I will soon receive an inheritance of 25,000 should I pay off bills and get out of debt or put in a CD?

Answer 1

Since the debt probably carries a higher interest rate than the CD, pay off the debt. Would you borrow money at 10% to invest it for a 5% return?

Answer 2

Pay off your debts, definitely. The longer you hold a debt, the more debt you accumulate through interest, so it's better to pay it off as soon as possible.
It's rare that any investment would make enough money to counteract the amount you are losing in interest on your debts, and a CD certainly never could - it is a highly over-rated investment and not worth your time.

Think about it - just an example, if one of your debts charges you 12% percent interest for every month it goes unpaid; and you earn maybe 3% on a CD or 10% on a really good stock, you're still losing the difference (9% on the CD or 2% onthe stock).

Most of your inheritance will be eaten up in taxes, but the rest should be immediately directed to your unpaid bills and debts. Then read up before you spend another dime or even think about investing. Head down to the library for these easy but essential guides:
Some good, easy reads:
-The Complete Idiot's Guide to Personal Finance in your 20s and 30s
-The Complete Idiot's Guide to Managing Your Money
-“Smart Women Finish Rich” or “The Automatic Millionaire”, by David Bach
-any Suze Orman books

Answer 3

How disciplined are you to STAY OUT of debt once you pay off bills? If you are, then pay off the high interest credit cards and put your payments into a savings plan or stocks instead.

Personally I would use half to pay debts and invest half. But a CD won't get you anywhere. Buy into a good mutual fund or something that will 1) Be hard to touch and 2) Have an opportunity to grow at a faster rate.

Answer 4

What kind of debt? If credit card then yes pay it off immediately. CD's are often not a great return, why not invest in a S&P 500 Index Fund, like through Vanguard? You'll average 8-10% return over the years. Or open a retirement fund. If the debt you have has a rate less that 8-10% (for example some mortgages) then invest. Otherwise pay off the debt.

Answer 5

No CD you may purchase has as much income or as high of interest rate as what you are paying on a loan. Or the banks would go out of business. People who borrow and then put it in the bank have to make me laugh. While they are earning 4% interest tops are paying out 9 or 10% on the loan.
That makes about as much sense as buying a shopping card.
Verus cash. You are paying to turn your money witch is refundable anywhere into something that only that store cashes and at a less than what you paid rate.
Why do people fall for this type of thing where they pay more for something than it earns?
Pay off your bills get out of debt and then save money to put into a CD. Never borrow money which is in essense what you would be doing to buy a CD.

Answer 6

1) If you will owe any taxes on this, prepay it! But most likely it will have been through the estate process.

2) Pay off your current bills, no reason to add additional black marks to your credit rating.

3) Pay off past due bills.

4) Take a look at your debt. Try to pay off the highest rates first, but be sure to cover the minimum on as many as possible.

5) Squirrel away a little for emergencies (I emphasize this word) I wouldn't use a CD, too illiquid, I personally have several online savings accounts one of which is designated my emergency fund. You racked up that debt somehow, have a contigency plan to keep from tapping new debt if your car breaks down, or you blow a tire, or your kid buys a boat on your eBay account.

6) Go to a used book store and get a fairly recent version of a PERSONAL FINANCE GUIDE (Idiot's or Dummies or "The Only Investment Guide You'll Ever Need" -Tobias). Read the parts about Savings & Budgeting. Tailor their advice to your needs.

7) Make spreadsheets - nothing has helped me get my financial house in order in a shorter amount of time than by making spreadsheets. Chart out your financial assets, your liabilities, your monthly payments, do snowball debt repayment calculations on your debts ( see below ). You can't get where you want to go, if you don't know where you are, spreadsheets are your roadmap. After struggling to pay off seemingly limitless debts for years, in a couple of months once I made spreadsheets of all my assets & liabilities I got things under control, even started saving for big ticket items, added to my investments, and started the emergency fund... all without really sacrificing very much as far as life style. My Spreadsheets give me a reason to pay down debt faster, and save for things I really want, rather than spending on a little bit here & there on impulse...

Answer 7

Fred S is right. Best to get out of debt. Then your paycheck is yours to keep instead of paying interest charges on credit cards. I payed off a credit card a couple years after I got divorced and became a single mom. It was the absolute best thing to do. I had money to pay my bills and I was finally able to have a great credit report. It's been 5 years, and I still don't have a credit card. It's the best decision I ever made. I set up payment plans in order to keep my credit report healthy and enjoy NOT having to scrape together money for food.

Answer 8

If you were out of debt, would you borrow $25,000 to put in a CD? What is the difference?

Answer 9

Your loan is probable getting the ideal activity cost so leave or no longer this is... i could do 2 issues... repay a number of the intense activity ccards if that's what your different debt is and shop a splash for the circulate. for this reason!!! in case you do no longer shop some for the circulate you will probable finally end up putting shifting expenses on a ccard so your lower back to the place you began. next, paying off a number of the different money owed will help your fee to debt ratio which will in turn assist you get the greater useful activity cost whilst figuring out to purchase the hot residing house once you relocate... desire this enables... stable luck!!!

Answer 10

If you had no debt, and no money, would you *borrow* $25,000 to put into a CD?

(P.S. If you decide to invest any of the left over, put it into something getting decent rates of return, and not a CD, fer cryin' out loud!)