If you found $15,000 what would you do with it?

[chitown_disneylovers]

1. Pay off the credit card entirely. Credit card debt is NO GOOD
2. Open up a Roth IRA with $5,000
3. Take the rest and do a home repair and/or do something fun

Who cares about a car payment?

 

[ICF]

What is your savings status for retirement? Do you have IRA / 401Ks?

I'd take $5K in put it in an IRA. If you have a spouse I'd fund their IRA for $5K as well.

That would leave you with $5K - $10K left.

After that, I'd keep $2K out for a vacation trip or other "fun" stuff and then put whatever balance was left $3K - $8K on the car loan.

 

[ICF]

1. Pay off the credit card entirely. Credit card debt is NO GOOD...Who cares about a car payment?

If the CC loan is 2.9% on $5000 and the car loan has a higher balance / rate then why should she pay off the CC vs the car payment?

For example...If she owes $5000 @ 2.9% credit card or $10000 on a car loan @ 5% (my made up #s for her 2 year old car loan), which one would make the most sense to payoff? Which one is causing her to pay the most in interest?

That answer is easy...pay off the higher balance / rate.

 

[Colleen27]

First of all, I'd set aside a little to do something fun. DH & I have a general guide of 10% of "found" money goes to something purely enjoyable, whether that means travel or some upgrade we've been putting off on the house or whatever.

Beyond that, it would depend on the rate on your car loan. If you got the 0% financing that some were extending, I'd pay off the credit card and put the rest into savings. If not, I'd pay off the credit card, pay down/off the car, and then put the amount you were spending on those payments each month into savings instead.

 

[AmberHeartsDisney]

Pay off the credit card and start an emergency fund if u dont have one. Once you do that make extra payments on the car if possible.

 

[Planogirl]

You could donate a little of it. I try to donate a small percent of any 'extra' money I have.

 

[darthspud]

I'd buy into the DVC and go on vacation lifes to short to just make sure the bills always and only get paid..

 

[sunshine74]

Here's what I would do:

1) take 500-1000 and buy myself some clothes or shoes or a bag - not off the sale rack, just anything I want!
2) increase my emergency savings to 6 mos
3) pay off the cc
4) put the max into an IRA and some my the kids 529 accts (if that applies for you?)

I actually had a similar situation to yours happen when my company was bought out last year and I had a bunch of stock options that all of a sudden became cash. Here's exactly what I did:

1) paid off Marriott timeshare loan
2) finished our basement - this a huge "want" since we moved into the house seven years ago and we were finally able to do it!
3) max contribution to both my and my SAHD DH's IRAs
4) max contribution to both my kids 529s
5) put the rest into savings/emergency fund

We don't have any cc debt, so that was not an issue. We do have a car loan, but it is a 0% loan, so saw no need to pay it off early.

Whatever you decide, you really can't go wrong as long as you don't completely blow it all! Good Luck!

 

[surfergirl602]

Here's the story. I'm going to be getting a tax free check for $15,000. I want to use the money wisely, so I'm looking for advice from the smart money people.

I've been an RN for over 15 years. I work a weekend contract and overtime almost every week. I make an excellent salary and never charge "small" purchases. I use my CapitalOne Miles card for all "big" trip purchases and pay the trips off in full for the next billing statement.

I have money in savings, though not as much as I'd like.

I have a mortgage, but my house is around 9 years old and even in this terrible housing market I have over $100,000 in equity. The payments are affordable because we have a good interest rate and we've stayed put.

I have a car payment. It's a Toyota Rav 4 and it's almost 2 years old with 22,000 miles. This is the first car I've ever owned that I plan on keeping and paying off and having no car payment. I've NEVER not had a car payment!

I do have a large CC bill. It's around $5000ish, but I actually used one of the 'credit card checks' sent to me to buy Disney Vacation club. I pay 2.99% interest for the life of the loan. I've always paid more than double the necessary amount and I've paid around 2/3 of it off in just over a year.

If you were me, what would you do with the money?

Well, if it were me, I would put some in savings and then pay off all our high interest debt first, followed by school loans. We don't have a mortgage as the army pays for that, but perhaps I would also put a good chunk of it towards the rest of our truck payment as well. It's something i would write everything down first, and then decide, based on interest rates etc.
Congrats on the check - I'm jealous! lol

 

[DCLbrideSept2009]

I would pay off debt. If you follow Dave Ramsey's baby steps, step one is $1000 in the bank (baby emergency fund) and step 2 is pay off ALL debt except mortgage. Then baby step 3 is the "fully funded emergency fund" of 3-6 months of expenses. Unfortunately, we are in baby step 2 still (just started Dave Ramsey about 3 months ago) and we are putting every extra dollar toward debt to get rid of it all. Plan on being debt free in about a year or so.

So if I were you, $15000 would first go to car and credit card... anything left would go in savings.

 

[ClarabelleCowFan]

I agree with the posters that say to take $2k to do something "fun" then apply the rest to the higher interest debt then any leftover into savings.

I am curious what criteria goes into figuring an emergency fund for 6 months - is that just mortgage, utilities, food or does that take into account car payment, etc..?

 

[DCLbrideSept2009]

I agree with the posters that say to take $2k to do something "fun" then apply the rest to the higher interest debt then any leftover into savings.

I am curious what criteria goes into figuring an emergency fund for 6 months - is that just mortgage, utilities, food or does that take into account car payment, etc..?

if you use the DR method, you wouldn't have any debt by the time you fully fund your emergency fund, so no, car payment wouldn't be included in that. it would be rent/mortgage, utilities, gas, groceries, etc.... all of your necessary "expenses" if you suddenly had no income, what it would take to live for 3-6 months.

 

[ICF]

I am curious what criteria goes into figuring an emergency fund for 6 months - is that just mortgage, utilities, food or does that take into account car payment, etc..?

Paying no attention to what Dave Ramsey says, I would say an emergency fund of 6 months would need to cover any and all bills that you have to pay in that 6 months.

Losing a job, might cause a reduction in some expenses (such as child care) but you would need $$ to cover your monthly reoccuring expenses...such as food, mortgage, car payments, utilites and the like.

 

[Colleen27]

I agree with the posters that say to take $2k to do something "fun" then apply the rest to the higher interest debt then any leftover into savings.

I am curious what criteria goes into figuring an emergency fund for 6 months - is that just mortgage, utilities, food or does that take into account car payment, etc..?

For us it is everything required to maintain our basic lifestyle - utilities, insurance, food, as well as a few extras that we'd have a hard time doing without (like internet) or couldn't cost-effectively cancel and resume (like our cell contract). If we had mortgage or car payments, those would definitely be included because they can't be postponed/ignored without serious consequences.

 

[Luv Bunnies]

If it were me, I would pay off the credit card or the car loan, whichever has the higher interest rate.

I would put the rest in an easily-accessible savings account (not a long-term CD or IRA). In this poor economy, you never know what's around the corner. I wouldn't plan to blow any of it on clothes or a vacation. If there's anything you need but have been putting off (like a large appliance or other necessity), now would be a good time to buy it.

If you already have a healthy savings account, perhaps you can afford to splurge on something. But if you don't have any savings, now would be a good time to start. When you think about the cost of things, $15,000 isn't really that much money. I think it's best to hold on to it!

 

[asoko]

The first thing I would do, if my income/deductions are going to be the same in 2010 as 2009 is change my withholdings so I get more money each month and don't give the government a free loan.

Then I would do a happy dance.

 

[Mom2micayla]

If it were me, I'd beef up my EF to at least 6 months. Then, I'd use the rest to pay off (or on) the car loan. I'd feel a lot better about putting money down on a secured debt than a credit card, but that's JMO. Then once the car is paid off, I'd hit the cc hard and get that taken care of asap.

 

[tammymacb]

Thanks for the advice everyone. Just read all the responses as I just got home from another overtime shift at work. ( 56 hours this week )

I'm going to have to check a statement as I don't know what's left on my car loan. I know the interest rate was around 5%. When I bought the car and my credit was checked, I had a score of above 800 so I got the best financing that Toyota had to offer at the time.

Oh, and I do have a pre tax 401K at work and before I worked at the hospital I work at now, I worked at a state hospital and I'm already tenured into the state retirement system ( and on top of contributing to the state system, I contributed to a private 401K there also )

 

[ClarabelleCowFan]

Paying no attention to what Dave Ramsey says, I would say an emergency fund of 6 months would need to cover any and all bills that you have to pay in that 6 months.

Losing a job, might cause a reduction in some expenses (such as child care) but you would need $$ to cover your monthly reoccuring expenses...such as food, mortgage, car payments, utilites and the like.

For us it is everything required to maintain our basic lifestyle - utilities, insurance, food, as well as a few extras that we'd have a hard time doing without (like internet) or couldn't cost-effectively cancel and resume (like our cell contract). If we had mortgage or car payments, those would definitely be included because they can't be postponed/ignored without serious consequences.

Thanks. DH and I are in the process of beefing up our EF now - 6 months seems like such a high amount but I guess that is one area you really can't have too much of. DH is Active Duty Army so chances of a layoff are pretty slim and benefits are about as secure as they can be.

OP - Congrats on the $$$.

 

[gerberdaisy1234]

Just to add my two cents (now I guess you have $15,000.02 )

I would give $1500 to charities/acts of kindness, spend $2000 on something fun like a Disney trip, put $2500 in savings and pay $9,000 on the car!

I would have fun dividing up the $1500 in donations. Giving to some places that don't normally get donations like a food bank. Or maybe giving $50 to the hardworking cashier at the grocery store. Or paying for the family behind me at the movies tickets. Or groceries for an elderly neighbor. Hey, this is so much fun maybe I will cancel that $2000 for Disney and keep doing random acts of kindness. Oh wait, I don't have the extra money, you do.

By the way, my DH is a hard-working nurse. I say cancel a few of your extra shifts each month since you now have more in savings and owe less on your car. Enjoy life!!!!