hypithetical Question about reciving a large sum of money

[daddyof2]

Hi just to start off I make around 45k per year and live pretty much 1 pay check ahead (I could afford to be off for 1 week with out a pay check)

family info
me husband about 35 yrs works full time
wife 36yrs stay@home mom
DD 9yrs
DS 7yrs

I owe $41,000 on my mortgage and about 25years to go

monthly bills about 1,100

2 cars 2002 mini van High miles
1992 subaru low miles 76,000 body rotting off frame

credit card bills about 5,000 payoff amount


so If you were to get a check for $15,000 what would you do w/ it?


Ps Dis Vacation is very high on list ($5,000)

 

[Leajess99]

Hi just to start off I make around 45k per year and live pretty much 1 pay check ahead (I could afford to be off for 1 week with out a pay check)

family info
me husband about 35 yrs works full time
wife 36yrs stay@home mom
DD 9yrs
DS 7yrs

I owe $41,000 on my mortgage and about 25years to go

monthly bills about 1,100

2 cars 2002 mini van High miles
1992 subaru low miles 76,000 body rotting off frame

credit card bills about 5,000 payoff amount


so If you were to get a check for $15,000 what would you do w/ it?


Ps Dis Vacation is very high on list ($5,000)

What I did when I got my settlement was put it in the bank and left it there unless an emergency arises and then I replace the money withdrawn over time. If I can not afford the trip without touching the money than to me it is not worth it. You just never know what the future holds. If you spend any of it than pay off your credit card bill.

 

[DISdreamin']

Hi just to start off I make around 45k per year and live pretty much 1 pay check ahead (I could afford to be off for 1 week with out a pay check)

family info
me husband about 35 yrs works full time
wife 36yrs stay@home mom
DD 9yrs
DS 7yrs

I owe $41,000 on my mortgage and about 25years to go

monthly bills about 1,100

2 cars 2002 mini van High miles
1992 subaru low miles 76,000 body rotting off frame

credit card bills about 5,000 payoff amount


so If you were to get a check for $15,000 what would you do w/ it?


Ps Dis Vacation is very high on list ($5,000)

One word - savings. (ETA: Save whatever is left after paying off the CC!)

Just a FWIW, I can't imagine ever spending $5,000 on a WDW vacation. When we went, I think the total was just over $2200 including everything (spending money, hotel, dining plan, tix, etc.). $5K is an awful lot, unless airfare from your area would run super-high. For us, that would buy two WDW vacations if we were careful and budgeted right.

 

[dr&momto2boys]

If you don't have any other debt, I'd put 3 months living expenses into an interest bearing savings account or something else pretty liquid. Take a vacation--but don't over do it. Use the rest to pay down your mortgage. Start a plan to put some money into emergency savings each month for when those cars konk out or other emergencies. Good luck!

Edit: Oh, I missed the $5K CC debt. Pay all of that off and start putting what you were paying toward it into savings. Don't ever use a CC again. Take a vacation, but really budget it! You'll feel proud of yourself and the deal you find, and have a ton of fun too!

 

[bucket o' butter]

First and foremost, I would pay off the credit cards and then put the rest in an account that earns a decent amount of interest. Use it as your "emergency fund". Start saving money for the Disney trip and try not use any of the $15,000. At some point you will probably have to get a new (or new to you) car. If possible, start saving now for a down payment when the time comes to get a new car. You need to have some money in the bank for emergencies and I would try to save as much of the $15,000 as possible. But definitely pay all of the credit card bills. Good luck!

 

[RitaE]

I'd say $5k to pay off the cc, maybe $2 to $3k for a family vacation and the rest in savings. Your savings are extremely anemic given that you are the sole support for your family.

Your mortgage looks to be extremely reasonable but you have a car problem. You need to address your vehicle issue. After all that is there room in your budget to start putting $200 to $300 a month away to save for a car? Because chances are very good that you are going to be having a $200 to $300 car payment in the very near future which I think you know. Save now or pay later.

And then we haven't even gotten into the issue of retirement/college savings.

 

[RumpleMom]

Pay off credit card completely.

Put $5,000 away in savings for emergency cash fund.

Start a college fund for both kids, so you are putting away something each month- get started with $50 each month.

Take the Disney vacation. A WDW vacation can be taken on less than $5,000.
You will have a wonderful time without breaking the bank for the vacation. You will need to cover transportation, room, food and park tickets. We have visited WDW and the kids knew they could buy a t-shirt and one reasonably priced stuffed animal. That is all we spent on souvenirs. We took boxes of cereal for breakfast and bought milk at the food court each morning. The other meals were counter service and we shared many meals without feeling deprived because portions are big.

We had a fantastic time making family memories.

 

[pyrxtc]

pay off the credit, trade in the car with some cash to get a better one and use $3,500 to go to Disney. A family of four shouldn't be $5,000. I have done it for cheaper with my family of 6.

 

[ceecee]

If we were living only one check ahead of paycheck to paycheck....I would save ALL of it and not take a vacation (at least not to the tune of $5000). Paying the cc would be next and really cutting expenses would be high on my priority list. You may end up needing a new car soon.

 

[Planogirl]

Does your house need any repairs? Are your appliances in good shape?

If so I'd pay off the credit cards, take $500 for some mad money or to get smaller things you need and put the rest in savings.

 

[christinec68]

First and foremost, I would pay off the credit cards and then put the rest in an account that earns a decent amount of interest. Use it as your "emergency fund". Start saving money for the Disney trip and try not use any of the $15,000. At some point you will probably have to get a new (or new to you) car. If possible, start saving now for a down payment when the time comes to get a new car. You need to have some money in the bank for emergencies and I would try to save as much of the $15,000 as possible. But definitely pay all of the credit card bills. Good luck!

This is exactly what I was going to say.

 

[Cheshire Figment]

What is the source of the money? Specifically, is it taxable or not?

If it is taxable pull your copy of your 2009 Federal and State returns and see what the additional tax would be if you had that amount of additional income, so you are prepared to pay the tax.

Take the available amount ($15,000 if not taxable or the available amount after taxes if taxable), pay of the credit cards of $5,000, add what you can to your retirement fund, and the balance into a reserve fund.

 

[a1tinkfans]

get that cc paid off, have minimum 3 mos reserve cash in a bank somewhere and save some for upcoming expenses, like car/house issues.....

sorry, I am not one to say spend 5K on a vacation (to anyone) when you can't truly afford it ...with debt and no back up $$....thats a scary way to live IMHO,

Best of luck to you!

 

[amylevan]

What would I do:

$5000 - pay off credit card debt first
$3500 - savings account as an emergency fund (about 3 months of bills)
$3500 - put in savings account for a car fund

That leaves about $3000 for a Disney vacation (or some other family fun). That is more than enough for a trip.

Of course that assumes this is non-taxable. If taxes are owed, I'd advise to drop the trip. (But without credit card debt, you can now save for a trip.)

 

[SandrA9810]

He said hypothetically....

hypothetically, I'd be staying at the Wilderness Lodge for two weeks, annual passes, and dining plan... yeah that could run up to 5 grand.

5000 for the credit cards and 5000 for a decent used car, and if you can get anything on one of your trade ins.

 

[trip]

I would pay off CC debt, put 8 months in emergency fund, put the rest on a different car and start a vacation savings account. Disney will always be there.

 

[Luv Bunnies]

If you're only ahead by one week's pay, it's time to do some major saving. My DH was laid off just over a year ago and has yet to find a job. My part time salary and his unemployment check just cover our monthly expenses. Anything else we need has to come out of our savings. We're very lucky to have a healthy savings account and are very glad we made saving a priority.

With $15,000, I would suggest paying off the credit card to avoid accumulating any additional interest. Then I would put the rest in a savings account. I would definitely not take a Disney trip at this point. You never know when you might need that money for day-to-day expenses.

 

[dvcgirl]

Your income is pretty low, but so are your expenses, which is a good thing. The problem is that you seem to be living above your means a bit with 5K in CC debt. An even larger problem is that you are living just one paycheck ahead of financial ruin. If you lose your job, or are injured, you guys are toast. And you have two cars that are older.

I think your only option is to pay off the CC debt and put the remaining 10K in an emergency fund. You may need to use some of that money in the future for car repairs.

Then I'd start saving for a vacation. A $5,000 vacation in your situation is financial insanity. If you feel the need to splurge on something, then perhaps take $500....$1,000 tops and get away for a long weekend which should be doable. Perhaps take $1,000 and put it in a Disney fund and save up and pay cash for the rest. It would give you something to look forward to, and you'd prove to yourselves that you could save the money to go.

I just think you'll sleep much better at night with that 10K in the bank....think about it, if something was to happen with your job, that takes care of your family for 8 months....that peace of mind is worth far, far more than a huge splurge of a trip (which is what a 5K trip is on your income).

 

[crisi]

Like everyone else, I'd pay off the credit cards and save the rest. I agree that spending that much on Disney in your circumstances is a really poor idea. And the advice to check the taxability is good - I know a lot of my friends who have gotten windfalls have forgotten about taxes, and needed to come up with thousands months after the money was spent.

 

[nunzia]

I'd pay off the CC, take a trip, but not for 5K..you can certainly do Disney much cheaper, say less than $3,000, and then save the rest and do not touch it unless there is a true emergency. Then, take whatever you were paying on that CC and put half into savings and half into car fund. Do not let that CC being paid off boost your income to spend..let it boost your savings.