Pay off loan not in my name, pay off card in my name, or save for down payment?

Question

I owe on a loan with my family that is not actually in my name, but I've agreed to share in it, my part has about $6k left at 9%.

Then I also have my own credit card, in my name, with $17k on it (past bad choices, but it's half what it used to be) at only 6%.

I've also been considering trying to save for a downpayment on a future home.

I have a bonus coming and can apply about $10k in the next 3 months to these goals.

If I go with the highest interest, the 9% loan, that saves me the most money, but does nothing to affect my credit score as it isn't even in my name, it's "off the grid".

The 6% card would seem to make the biggest credit score impact and would "feel good" to lower my "bad debt" (I could get it below 30% of the credit limit if I attack it) but it's the better rate of the two

Finally saving for down payment? Am I better off house buying with more cash or better credit?

Pay the 9% loan, the 6% card, or just save? Or balance of the three? Thanks.

Minimum payments are not a problem, that's all under control. I'm just looking to focus major above the minimum payments.

And I long ago stopped using credit for anything new, I'm all cash all the time now.

My current credit is good, just trying to maximize for future house buying good planning.

Answer 1

Absolutely throw all the bonus at your credit card debt. You really need to pay that off completely before you start saving for that house.

The loan that isn't in your name has no impact on your credit score or mortgage process.

Answer 2

If your credit is bad, it'll be bad no matter what scenario. It is the continual payment per month without going behind that will give you better credit. I personally would pay half of the 6k loan, and keep making payments. Keep mayking payment on the 6 % card as this will help your credit in the long run anyway. That should leave you about 7k left for the house to put away. Sometimes new home owners will get a break for their first house and you won't need much more than that. Depends on where you from.

Answer 3

You need to pay off your debt first. A lender is going to be looking at a high balance on your credit card. Some will not lend to you because of it. You will want to pay it off as soon as possible and then save for your house. If I were you I would pay off the 6000 and put the rest on the credit card payment. Then I would send every penny that I could spare to the credit card. Since you owe too much on the card is why I would put more on the other bill. You can eliminate it all together.

Answer 4

You should focus on reducing your debt before you try to save. You'll end up paying more in interest than you could safely get from any investment.

I don't understand your commitment to paying down a loan that's not in your name. Is it a true act of charity? Does it benefit you AND the person you're helping? Are you trying to be responsible for someone who would be better served being responsible for themselves? Ask yourself some hard questions about it. However, since you made the commitment, and since it'll cost you the most money at 9%, it seems like the obvious choice to pay it off first.

Use the remaining 4k towards paying off your credit cards.

I would recommend paying off your credit card in its entirety AND saving up a good sum before you buy a house. Practice your new, improved decision making and spending habits for awhile before you take on a mortgage.

Reading some Suze Orman would probably help, too.
You're on the right path. Good luck!

Answer 5

ALWAYS ALWAYS ALWAYS pay off debt before you invest. There is no gray area here. There are no "maybes" or "buts". Pay off debt. Period.

Pay off the credit card first. Pay off everything else after that.

You're not ready to buy a house. Forget that for now. When the time comes to buy a house you will need both: a good down payment (at least 10% of the price of the house) and a good credit rating.

Pay off the credit card.

Answer 6

9% of 6K or 6% of 17K, paying off which onewill save you more? Personally, pay off the 6K, apply some to 17K. You mentioned your credit, is either account negatively effecting your credit? If so, it needs to go first. Do everything you can to build your FICO score as that is what determines the interest rate as much as anything else.
I would throw every spare $$ at the larger debt AFTER paying off the 6K, get the balance down which will effect your debt to income ratio by making it better, another way to help you do well with a mortgage company.

Good luck!

Answer 7

Invest $ in a cd and keep adding to it for three years. Take out a lower interest loan at your credit union to cover your card balance and pay off your card balance at the end of every month from now on.

Answer 8

No house for now. The only debt that's yours is the one that's in your name. Get your personal debt and affairs covered first. If you're sunk, no one else can or will step in to get you back up.

Before you do a single thing listen to this man for free, on the radio or online, daily, and you will make the absolute wisest next move. This is like getting financial wisdom from Bill Gates, except this guy has a radio show. Listen to archives too.

Half way down click "Listen to Dave". JUST listen.
http://www.daveramsey.com/tdrs/index.cfm/2007/9/17/Getting-rich

Answer 9

well as long as all your payments are current then your idea of paying the highest intrest rate would probably be best especially if the other loan is not in your name. You want to worry about your credit before anyone elses.

Answer 10

Pay off the 9% then put the rest to the other loan and then use what you were paying on the 9% and up your payment to the loan.