27 year old with $20,000 from will. But a lot of debt. Help

[Pequa58]

This is my situation:
$90,000 in student loans.
$8,500 in credit card debt.
$10,800 in car loan.

I make$ 70,000 a year at a job I hate and have been there for 3 months so far. I received a check from my grandfather's estate for $20,000, and I don't know what I should do with it. I would like to get into income properties or perhaps get a duplex and rent but I have a lot of debt.

Plan A -- pay off car, and credit card. Saving me 600$ a month. Then sell the car ($14,000) and purchase a beater for 3-4k. I will then only have to worry about rent( 1200 all utilities included) and my student loans.

Plan B -- Put 20,000 in 90 day CD with 1.5 % and continue to pay down my loans. And revalueate after 90 days.

Help I need ideas , I might never have this chunk of change again. I need this money to improve my life.

Thank you so much

[Leo]

What I would do in your situation is pay off credit card debt and car loan.

The decision of selling the car and replacing it with a beater is up to you. Keeping it after paying it off is also okay in my opinion, as long as you maintain and drive it til it dies.

Then I will save a temporary emergency fund. Dave Ramsey step 1 is to have at least $1,000 then paying all your loans except if you have mortgage. Depending on how secure are you on your job and how quickly can you find another one in your industry in case something happened. In my case, I would save at least 3 months of emergency fund then attack the student loan aggressively.

When you're debt free, save 6 months of emergency fund. Owning a property is long way to go. Goodluck.

[Petunia 100]

I would like to hear more about your job. You "hate" it. Is it the particular employer, or are you not enjoying your line of work? What would it take to make a change?

We spend an awful lot of our time at work. It is important to do work that you enjoy. If you can't do a job you love, you at least need one you don't mind. You're only 27. You have an awful lot of miserable years ahead of you if you don't fix your work situation.

[HappySaver]

What are the interest rates of the student loans, credit cards, and car loans?

Keep it simple: use the $20k to pay off the loans with the higher interest rates.

The CD makes no sense unless all your other debt is under 1.5%, which is doubtful.

If you don't already have a small emergency fund you may want to keep around $6k in savings; without knowing your exact expenses that's a ballpark 3-month EF.

[disneysteve]

The CD makes no sense unless all your other debt is under 1.5%, which is doubtful.

I think OP's point with the CD was that this was a sudden windfall and he/she isn't sure what to do with it and it might be better to park the money for a short time to research the options rather than rushing into something. Many financial advisors suggest doing this with inherited money. Grieve the loss of your loved one. Don't make a snap decision that you might regret later. Taking 6 months to think about it isn't going to change anything in the grand scheme of things.

It's easy for some of us to say how best to use this money but for OP, 20K may be the largest chunk of money he/she has ever had. I can understand some hesitancy in wanting to use it the best way possible and not blow it.

[Jluke]

Good to see that you are planning to put this 20k to eliminate debt.

Please provide the monthly payment, Interest Rates and length of time remaining for each loan.

If you are going to sell the car, sell it. don't pay it off first since you'll net 3k or so based on the info you provided.

Your best bet may be to wait a month to figure out your plan. if you need more time in a month, put it in the 90-day CD.

However, I would treat it like a math problem. 20k is a good chunk of money and you need to figure out how you will get the most bang for your buck.

The credit card debt, student loan, car loan would probably be my order of priority even without knowing the interest rates, loan terms.

hope to hear these details - good luck!

[Pequa58]

Thanks for all the positive replies

I cannot express how much I appreciate all the detailed responses. To add a little
More detail to my situation I will give some specifics.

$10,800 on the car is 1.69% ($401 a month).
$8,500 credit card is a discover card with 12% (min 189 a month)
My student loans are consolidated with 6.5% interest. ( monthly payments are $312). Paying 750$ a month.

As a person who did not come from money, this $20,000 has to be used to better my entire future, and as some
Of the views said I am very nervous as to what to do with it.

In terms of my job I work in a highly stressful 65+ hour a week job which essentially has sucked the passion out of my life. I have worked very hard to get this position because I want to pay my student loans off, however I really dislike it. I am
Currently looking for more fulfilling jobs in which I can help people, and serve humanity-- however those jobs don't pay much haha.

Thanks

w

[Jluke]

$10,800 on the car is 1.69% ($401 a month).
$8,500 credit card is a discover card with 12% (min 189 a month)
My student loans are consolidated with 6.5% interest. ( monthly payments are $312). Paying 750$ a month.

Pay off the credit card first. Keep the remaining 11.5k for EF/savings and to afford any work-life changes. Having this cushion will give you some peace of mind, which can be priceless.

As for where to put the EF, CapitalOne360 could be a good choice (0.75% interest). Depending on your current savings, you can also consider using some of the 11k to start a ROTH IRA for your future self.

Good to see you are paying extra on the student loan. Ride out the car loan and enjoy the vehicle!

[Weird Tolkienish Figure]

Life is too short to do a job you actively hate.

Why? What keeps you there?

If it's debt, break your damn bondage, pay off your loans, and quit this Godforsaken job you hate and live your life to it's fullest, man!

Why live life any other way? I don't get it!

[Pequa58]

I am torn between paying off all my debts or risking it all and investing my windfall, hoping it will pay off.

[pflyers85]

I would probably pay the car loan and CC off and keep the car and drive it until it dies. Even if you sell the car for $14,000 and buy a $4000 car you still have $80,000 worth of student loans. $80,000 is better than $90,000 but its not a significant difference. Especially when you factor that it will take you another 6 years at least to pay off the student loan (assuming you use the $600 saved and add it to the $750 you are paying now). Outside of an accident or unforeseen issue your $14,000 car should easily last you another 6+ years. A $4,000 car depending on how much you drive may not.

If you don't have an emergency fund saved up with 3-6 months of living expenses I would use the extra $700 from the $20,000 to get started. Pay the minimum ($312) on the student loans for the time being and use the $600 saved and $438 ($750-$312) to get your emergency fund fully funded as quickly as possible. Once you have done that you could resume the $750 payments plus the $600 saved. Paying $1350 a month you will really start making a dent in that student loan and you can get it paid off before you turn 35.

[riverwed070707]

Pay off the credit card first. Keep the remaining 11.5k for EF/savings and to afford any work-life changes. Having this cushion will give you some peace of mind, which can be priceless.

As for where to put the EF, CapitalOne360 could be a good choice (0.75% interest). Depending on your current savings, you can also consider using some of the 11k to start a ROTH IRA for your future self.

Good to see you are paying extra on the student loan. Ride out the car loan and enjoy the vehicle!

x2

The car loan rate is too low to make it worth dumping your whole savings into it. I would pay off the CC and put the rest in savings and then consider paying extra on your student loans with what would have gone toward the CC and anything else you can scrape together. If you really want to hack at it, I'd sell the car and get something cheaper to eliminate the payment but def don't just dump $10k just to be rid of a 2% loan

[Pequa58]

My only concern is the reliability and eventual headache of repairs on a 2009 Jaguar XF with almost 80,000 miles on it.

[sblatner]

You can get 1% interest at Barclays Bank USA or .99% at Ally Bank. I have used both of these for a few years now with no problems.

[tripods68]

Plan A -- pay off car, and credit card. Saving me 600$ a month. Then sell the car ($14,000) and purchase a beater for 3-4k. I will then only have to worry about rent( 1200 all utilities included) and my student loans.

Stick to PLAN A which is my advise but you beat me to it.

Then start tackling your student loan.