Where Should Settlement Money Go? (Your Advice)

When you come into some extra money and have debts to pay off, it can sometimes be confusing which ones you should tackle first. I often receive emails like this one asking for advice on which debts should be paid off first:

I’m currently $70,000.00 in debt with credit cards. I also have a mortgage ($121,000.00) and 2 car loans (total $50,000.00). Recently I received some settlement money of $150,000.00. I have 2 grown children (33yrs and 28yrs) and my husband and I have 401k’s totaling $140,000.00. We are only 52 and 51yrs old, still 8 years before retirement.

My question is:

Should I use this money to payoff the credit cards (interest rates range from 8-12%), mortgage(5.5%) or car loans (5-8%)? Help what should I do?

How would you advise this person to distribute the $150,000 in settlement and what other advice, if any, would you add?

Jeffrey Strain

Jeffrey strain is a freelance author, his work has appeared at The Street.com and seekingalpha.com. In addition to having authored thousands of articles, Jeffrey is a former resident of Japan, former owner of Savingadvice.com and a professional digital nomad.