I'm 34 and was planning on getting a house next year. My credit card debt also happens to be 5,000. I have a good job, no kids, but do take care of my mom finantially. What should I use the money for? house? debt? something else? I'm thinking if I pay down debt I might get a better credit score but no money for downpayment. Also, should I wait until next year to cash it? - for tax purposes
2006-12-06 17:30:41 · 11 answers · asked by BT 2 in Business & Finance ➔ Personal Finance
Keep a careful eye on the tax issue. If your card debt is not behind, you might pay it down a bit & save the rest for tax payments and money towards a down payment if you find the right house.
You might ask a tax professional about the winnings to see what your exact tax liability will be.
2006-12-06 17:35:49 · answer #1 · answered by bionicbookworm 5 · 0⤊ 0⤋
You don't say where you live so the tax situation is unclear. Pay off the credit card. You don't have to use all the money for that, but pay off a lot more than you would normally. Start with several hundred dollars of the 5000 until the tax situation is clearer. Once tax is sorted, keep paying several hundred per month from income and from the 5000 until the debt is cleared. You should have a few thou left over. A very strong suggestion - never let the credit card get that high again.
2006-12-07 19:05:23 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I don't see how $5000 is going to help much in buying a house, unless it is a shack in the middle of nowhere (I live in New York where anything decent is at least $400,000). You shouldn't buy a house unless you are going to be able to make the payments. Assuming that this is not an issue, I would pay off the credit card. You will save a lot in interest and can always get at the money later in case of emergency.
As far as the lottery, I'm assuming you just have the ticket and didn't turn it in yet. Then waiting to cash it depends on your tax situation this year and next, which I don't know anything about.
2006-12-06 17:40:03 · answer #3 · answered by Alan S 6 · 0⤊ 0⤋
Waiting to cash next year is an option - so you don'thave to pay taxes until April 2008. But you should look at the interest rate on your credit card debt, is it high? if 8%or more, you should pay it off or most of it. Also kee about $100-$300 and donate to one or 3 of your favorite charities. Get receipts for them.
With what you normally make the payment to the credit card, make that payment to yourself in terms of a savings.. as you'll still need to pay income taxes on your lottery winnings..either next year on April 15, 2007 or the following year.
2006-12-06 19:49:59 · answer #4 · answered by JNC 2 · 0⤊ 0⤋
Until you figure it out, why not invest in a high interest rate savings account: ING Direct for example. They're interest rate is 4.5% , so you'll make a couple hundred bucks over the year. If your debt interest rate is higher than 4.5%, pay off the debt. That way when you buy your house, you won't have the debt payment to worry about.
2006-12-06 17:37:58 · answer #5 · answered by Alan B 2 · 0⤊ 0⤋
Clear your debt because it will help credit score to get a house.
2006-12-06 17:41:52 · answer #6 · answered by livlafluv 4 · 0⤊ 0⤋
Payoff the highest interest bills first.
2006-12-06 17:39:00 · answer #7 · answered by Anonymous · 0⤊ 0⤋
pay your debt, that comes first. if you die, who do u expect to pay the debt. You don't know you will live the next day, so i will advise you before wishing othere things , that you pay the debt.
2006-12-06 18:15:19 · answer #8 · answered by abuki 2 · 0⤊ 0⤋
Debt first before spend. Remember that.
2006-12-06 17:33:15 · answer #9 · answered by Help me 3 · 0⤊ 0⤋
you can save that money for awhile until you need to use the cash for very important transaction in coming months...
2006-12-06 17:43:36 · answer #10 · answered by dodadz 4 · 0⤊ 0⤋