What To Do With Extra? - 2/26/12

Sunday - 2/26/12

I just paid the bills.

It seems like I'm always paying my cell phone bill late.  It comes due right at the middle of the month, when most everything else is due and there isn't always money to pay it until a few days after it's due.  My Discover card has a low interest rate and is offering me double cash back for paying utility bills with them by automatic payment.  I decide to go ahead and do this; set up automatic payments for the phone bill to the Discover card and then pay that off in the second half of the month, when I have extra.  That way all my payments will always be on time!

There is some money left, after paying the bills .  This isn't unusual.  I normally have a bit extra the 2nd half of the month.  What's unusual is that I know I don't need this money to help pay the March bills.  I know I have enough coming in, that I'll have those bills covered.

I think about putting the extra toward my Discover card.  It has a lower balance and wouldn't be hard to pay off.  It also has a lower interest rate though, and that goes against what I've been trying to do...  paying down the higher interest rate items first.  In my mind, it would be better to leave that one charged up and pay on something else.

Since I don't have to use it for the next bill period, I want to use the extra money to pay on something now.  In general, there are two different schools of thought.  The one I've been following is that you should pay off the highest interest rate loan first.  That's going to give you the most savings.  The other school of thought says you should pay off the lowest amount owed first, which will make you feel better about yourself because you've paid something off, and will (hopefully) encourage you to pay things off faster because you're excited about seeing things paid off.


I have a "chase freedom" card that has tomorrow as the end of it's billing cycle.  It has a low credit limit and is one of my higher interest rate cards.  I decide to put the extra money toward this card.  I figure that way I'm almost using both methods...  I am paying off a higher (though not highest) interest rate card, and I am working toward paying off a low balance loan.  I'm crossing my fingers that this is the "right" thing to do.  It's so hard to know what is right to do, other than just keeping putting energy toward being financially free.

Today is a day mostly at home, showing apartments, doing laundry, making sure I'm prepared for my talk tonight.  Then, tonight, I'll take Charles' truck down to Costa Mesa so that I have an easy way to get home afterward.  I'm also taking down some more bulky items (like library books) that I'll drop off on my way back home.