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Those "Almost Paid Off" Debts

May 21st, 2014 at 08:00 pm

I'm working on paying off credit card debt, I have a plan in place and its going well, and I'm also able to save for upcoming expenses, a small emergency fund, etc. I just got the latest statement from one of my Chase cards, and the balance is under $200.

I have money in the bank. It is earmarked for property taxes, but I know I can make up $200 before they come due. The Chase card is second to last in my debt avalanche repayment plan, because the interest rate is only 6%. (In fact, it will be paid off just with the minimum payments before I even get to avalanche it.) It's only costing me $1 a month or so in interest, and the payment is $23.

If I pay off the card and put the $23 toward building my savings back up, it would take me 8.6 months to repay myself. If I keep paying the minimum on the card, I'll have it paid off in nine months. The interest on my savings account is nothing to speak of, so I'm not really losing anything there; paying on the card for the next nine months would cost me less than $9, so not really losing much there, either.

My inclination is to pay it off, add the $23 to my avalanche, and find a way to make up the $197 through side gigs, selling some stuff, whatever.

What do you do with those straggling little debts? Is there a threshold amount where you decide it's worth it to just pay them off and deplete your savings a bit?

Posted in Credit Cards, Debt, Personal Finance, Saving Money | 6 Comments »

6 Responses to “Those "Almost Paid Off" Debts”

  1. creditcardfree Says:
    May 21st, 2014 at 09:58 pm 1400709513
    1400709513

    I know when I got under $2K on our credit card it was hard to wait and keep making payments. I might have waited until $1500, but then I just wrote a check for the rest. It just feels good to be done!

    There is no right or wrong in your scenario...just personal preference!

  2. creditcardfree Says:
    May 21st, 2014 at 10:39 pm 1400711943
    1400711943

    Actually, not our credit cards...we never ran a balance on those. It was on our truck loan, which was our most recent non mortgage debt.

  3. snafu Says:
    May 22nd, 2014 at 01:02 am 1400720520
    1400720520

    While I like the idea of paying off a $ 200. CC balance, I worry about Murphy's Law. Life happens and thing go awry. According to your sidebar property taxes are due in Sept. and that date isn't flexible. Is there anything no longer used, needed, or loved that could be sold to add to the minimum $ 23. payment? Can food or auto operation cost be lowered/shaved? If you are adding a sum to savings each pay you might forgo that if it makes up the difference.

  4. My English Castle Says:
    May 22nd, 2014 at 04:52 am 1400734349
    1400734349

    Yeah, for me, the property tax account is sacrosanct. But I'm a worrier.

  5. snafu Says:
    May 22nd, 2014 at 02:00 pm 1400767206
    1400767206

    Our city offers a tax installment program that's very popular. Participant's property tax is divided into eleven equal segments, the twelfth is small, adjusts the balance owed. Anyone who signs on for the no cost program allows the city to automatically withdraw the monthly sum from their bank. If you NSF a payment you are dumped and the remainder of the year's tax is due by June 1st or immediately after the June cut off. They make it clear that you will not be able to rejoin the program in the future.

    If your city/community doesn't have a TIPPS [Tax Installment Payment Plan] you could call your city Councillor and advocate for the program as a great many forward looking cities find the system beneficial for city coffers.

  6. doingitallwrong Says:
    May 22nd, 2014 at 02:29 pm 1400768966
    1400768966

    I should have all I need for the property taxes, and about $500 extra, set aside by the next payday (5/31), so no worries there. Smile Worst case the $200 would squeeze me for the rental a/c -- which I'm hoping to get another year out of before I have to replace it, anyway -- but I know the company will let me pay in two or three installments.

    The TIPPS program sounds like a good idea, though, I'll have to see if our city offers anything similar or would consider it. I can think of a lot of families who would benefit from that type of program.

    Thanks for the input!

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