Advice for getting my finances in order

[rex2643]

Hi all - First time here I and I was hoping to get some advice from you guys. My wife and I have recently finished paying off our credit card debt and are looking to figure out what to do next.

We have 2 car loans - 1) 34k 2% int and 2) 10k 2.5% int
We have a TimeShare with 14k left on it and 8% interest

Our savings is low 5k since we have been working to pay off our cards. We have about 1.5k each month we can put towards stuff like savings or debt. Should we target the timeshare first since it has the higher interest rate? or one of the cars? Also, should we get our savings to a certain area before we worry about paying off the loans? I am not sure how much we should have in savings to ensure we are good for different situations. Any thoughts or advice would be great! Thanks in advance!

[disneysteve]

Welcome.

How much is each car worth? How much do you guys earn? Posting your entire budget would make it much easier to answer your question.

Unless the timeshare is DVC, there isn't a whole lot you can do about that. Those are virtually always horrible purchases. If you can, rent it out each year to at least cover your maintenance fee and hopefully a little profit that you can apply toward the debt.

Without anymore info, it's hard to say but my suspicion is that you've been living far beyond your means considering you have a bunch of debt for luxury purchases. If you can, sell at least the 34K car. Replace it with something in the 5-10K range and eliminate 25K worth of debt in one transaction. That will help a lot.

As I said, seeing the rest of the budget would allow us to give better advice.

[lorraineb]

My advice would be to pay off the timeshare loan asap and sell it asap. You're going to take a huge loss on it, but the longer you have it, the bigger that loss is going to be. Chalk it up to an expensive learning experience...

[dunnrobert700]

Paying off the timeshare is like buying a CD with a guaranteed 8-10% return (depending on your tax situation) so that's an awesome opportunity to improve things. Just keep a little emergency cash (3-6 month's expenses)in reserve than focus on that.

You might want to analyze whether dumping the timeshare after you pay it off is a good idea also. Even after you pay it off, sometimes it turns out that the annual fees just aren't worth the week or two access a year if you don't end up using it like you'd expected.

[snafu]

't Good on you for paying off your credit cards. It's not smart to buy more than you can pay in full by the due date. Interest rates are too high compared to rates on savings. You haven't mentioned establishing an emergency fund or whether you are participating in retirement programs. If your employers offer matching sums for retirement plan, that's free money you're leaving on the table! Emergency fund is dependent on employment stability. Basic goal in easy-to-access savings targets 3 months of expenses. Some people aren't comfortable until they have one year's savings.

I hate 'shutting the barn door after the horse has escaped' but what is the re-sale value of that $ 34K car? It's a depreciating asset and not your smartest decision.

[lindsay06]

You might want to consider debt consolidation? You can go to a site like http://www.debt.ca for more information on your options. At least with a debt consolidation loan, your interest will be reduced so you can get out of debt faster.

[Singuy]

Welcome.

Unless the timeshare is DVC, there isn't a whole lot you can do about that. Those are virtually always horrible purchases. If you can, rent it out each year to at least cover your maintenance fee and hopefully a little profit that you can apply toward the debt.

Hey steve, can you explain how DVC is better investment than other type of timeshare? I was thinking about DVC until they slapped the stupid maintanence fees on..

[disneysteve]

Hey steve, can you explain how DVC is better investment than other type of timeshare? I was thinking about DVC until they slapped the stupid maintanence fees on..

DVC is the only timeshare I'm aware of that has steadily appreciated in value. Folks who bought in early on, or even just a few years ago, can sell their points at a profit. They just announced a couple of weeks ago that the price of points is going up again which will make it even better for folks who already own.

I still do not think DVC is a worthwhile purchase as it costs a lot more than we spend for our Disney vacations and as you pointed out there is the maintenance fee to contend with, but as timeshares go, they are the best.