Which to Pay Off First: Credit Card or Car Loan?

This article is from Money 101, a collection of personal financial management articles, provided through Money.

Cut down the credit card or ditch the student loan? Knock off the home equity line or get a jump on the car loan?

Paying off money you owe is always a noble cause – but ditching some debts will benefit you far more than erasing others. Use the steps below to decide where to put your extra cash.

Step one: Know what kind of debt you’re dealing with. Money you borrow for a home or an education is considered “good debt.” That’s because these items can help boost your financial position. In addition, some home and student loan debt may be tax-deductible. There’s no need to put pressure on yourself to repay those loans as long as you can continue making regular installment payments.

Bad debt, on the other hand, includes anything that doesn’t improve your financial position and that you can’t pay for in full within a month or two, from a fancy meal at a lavish restaurant to a birthday gift for your spouse. Bad debt is usually in the form of credit card debt or a personal bank loan. You should tackle bad debt first.

Step two: Figure out what will give you the biggest boost. From a financial perspective, it’s smart to pay off your highest-rate bad debt first. After all, putting $500 towards a $3,000 credit card bill with an 18% interest rate will save you far more than paying off a $500 bill at 6%. That said, it can be worth prioritizing that smaller bill if you’ll gain a lot of psychological satisfaction from wiping a debt out in its entirety. “A small victory can give you the momentum to stick with the program,” says Anisha Sekar, VP of credit and debit products at Nerdwallet.

Step three: Consider the credit score effect. If you’re planning to buy a home or a car in the near future, it may be worth paying down any credit cards that are near their credit limit. That’s because lowering your so-called “utilization ratio” will have a positive impact on your credit score and potentially qualify you for lower interest rates.

Word of Warning:

If you’re saddled with a lot of high-interest credit-card debt, you might be tempted to pay it off quickly by borrowing from your 401(k) or taking out a home equity loan. That’s usually a bad move. If you default on your home equity loan payments, you may lose your home. Borrowing from your 401(k) will cause you to miss out on valuable tax benefits. And if you quit or lose your job, you’ll probably have to repay the entire borrowed amount within three months or face a stiff penalty.

Moms make an impact.

As shared by Sharon Witt on the Parenting Ideas platform in Australia.

The bond between mother and daughter is truly unique and has far reaching effects on the development and socialization of girls throughout their lifetime.

Increasing the emotional connection between mothers and daughters can foster mutual support. Here are some ideas to help you be an effective mother for your daughter.

Know your impact

Mothers are a powerful influence. The way a mother acts in front of her daughter largely influences her daughter’s behaviour. When a mother can model how to feel pride, take pleasure in her accomplishments, feel a sense of competence and hold a positive self-image she is empowering her daughter in infinite ways.

Be okay with saying no

Saying no benefits both of you. Daughters, like sons, feel safer with boundaries. Boundaries are essential to keeping her safe emotionally and physically. Daughters will often push the boundaries and pester their mothers to give in to them. When you stand firm you teach your daughter that firmness is a strength worth adopting. Your firmness gives her permission to say no when they are put under pressure to conform by peers and in their early relationships.

Tune in

Seize the opportunity to take in the full presence of your daughter when you can. Notice what she is like. Notice her and openly endorse her likes, dislikes and opinions. You do not need to agree with them, but you can validate them, which demonstrates respect and gives her permission to be her own person.

Invite assertion

Do not stop girls from becoming angry but coach them on the skills she needs to work through strong emotions effectively. She must have the opportunity to sit in the experience of those emotions, learn to cope with them and navigate her way through them.

Show her that it’s okay to express a full range of emotions. Emotions are an incredibly powerful tool, and we need to teach daughters that when they feel angry or upset, it’s a signal that something is important and that it should be expressed.

Be confident

Have confidence in your mothering abilities. Your mother’s instinct will tell you how to parent your daughter well and how to raise her so that she becomes herself. This intuition will guide you in setting limits and knowing if, and when, she needs help. Regardless of what girls may tell their mothers, they want them to be central in their lives.

Expand her definition of beauty

Mothers need to be a part of the beauty conversation with daughters. Don’t leave it to the media or popular culture to be educating her on what beauty is. Model and teach her that beauty comes from the inside. It is a quality that glows out. The more you are able to do that for yourself, the greater she is going to be able to do it for herself.

Help her find her passion

Encourage her to try a variety of activities so that she can discover her passions in early to mid adolescence. Some girls take longer than others to find their passions. Think of these girls as hummingbirds – they are driven by curiosity. Once a girl finds her passion, she is able to use that as her motivator to develop her skills.

Fracture the good girl image

Allow your daughter to make mistakes, it is one of the best ways to build her confidence. Avoiding failure only sets up a vicious cycle that says “you must be perfect”. Give her the permission to struggle so that she can let the hard times make her stronger, and understand that she can get through challenges that occur to her. This is a valuable lesson that kids learn from their same gender parent.

Gender identity is on a continuum – girls grow up to be women and women were once girls. Some argue that adult women struggle with the same things as younger girls, just in a different context. This may afford great empathy or it may be a great interference to problem solving if mothers are still working it out for themselves.