im coming into about 8000 dollars. i have wanted to use the money to both do something fun for myself (as i never can afford vacations or things like that), and to put some in a saving for once.
however, i have a credit card i used to pay for some college that has a $7000 balance and about 12%interest. (i also have a dept store cc with approx a $1200 balance and around 20% interest)
whats the best thing to do here? would it be wise to pay down some of the 7000 and keep a little for myself and the rest in savings?
any advice is appreciated
2007-09-25 08:57:14 · 8 answers · asked by j. deo 3 in Business & Finance ➔ Personal Finance
if you need to know, i make about 1700-2g/ month. and my bills are about 1000
2007-09-25 09:23:29 · update #1
Use the $ to pay off your debts with the highest interest first. No investing is going to yield you the rates that you're being charged on your credit card. Pay down the debits and go from there.
2007-09-25 09:11:15 · answer #1 · answered by anonymous100 3 · 1⤊ 0⤋
Ok, I would advice you to pay off the $1200 balance as soon as possible. Just think, that is costing you over $200 a year. That is $200 a year that you could be using for savings or wealth building. I would pay $3000 towards the $7000 balance and then use whatever the minimum payment on the department card to pay extra on it each month. If you can budget a little more on top of that then it would really be helpful. I would put $3000 into CDs or something. A CD would pay a bit better interest than a regular savings account. It is a little harder to get your money out any time with those as well. Makes it easier to keep it in savings. Finally, take about $800 and take a vacation. Don't spend any more than that and spend less if you can. That can get you a nice little getaway.
To recap.
Department Store Card $1200
Credit Card- - - - - - - - - - $3000
Savings- - - - - - - - - - - - - $3000
Vacation- - - - - - - - - - - - -$800
All of these figures are depending on that $8000 being the after tax amount. Now with the savings, if your bills are around $1000 a month, then you could feasibly live for 3 months on your savings if you needed to. Don't tap into them for anything but real emergencies.
Next up, I would suggest that you get a retirement accound going. Does your work offer a 401k? If so, start making contributions to it now. Even small contributions can grow big over time. If you don't have access to a 401k then check into IRA's, especially the Roth IRA.
Finally, I would suggest you start to do some reading on personal finance. I would recommend that you get the Personal Finance for Dummies. It is a pretty good starter book. Read it and then find other books from that. Start to learn about how to budget, keep debt to a minimum, and invest. It takes a bit of constant investing over time to make a big difference. Remember, all floods started off as raindrops.
2007-09-25 17:04:31 · answer #2 · answered by A.Mercer 7 · 0⤊ 0⤋
Always pay your debts before savings, because the interest on debts is higher.
So, first pay off the store debt and then the credit card dept. Pay off what is left of the debt from your wages and then you will be a free woman. Do not borrow for any thing again except for property to live in. Borrowing is an expensive hobby.
2007-09-25 17:17:09 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Lucky you!
The absolute best thing to do is to pay off your ALL debts first.
But, you can split in it half, knock 4,000 dollar off of your credit card's debt with one half, and put the other in savings, you never know when you might need it, so hold on to it, whatever you do don't spend it. You probally won't come into this much money very often, so don't blow it-once that money's gone it's gone forever!
If you want extra money for vacation, take up another job in the side and save up. It's better to use money that you worked for, because it's replaceable.
Anyway, thats my advice=)
⥠Tasha
2007-09-25 16:14:47 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Those credit cards are costing you big $$$$$
If you pay them off , then you will have all that cash you usually send in for payments And
You will have an extra $1000 per year from NOT paying %%% .
Pay the cards off , then use that free $$$ to visit
Cozumel (better than Cancun I think , not so las vegas at the beach) .
>
2007-09-25 16:13:35 · answer #5 · answered by kate 7 · 0⤊ 0⤋
Pay off most of the credit card debt! This way every month, you can save what should have been your monthly payment in a savings account.
2007-09-25 16:05:39 · answer #6 · answered by curlz 6 · 1⤊ 0⤋
Think about savings bonds, or certificates of deposits (CDs) and let your money grow until you have a good plan to use it.
Since you can't pay off all of your debt and wipe the slate clean with the amount of money you might as well try to invest it some kind of way.
2007-09-25 16:05:26 · answer #7 · answered by Anonymous · 0⤊ 1⤋
well, you should also make known how much you make a month and your expenses b4 the question can be answered.
2007-09-25 16:07:11 · answer #8 · answered by hh lee 1 · 0⤊ 1⤋