Should I spend a 10k gift on paying off my '04 vehicle, paying off credit card debt or a little of both?

Question

I'm 41 in a disintegrating relationship. with no savings.

Answer 1

It really depends on the interest rates on the car loan vs the card.

Cards are usually real reamers, they're probably draining you white. If you're willing to cut up the cards, by all means, pay them off.

If you're in a salt-the-roads state, you've got to plan your cars ahead of time, or plan trips to California once every 5 years to buy a good used car with no cancer. So, the more you pay your car down, the more available credit you'll qualify for your next car.

If your disintegrating relationship goes belly-up, your choices may change. If it's a real marriage that's going to result in community property being divided up, it's better to pay off the car if you think you're going to get it in the split. The credit card debt will be split, but a car payment will not be, it generally goes to the one who gets the car all things equal. Though I got nothing when I divorced.

Answer 2

Only you can know the best answer to this. Normally I would suggest that you pay off the higher rate credit cards. However this is only if you are certain that you can control your credit card spending. If you pay off the credit card now and then run up the balance again, you have not accomplished anything. If you are prone to impulse spending, pay off the car now. You are less likely to borrow against the car because title loans are so much more difficult to get than just whipping out a credit card at the store. Once you no longer have the car payment, start using the extra cash to pay more on the credit card until its paid off.

Answer 3

This is what I would do: I would pay all but about 2k on credit cards, since they probably have a higher interest rate, and take the money you'd be paying on all the cards and apply to whatever is left. Put the 2k in savings to set up new housing. Assuming you're not married, and you don't have to give up the car, sell it. Use the money to buy something a little older, just as reliable and pocket the difference! It is a wise choice to set up a savings plan of some sort. Good luck.

Answer 4

I'd suggest putting $1,000 aside for a contingency fund. You may need it for deposits on an apartment, phone, etc. if you need to leave this relationship. Put the money where the significant other can't get it.
Use the rest to pay off whichever debt (car or credit card) is charging the most interest. Then cut back your expenses as much as you can and try to get the rest of your debt cleared up.
Make a fresh start, if you can.

Answer 5

pay off the vehicle first then attack the cards.Being able to drive a round for multiple years without a vehicle payment will give you the opertunity to save alot of money and your next vehicle say in 10 years you will be able to buy with cash, vehicles are depreciating assets, however banks do and will reposse vehicle if payments are not made, this is not true of credit cards.By not having a vehicle payment you also could then use the amount of what the payment was too pay down other debt if you did not want to save it.

Answer 6

Pay off the credit card, the interest rates are a b i t c h. put a little back in savings tho.

Answer 7

I would only use half to pay off whatever has the highest interest rate and then put the rest in a savings account and do not it! Use the money when you "have" to have it, like when something breaks or there is a real emergency.

Answer 8

Pay off your credit cards the credit card companies charge nutty interest rates and put whatever is left over into a retirement account I prefer and recommend (ROTH TYPE) accounts the main difference is with a regular (IRA) individual retirement account your money grows tax deferred until you start using it and at that point you pay the taxes on what it earned at a lower rate due to your age where as a Roth type the taxes are paid as you earn interest and when you start taking the money out it's all yours. PERSONALLY I DEPOSIT MY TAX REFUNDS UP TO THE MAX ALLOWED AMOUNT EACH YEAR INTO MY ROTH IRA> My best advice to you is to talk to a financial planner and see what he thinks would benefit you best.

Answer 9

You need at least a few thousand dollars put aside as an emergency fund. The rest should pay off the bill with the highest interest rate.

Answer 10

Pay off the car, This way you can switch to a liability only policy. (unless of course you are prone to accidents) You can use the additional money you will save in auto coverage to make much larger payments on the credit cards getting them paid off much faster.