Financial question?

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March 5th, 2004, 11:11 AM
opiate

Financial question?

I'm getting about $6100 back from taxes this year. What should I do?

Pay off my credit card $4,000, $250 per month.
Pay off wife's car loan $6,000, $404 per month.

I was thinking if we paid off the car loan, I could double my payments to the credit card $400 per month.

What does everyone think. O yea, after we pay this credit card off, its going in the trash for good. It's our only one and every time we get it down to a zero balance, for some reason we start to slowing use it up again. But last time it was my wife's fault, she had to buy 2 wedding dresses instead of just one, because the first one wasn't the right color of white and it didn't match the flowers or something like that. Anyway we put the first dress on the credit card and it was $1100, for off white. Then 1 day before our wedding she changed her mind and went out and bought one exactly like it but bright white for $1100. The dress store would not give us a refund for the first one, so we sold it on eBay for $63.00. But this is all besides the point! Any advise would be helpful. Please don't tell me to get a divorce.
March 5th, 2004, 11:13 AM
ilovetheusers

What's the interest rate on both. I'm guessing that the car is about 0-9% and the credit card is 19%. Pay the card.

I would have been miffed about the dress thing though.
March 5th, 2004, 11:28 AM
Cleetus

Agreed, whatever has the highest interest rate first.
March 5th, 2004, 11:34 AM
kato2274

so you've got 4K on the credit card and 6100 on the car.

you're paying 250 and 404 a month respectively. lets assume that interest rates are equal (I'm sure they aren't but just for the sake or argument.) 10%

you pay off the card with 4k of your refund taking it to zero balance. you drop 2100 onto the car knocking it down from 6000 to 4900. then you take the amount of both payments you were making monthly and apply them to the car.

you pay 650 on this monthly and you are out from under it in 8 months time and you'll have $650 bucks a month to put away into savings or spend a little of it at that time. It will probably go a lot faster as usually your car loan should be under 10% interest.
March 5th, 2004, 11:35 AM
silencio

The off white one is for her next wedding. https://forums.windrivers.com/images.../2005/03/1.gif
March 5th, 2004, 12:00 PM
hudsonsmith

Quote:

Originally Posted by kato2274

so you've got 4K on the credit card and 6100 on the car.

you're paying 250 and 404 a month respectively. lets assume that interest rates are equal (I'm sure they aren't but just for the sake or argument.) 10%

you pay off the car with 4k of your refund taking it to zero balance. you drop 2100 onto the car knocking it down from 6000 to 4900. then you take the amount of both payments you were making monthly and apply them to the car.

you pay 650 on this monthly and you are out from under it in 8 months time and you'll have $650 bucks a month to put away into savings or spend a little of it at that time. It will probably go a lot faster as usually your car loan should be under 10% interest.

Yeah, that. :thumbs:
March 5th, 2004, 12:08 PM
opiate

The interest rate on the car is 5.69% and the credit card is 6.99%.
March 5th, 2004, 02:58 PM
FatalException0E

Quote:

Originally Posted by opiate

The interest rate on the car is 5.69% and the credit card is 6.99%.

Dang, I want that credit card. I just got my main one down to 9.8 and transfered balances to it (at a promo 3.5%)

Yeah, pay off the card first, then apply what you were paying on it to the car. You'll really feel better about not having that credit card hanging over you, too.
March 5th, 2004, 03:04 PM
ilovetheusers

I just moved all of my CC to one card with a 5% rate for 12 months. The GF just got an offer for one with 0% interest for all balance transfers.

Just look for offers and apply then transfer your whole balance from the other cards.
March 5th, 2004, 03:34 PM
gazzak

Put it on a horse and pay everything off when it wins!!
March 5th, 2004, 03:44 PM
ilovetheusers

Quote:

Originally Posted by gazzak

Put it on a horse and pay everything off when it wins!!

What horse? What do you know that we don't?
March 5th, 2004, 03:59 PM
meatwad

I got a tip that War Admiral will beat Seabiscuit in a match race. Let it ride! TRUST ME! :devil:
March 5th, 2004, 06:08 PM
Ya_know

Don't be such a tool!

First thing I would do is change your W4 so that you have much less taken out each month by the IRS! You realize the amount of money you lost in interest alone on that $6100 if you had an allotment for savings over the past year, and government owed you nothing!?! Why let them keep your money this long interest free???
March 5th, 2004, 06:41 PM
arch0nmyc0n

Quote:

Originally Posted by Ya_know

Don't be such a tool!

First thing I would do is change your W4 so that you have much less taken out each month by the IRS! You realize the amount of money you lost in interest alone on that $6100 if you had an allotment for savings over the past year, and government owed you nothing!?! Why let them keep your money this long interest free???

I don't know much about American taxes but that sounds like you're suggesting fraud?
March 5th, 2004, 06:51 PM
Ya_know

Quote:

Originally Posted by arch0nmyc0n

I don't know much about American taxes but that sounds like you're suggesting fraud?

You and that crack cornflakes brand...You haven’t been doing taxes very long, have you?

There are two stages to taxes; one is the declared deduction, which is spread over the course of the whole year. Then there is the filing at the end, to determine how much you actually owe. If you declare incorrectly, you will either owe more than you would want to pay in one lump sum, or you end up having given them too much money over the course of the year, and they have to send you a refund. It is always better to owe the government money at tax time, but just a little bit. It means that you were in possession of your own money…that’s not fraud crack-baby…that’s intelligent! :p
March 5th, 2004, 08:12 PM
rgharper

Quote:

Originally Posted by arch0nmyc0n

I don't know much about American taxes but that sounds like you're suggesting fraud?

Uhhhh ... no. There's no fraud involved, as Ya Know has mentioned. Unless there are unusual events that cause a sudden one-time jump in your deductions it is financially unwise to let your employer deduct that much money from your paycheck. In effect you're giving the United States a one-year interest-free loan of that six thousand clams.

If you invested it at 5% return that would be $300 you could have earned yourself with it.

Or if you had bought $115 ($6000 / 52) worth of beer, wine or spirits each week you could easily have spent the $300 on Tylenol and electrolyte-replacement drinks to help recover.

Your choice. :devil:
March 6th, 2004, 01:25 AM
Cleetus

Agree with Yaa_know on this one
March 6th, 2004, 05:02 AM
confus-ed

Here vs there ...

Daft as it sounds, here, it can make sense to overpay your taxes if you have the cash flow, the Inland Revenue pay better rates of interest on overpaid taxes than most high street banks :eek2: & its tax free too ! :thumbs:

So Uncle Sam doesn't pay you interest on overpaid tax ? What happens if you underpay then - he charges you interest ? Is that why you overpaid so much, I dunno what your rates are but surely that's like $25,000 worth of income 'extra' you paid tax on by 'accident' ... I'm guessing 25k based on tax rate of 25% = multiply $6100 x4 is 'nearly' ..
March 6th, 2004, 06:11 AM
rgharper

Quote:

Originally Posted by confus-ed

So Uncle Sam doesn't pay you interest on overpaid tax ? What happens if you underpay then - he charges you interest ? Is that why you overpaid so much, I dunno what your rates are but surely that's like $25,000 worth of income 'extra' you paid tax on by 'accident' ... I'm guessing 25k based on tax rate of 25% = multiply $6100 x4 is 'nearly' ..

No - but if your underpayment is too large there is a "penalty" charged as a percentage of the underpayment.
March 6th, 2004, 04:26 PM
opiate

Quote:

Originally Posted by Ya_know

Don't be such a tool!

First thing I would do is change your W4 so that you have much less taken out each month by the IRS! You realize the amount of money you lost in interest alone on that $6100 if you had an allotment for savings over the past year, and government owed you nothing!?! Why let them keep your money this long interest free???

I got this under control, I claimed 4 exemptions on my W4....my W4 isn’t why I got so much money back. The reason why is because I bought 2 rental houses and was able to write off thousands for remodeling them. Plus we refinanced our house last year. You don't need to worry; my tax person will take care of me. Besides our credit card, I have my financial situation under perfect control. Making money is what I'm good at. O ya, I'm getting ready to pocket $20K from another house I've remodeled and sold. You only need to worry about your financial situation, not mine!
March 6th, 2004, 07:15 PM
FatalException0E

If you overpay and don't get it back (don't do your return right) but then ammend the return in a later year, they'll pay you interest from the end of the filing year where you didn't get it all back.

That was confusing, even to me, so.....
When I filed my 2000 return, I forgot education expenses. When I sent in my 2001 return, I also ammended my 2000 return, getting an extra $200 back. The IRS sent me a check for just over $218. That's not bad interest.

By the same reasoning, if you miss the deadline to pay, they charge you interest from the due date.

(I think)