hypithetical Question about reciving a large sum of money

[okeydokey]

First pay off the credit card. Put the rest into savings. You'll be needing a car soon. Vacation should be put on hold until you are on a more secure financial footing with an emergency fund in place.

Spending $5000 on a vacation when you live paycheck to paycheck is ludicrous.

 

[MrsPete]

$5000 to get rid of the credit card debt -- this will save you money every month; start putting that money into savings -- this might end up being for cars, college, whatever . . . but start saving what you've been paying to the credit card company. Hypothetically, this is a great opportunity to wipe out credit card debt in one fell swoop; most people don't get this opportunity.

And, of course, it goes without saying, don't run them up again! With that credit card bill gone, you're going to find your budget easier to live with. Saving isn't as hard as paying a bill -- it's rewarding to see the magic of compound interest working in your favor.

Having been responsible with that first $5000 . . . use $2000 for a Disney trip. That's plenty for a reasonable trip (not a luxury trip, not a bare-bones trip). With these numbers, that's realistic. You can't squander this hypothetical opportunity, and you'll have just as much fun with a moderate trip as you will a luxury trip -- and no guilt later.

And the remaining $8000 needs to go into savings. You don't have a lot of savings right now, and it sounds like BOTH of your cars may need replacing. I would not do this until the wheels fall off (and they don't make them any more) because you're not going to get much of a trade for a high-mileage van or a rotting-away Subaru. So keep going with what you have for now, and put this $8000 away for the day when you're forced to get something new.

Also, as the mother of a 13 and a 16 year old, I must warn you that your kids are in the "cheap stage" right now, but that's going to change in the fairly near future. Braces, cars and insurance, and college will be realities for you sooner than you think (I'm not particularly indulgent with my kids' wishes, but teens are more expensive than you expect). If you're just making it now, you're going to fall behind when those big-ticket things come your way. That $8000 financial cushion will help you, but you need to find ways to build it every month. Your kids are both school-aged now; it might be time for your wife to find a part-time job. It'll be better to do this before you hit those teen years.

As much as I believe in paying off mortgages ASAP, in your case, I think you need the savings more. Your mortgage isn't all that high in the first place, and you're able to pay it now. On the other hand, your vehicles are likely to become a crisis in the next years, and you need the emergency savings.

 

[hanutedmansionmomma]

I'd say $5k to pay off the cc, maybe $2 to $3k for a family vacation and the rest in savings.

Paying off the cc will save you 150+ a month, right? You could put that amount aside each month until your cars are really dead...

I would TOTALLY go on a trip.

 

[DISdreamin']

Paying off the cc will save you 150+ a month, right? You could put that amount aside each month until your cars are really dead...

I would TOTALLY go on a trip.

Or you could put the $150 a month away until you have enough in a designated vacation account to pay for a trip. Even bigger IMO!

At $150 a month, plus whatever additional you can scrounge, you should be able to plan a trip for 9-12 months out and pay for it with money earmarked (mouse pun intended) for a vaca rather than eating up money that IMO should be part of an emergency fund. With two older vehicles, having only a few thousand in savings doesn't seem smart.

 

[3girlsfun]

$15k

I would do the following:

$5,000 to pay off CC
$3,000 for Disney vacation
$4,000 to Savings account that Cannot be touched unless it is 100% necessary

That leaves $3000 that I would put into a car fund. You are going to have to get a new car eventually, or there will come a time when the repairs are more than the car is worth. I would be prepared to buy a new to you car at that time.

I 2nd the part time job for the wife. I would bank everything she makes for things like a car fund, vacation budget, and home repairs.
(And I might give the family $100 a month for blow money!)

 

[NHdisneylover]

Assuming this is after taxes and you have some sort of emergency savings for thigns like broken applainces and car repairs:

$5K credit card (this is pretty much unanimous isn't it)
$7500 in a savings account to be used for a car when the time comes)
$2500 for a vacation or other fun treat (WDW can be done on this if you are smart about it)

take all the money you have been paying toward the credit car and start putting it into savings every week.

 

[wdwfan16]

I would pay off the CCs, sell the rust bucket, put $5 into an emergency fund and buy a newer used car that I could pay cash for with the money form the rust bucket and the other $5K.

Your wife needs to get a job. Save from her check and when you have enough to to WDW.

 

[eliza61]

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.

LOL, thanks Sandra,
My vacations routinely run 5K.

Anyway op, I would probably split it. Pay off credit cards, get at least 3 months living expenses in the bank. I'm a great believer in vacations so I would put 2k in a savings account and then save up the other 3 toward my vacations. If you're car is still running, keep it running. I have a 12 year old maxima that has over 200K miles on it. I'm not buying a new one until my feet fall through the floor board.

 

[disneymarie]

I am in almost your position , the numbers are a bit different, I have a student loan and no credit card.

I am paying the loan, we need to replace a car. The rest is going into savings. We sooo want a trip to Disney. Not DH, the younger dd and grandson. So I am working PT to top off a trip.

 

[DawnM]

I am agreeing with the others here:

Priority List:

CC paid off: $5,000
Emergency fund funded: $4,000 or so
Car fund started: $4,500

Disney: $1500-$2000

Disney is WAY down the list......although if I really, really wanted to go, I would do a frugal trip and enjoy anyway! We can typically do Disney on $1500 including gas, food, and dog sitting if we are on tight budget, for a family of 5. We still love Disney just as much and the magic is there whether we have spent $1,500 or $5,000.

Dawn

 

[dzorn]

Pay off credit card (do not let accumulate balance again) then the rest in savings for emergencys.

Denise in MI

 

[daddyof2]

so here is some up dates

my 401k is in very good shape

the money would be not be taxable actually the money is comming from the reason I have the cc debts

my last and disny trip cost us about 4,000 for air,room (at pop)+ disney dinning plan) and spending money witch was 700 @ disney I figured a mod hotel and rental car bec. wife Hated the busses (I didnt mind ) our trip was in early Dec. of 06 the 5grand is a ruff budget I WILL be watching dings like crazy and every thing I can to save $$

about my job I work in a cocoa factory the building is brand new only half built I was the 7th person hired ther is now 220 people the company is spending a lot of money there is no worry of layoffs or closing Im pretty shure of my job I
should be up to 50 to 55k per year in the next year to year and a half and if all goes well promoted to supervisor starting around 60K

the cc is going to be paid off

the vacation is very important and the auto is in the back of my mind I live 7 miles from work and could car pool easily so excpt for getting a new to me van for the boss (wife) my 92 subaru w/ 76,000 miles should last since I only put about 4000 mile on it per year

Im sorry for not giving this much detail before but didnt think yall would go so deep (YOU PEOPLE ARE THE BEST)
my life was in much better shape about 2 years ago and finances were in check Now things are gettting back to normal my fnancial situation Should get better soon

the 3 month or longer emergency fund is a great Idea that will be done as well

thanks all and any more ideas would be good as well hopefully the 15g will become larger but it currently is in the dream Phase as there is a long way to go with it could be this year could be in 3 years maybe more.

But it is nice to dream and start planing

 

[daddyof2]

just another add

I bought my house about 5 yrs ago for 52,000 and didnt get the house for 180,000 that the bank pre approved me for
I knew I couldnt afford a house for that much even though I was told I could my rent was 500 month and I wanted my mortgage lower then that now its 380 per month and I pay a min. of 400 per month

 

[Colleen27]

Just as a fair warning, I'm probably more of a "spender" than most budget boarders, in that I'm not one to put off travel and other extras until that "someday" when the financial picture is all wine & roses.

I'd probably split it 3 ways - CC payoff, savings, and trip. The savings needs to go somewhere fairly liquid just in case you need to shop for a car or deal with another emergency need. With the CC paid, you can start putting the amount you're currently paying on the card into the same account to build up your savings over time. Your bills are low and your employment situation sounds fairly secure, so I don't see why enjoying some of your "windfall" would be such a bad thing.

 

[Colleen27]

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.

I think you're WAY underestimating the costs! Airfare for a family of 4 is likely to run about $1000. Tickets are another $1200. Basic dining plan is $110/night. Assuming a weeklong vacation, a family of 4 is at $3000 before even thinking about resort choice or spending money.

 

[SandrA9810]

Ok, well i've been doing disney discounted for too long. And living so close to Disney, I forget about airfare and all that other stuff.