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New money
I have always been in dept. I have student loans, credit cards, auto loan and other tipical debts. About $45,000 worth. I recently moved from N.Y.C where I owne a home to North Carolina where I purchased a home. I have $170,000 in morgage hear with an intrest rate of about 8%. Now that I have left NYC I sold my home in N.Y and have about $90,000 to try to get myself right. My biggest question since I have never been in a position other than owing is if I should invest ? (and what in) Or should I pay off and how to reduce my morgage payments. About $1,500 mounthly.
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Re: New money
Paying extra towards your mortgage won't reduce your mortgage payments (unless you refinance). I assume you meant that your payments are $1,500 a month (not $15,000)?
Pay off your credit cards and other revolving debts first. Paying extra on your other loans (auto, student, mortgage) depends on what interest rate you're paying.
I assume you don't have an emergency fund? You should set aside about 4 or 5 months worth of monthly expenses in a high-yield savings account such as ING or HSBC. -
Re: New money
If it was me, I'd take 45K and pay off all the debts, and then put the other 45k into savings and/or investments. It would depend on how much you have in savings already. With as much debt as you have, I wouldn't even think about paying extra to the mortgage until those others debts were eliminated.Comment
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Re: New money
I would take 45k to pay off the debts. With the remaining 45k, I would establish an emergency fund and invest the rest. This would really get you going on the right track. Also, try not to use those credit cards anymore so you don't wind up with that debtload again. Good luck!Comment
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Re: New money
I would pay off all my debts (thus allowing me to put all that money usually paid toward everything else as an extra toward my mortgage with out sacrificing any of the 90k and paying off the mortgage earlier.)
then I would put the maximum allowed into my ira for the year to gain the maximum investment possible for this year and begin saving 335 per month to fully pay it next year in January for all of 2007 and continue this cycle to maximize investments in my IRA.
I would set asside 6-9 months of living expenses into a high yield savings/money market account that I know is secure.
Then i would take the 30 k or so left and investment with a good investment representative and work toward being able to have a better retirement or retire early.Comment
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Re: New money
I agree with everyone. You need to pay off all debt first and don't allow yourself to get back into debt. With house payments that high, you need 6 months of earnings in a savings account. Then I would fully fund a roth ira. I would start reading and learning all you can about mutual funds so that you can begin investing when you have gained the knowledge. That is how I learned to invest, I just bought books and magazines and started reading. I don't really want to take another person's advice that I am paying.
I signed up at Edward Jones to buy some stock and found I knew more about investing than the rep did.Comment
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Re: New money
Knock out that debt!Comment
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Re: New money
Is your interest rate on your mortgage 8%? I would try to refinance that and add 45k to the house. You would reduce your monthly mortgage payment.
I would take the other 1/2 and establish an emergency fund, make your 2005 and 2006 Roth IRA contributions, and pay off your debt. And of course cut up the credit cards.
Good luck!Comment
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Re: New money
Nothing like joining a bandwagon. Pay the debt firstComment
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Re: New money
I'd pay off the debts. But...you didn't mention the rates of the debts, the value of your home, how much you were able to pay down, etc. Do you have PMI, other expenses to reduce? Is the rate on the student loan lower than the rate you would make on an investment?
Assuming you just purchased the new house, refinancing may just dump on many extra costs that you just paid. Check your mortgage, there is often a clause for a one-time-only recalculation of debt and payments. If so, you can put money against the house, and either keep the monthly payments to pay off sooner OR have them recalculate payments over the same period on the reduced debt.
Pay off credit cards and high interest loans immediately, or at a minimum transfer them to 0% accounts for a few months while you figure out which option is best.Comment
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Re: New money
CC and high interest first,
Have an emergency fund for 3-6 months...then turn rest to IRA or mutual funds...my .02 cents....
plus take 5% for your fun!Comment
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