cash flow strategy

[Anonymous]

We have a bit of a cash-flow crunch right now.

Owe too much on ccs. But nearing the end of car payments.

Interest rates are basically the same. I know this sounds a bit contradictory but if I suddenly had an extra $1,000 in my budget for a couple of months (like a windfall from a project) and wanted to fix the cash flow crunch for the longer term, would you: Pay off the car loan (balance of about $6,000 left) to free up $500 a month, or chop at the credit cards? Interest rates on the ccs are actually a point or so lower than the car loan.

[Anonymous]

You must get really good cc rates, or really poor car loan rates. Anyway, pay the higher interest loan off first, which seems to be your car. The added benefit is you can later on sell it and turn it into cash if you need it -- can't do that with cc debt.

[Anonymous]

^^^ True, but car loans are usualy at fixed rates. CC company can raise them anytime for any reason and they often do.

[Anonymous]

Anonymous wrote:You must get really good cc rates, or really poor car loan rates. Anyway, pay the higher interest loan off first, which seems to be your car. The added benefit is you can later on sell it and turn it into cash if you need it -- can't do that with cc debt.

CC rates are zero right now for 2 years. Car is 2.49%

[Anonymous]

If cash flow is tight, do not use the $1000 to prepay the cc or car. Put it in the bank as an emergency fund for the next unexpected expense. That way, you will not be putting it on your cc.