Say you got $30,000

[tracymarsinco]

You found or inherited or were given $30K (after taxes, all on the up and up).

You have zero in savings
You owe more than $100K on your home
You own your own car, but it is a 1995 with over 200K miles on it
You have $9K in credit card debt
You have two children and a spouse, no pets
Both spouses are employed and are middle income earners

What are you going to do with your money?

[Deleted]

Pay off the CC debt. Save the rest. use the money that you were paying on the CCs to start a car fund for when the car dies.

[Deleted]

1. Pay off CC debt - $21K remaining
2. Put aside an emergency fund of $10K - $11K remaining
3. Buy a new used car in the ~$8-10K range - $1K remaining
4. Spend that last thousand on something frivolous but memorable to honour the giver, like a small family vacation.

[anna7602]

Definitely build an e-fund and pay off the cc debt.

Not sure how much would be left over at that point, but I absolutely would NOT do anything about the mortgage. If you're even thinking about paying off part of the mortgage, look at refinancing to a lower rate first.

I haven't had a car in over a decade, so have no perspective on how much it would cost to replace a car or whether it's better to finance or pay cash these days.

[dexteroni]

1. $9k to pay off credit card debt
2. $20k to e-fund*
3. $1k for something fun.

*But what is the retirement situation in this scenario? If there isn't any, or if it's not up to par, then change item 2 to $10k to max two IRAs and $10k to e-fund.

[SJ]

Nov 13, 2012 12:27:26 GMT -5 dbsk8dance said:

Pay off the CC debt. Save the rest. use the money that you were paying on the CCs to start a car fund for when the car dies.

I am in this camp, although depending on how your retirement savings look I might put $10K towards maxing out a Roth for each of you.

[limey]

Pay off CC

Split remaining 21k between emergency fund and new car fund.

Use money from monthly CC to contribute to retirement.

[dexteroni]

Shoot, I missed the car. OK I change my answer.

1. $9k to pay off credit card debt
2. Either $11k to savings and $10k for new used car,
-or-
$6k to two IRAs, $7k to savings (or vice versa, it doesn't really matter), $8k for new used car.

[tracymarsinco]

There is about $30K in the Roth IRA; the other one is a SEP with a little less than $20K.

[Deleted]

1. CC debt ($9K)- 21 K left
2. 5K for a down payment for a new car (would finance if under 1% interest, make sure car payments are reasonable within your budget- could take the place of your current CC payment) -- or spend $5K on a used car. ($16k left)
3. $10K to IRAs for both of you, if you dont have it already. ($6k)
4. 1K for fun
5. Rest to e-fund. ($5K)

[dexteroni]

Nov 13, 2012 12:35:59 GMT -5 tracymarsinco said:

There is about $30K in the Roth IRA; the other one is a SEP with a little less than $20K.

OK just CCs and savings and car then. And upon further thought, I would probably just put the whole $21k in savings until you absolutely need a car, then spend no more than $8k - $10k on it.

[EmilieMadison]

I would focus on paying off CC debt and savings. Here's what I would do:

Pay off the CC debt.

Is the car in good shape and doesn't need extensive repairs? If so, keep it and keep driving it.
If not, sell it -$1K value perhaps?- find a newer, reliable vehicle for $10K.

SAVE the rest.

Or, consider saving at least 3 months salary and then:
How is retirement savings going? Good? Then put the rest in savings.
Need a bump to retirement? Put open or contribute to RothIRAs.

Also consider opening or contributing to 529 plans for your kids.

[h]

Nov 13, 2012 12:42:12 GMT -5 @charky said:

Nov 13, 2012 12:27:26 GMT -5 dbsk8dance said:

Pay off the CC debt. Save the rest. use the money that you were paying on the CCs to start a car fund for when the car dies.

This exactly.

Don't even think about touching the mortgage if you have zero in savings.

Yup. If the car situation is dire, then use a little for a downpayment and finance the rest. Otherwise, save for the car over the next few months. Regardless, the bulk of the money should go to savings if you have none.

[theintended]

1. Pay off credit card.
2. Max Roth IRAs, 5K each for a total of 10K
3. The rest in savings, with a chunk earmarked for a replacement car when necessary.
4. I'd take your former monthly credit card payments and set up auto-contributions to your Roths starting in 2013.

What's the CC debt from? If from cumulative overspending, I'd also take this opportunity to track your spending and reign it in so that this boost helps you stay ahead.

[gnomesweetgnome]

I would probably pay off the CC debt, put $10k down on a new(er) car (if you can afford a monthly payment), and put the rest in savings ASAP.

[Roc A Bee]

Pay off cc
max Roths for both of you (10k)
save whatever 3 months of expenses is
do something fun with the rest.

[auberge]

1. pay cc debt ($9k)
2. efund (10K, the amount depends your income) and car down payment (5k)
3. Something fun (1k)
4. Roth IRA, (5k for one ) plus former cc payment to other roth.

[hocus]

Pay off CC debit. Put most of the money into savings for a new car. spend maybe $500 on something fun/frivolous.

[tracymarsinco]

the CC debt was from unemployment, health issues, and borrowing from Peter to pay Paul. It's under control now and is going to be paid off first.

thanks girls!

[dr.girlfriend]

Ditto the others, including refi-ing the mortgage if the rate is high, assuming you're not moving any time soon. I would feel comfortable with an efund of $5k and the rest in Roths assuming I could also add to savings going forward...

[Susie]

1a. $9k - pay off credit card debt.
1b. Set up monthly automatic transfer into a savings account in an amount equal to what you used to spend on credit card debt. This is your emergency fund.

2. $9k - put in the emergency fund. Note, this is for EMERGENCIES. Travel, cars, furniture, etc. are not emergencies.

3. $9k - put in a savings account as car fund. Keep driving the '95 until it dies, then use this to buy the next car in cash. No car payment.

4. $3k - Roth IRA, if you're eligible and you're not already doing this.

[mrsjuleshs]

Pay off the cc debt and put the rest in savings. Use the previous cc payments to add to savings to save up for a down payment on a new car when the current one craps out.

[Deleted]

I like what the others are saying, but I would also get a month ahead on my mortgage and then make future payments twice a month (like half on the 1st, half on the 15th). This supposedly saves you a ton of interest in the long run.