Home     Forum     401k     401k Rollovers
    Register   Login   Members   Search   FAQs     Recent Posts    




Debt Payoff with Small Inheritance

Reply to topic
Money Talk > Personal Finance

Author Thread
NTQJosh
New Member


Cash: $ 0.65

Posts: 3
Joined: 27 Jan 2016

Debt Payoff with Small Inheritance  Reply with quote  

Hello - I found out today that I will have a small inheritance coming to me ($17,000) and I would like to use this as wisely as possible.

Here is my current debt situation:

- $11,000 car loan (highest interest)
- $5,000 tax bill
- $25,000 student loans
- $15,000 hospital debt

My thought is to pay off the tax bill and car downright. This will essentially eliminate the money, but it will get rid of the inevitable taxes and the highest interest. Then I can put that money from the car payment towards my student loans.

Thoughts on this? I would like for the money to be invested where the return would protect the principal and still give me enough to pay at least one bill a month ($300/month or so) but I don't foresee that being probable.

Thanks for any input!
Post Wed Jan 27, 2016 1:37 am
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 715.40

Posts: 3479
Joined: 21 May 2006
Location: arizona
 Reply with quote  

Hi and welcome.
A little more info please, did the student loan result in a good job? Good pay?
What is the interest on the car loan?
And do you rent or own?
Post Wed Jan 27, 2016 3:58 am
 View user's profile Send private message
NTQJosh
New Member


Cash: $ 0.65

Posts: 3
Joined: 27 Jan 2016

 Reply with quote  

Thanks for your response. The degree did land me a great job in the industry I love but I'm stuck in a low salary city for a variety of reasons.

I rent, and the interest on my auto loan is high...like 15%.
Post Wed Jan 27, 2016 4:27 am
 View user's profile Send private message
christcorp
Preferred Member


Cash: $ 38.85

Posts: 194
Joined: 05 Mar 2015
Location: Wyoming
 Reply with quote  

Obviously, pay the tax bill. You don't want to mess with that. Next, pay off the car loan. Interest is too high.

Then, take every penny you were using on the car loan, and put it towards eliminating the hospital debt. Add also the payment you were making on the hospital debt. You should be able to eliminate that within a year or a little more. Continue paying the college loans as you have been doing.

Then, when the hospital debt is gone, take the car payments and the hospital payments, that no longer exist, and add that to your student loan debt. You should then be about debt free within another year.

It is better at your age to live paycheck to paycheck for a couple years and eliminate all $50k+ in debt. Then, you can start debt free and build for your future. And with having gotten use to not having the money each month that you were spending on all that debt, it will be like a giant pay raise. You can then give yourself some of that each month to improve your standard of living, and use the rest, that you weren't use to having, to invest towards retirement, house, or other investments.
Post Wed Jan 27, 2016 11:50 pm
 View user's profile Send private message
NTQJosh
New Member


Cash: $ 0.65

Posts: 3
Joined: 27 Jan 2016

 Reply with quote  

Thanks for the reply. That's kind of what I was thinking. I had heard that hospital bills might be written off if you are only paying a small amount each month and that debt would be cleared. That makes me want to more aggressively attack the student loans next. Thoughts?
Post Thu Jan 28, 2016 2:46 am
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 715.40

Posts: 3479
Joined: 21 May 2006
Location: arizona
 Reply with quote  

quote:
that hospital bills might be written off


'written off' means that they are deducted from hospital revenue as bad debt. The hospital still has to pay for the service that they provided. And that means that the bill is spread across all other clients, ie, the costs go up for everyone else.
Post Thu Jan 28, 2016 7:14 pm
 View user's profile Send private message
christcorp
Preferred Member


Cash: $ 38.85

Posts: 194
Joined: 05 Mar 2015
Location: Wyoming
 Reply with quote  

Totally agree with old guy. I believe a person should HONOR their debt. If you don't pay back a debt, that means someone else WILL. Sounds great when you hear these commercials how people who owed $10, $20, $40K in debt or taxes, was able to "Settle" their debt for a fraction of the original debt. Sounds good for the person with the debt, but that's dishonorable and shameful in my opinion. I have no problem with trying to work out a "Payment Plan" if needed, but to try and get out of a debt that is legitimate and you gained from; (Buying goods or services); is shameful.

Follow what's been suggested, and you can be debt free in a short time. You will feel better about yourself, and you'll be able to then invest a large amount of money each month that you weren't use to having, so won't miss it. You'll be a better person for it in the long run.
Post Fri Jan 29, 2016 2:17 pm
 View user's profile Send private message
GardenCat
Full Member


Cash: $ 11.60

Posts: 58
Joined: 07 Dec 2014
Location: Colorado
 Reply with quote  

One more thing.
If your job has a retirement plan, use it! Especially if there is a match for your contributions. If the match is say up to 3% of your salary, then contribute at least that amount every paycheck into the retirement plan - you get immediate 100% return on your investment and that will buffer whatever the market does in fluctuations. Whatever the % is, contribute that amount.
Post Fri Jan 29, 2016 5:09 pm
 View user's profile Send private message

Reply to topic
Forum Jump:
Jump to:  
  Display posts from previous:      





Money Talk © 2003-2016