I agree with #3 as the ideal option, but I also share aida2003's concern. Why do they have CC debt nearly equal to their annual income? That's a lot of debt.
If the debt situation has been taken care of, then take the 20K and pay off all the debt. That will free up $800/month. They can use that to build savings for an EF and a downpayment.
Just be sure that they have stopped using CCs to buy things they can't afford.
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Steve
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
* The world is a book and those who don't travel read only one page.
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