Getting $16K. Need financial advice.

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nitrousninja

Golden Member
Jun 21, 2000
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My company is getting bought out but I'll still have my job at the same pay but they dont do a "Cash Retirement" like this company does so I'll be getting a check for it. Here's the thing: I really want to stop renting and buy a condo or townhome. With this money I can pay all my debt of minus the car('03 Cobra) and then I can easily save $1K+ a month by not having the payments and that would give me lots of time to look for the right place as I save. It would take around 16 months to get rid of the debt at $1K a month and I wouldnt have a lot saved. Obviously paying it off now would get rid of the finance charges over the 16 months. I would think a loan would be easier to get if I was away from payments for awhile.

OR should I roll it into something and let it grow for a while and pay off the debt the way I have? I have WAY more experience in spending than saving. Any advice would be greatly appreciated. Thanks in advance.
 
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Double Trouble

Elite Member
Oct 9, 1999
9,270
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I'm not sure from your post exactly what funds you'll be getting, but make sure you find out what the tax consequences are going to be. If you have funds in a 401k or other retirement plan, taking them out without rolling them over into another retirement plan (like IRA or some other plan) could make you get taxed and penalized for a significant amount. I don't know the details of your situation so I can't provide more specific info.....
 
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spidey07

No Lifer
Aug 4, 2000
65,469
5
76
or balance/split it up somehow.

We need to see what your overall goals are. I would think getting a house would be number 1 and paying down debt number 2.

But then again if you're carrying 16K in debt (and don't own a home) I'd say getting rid of that would be a big step in the right direction.

If you're only carrying a few K then go ahead and get the house.
 
KK

KK

Lifer
Jan 2, 2001
15,903
4
81
What if you die in one month? Go ahead and get yourself something nice, like a tractor.

KK
 
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Mr N8

Diamond Member
Dec 3, 2001
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Pay off the debt. It will make a home / condo loan a lot easier to get, and you will be able to save the down payment.
 
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Elbryn

Golden Member
Sep 30, 2000
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In order for the invest the money in something instead of paying off your debt, you would have to get a higher return on your money than you are currently paying in interest. If you are holding credit card debt, that wont work as you would need something like 25% investment return to overcome the high interest of CC debt. If you are holding 2% student loans, investing the money in something reasonable would get you a decent return. If you feel you arnt that good at managing your money and spend too much, pay off your debt, cut up your credit cards, open a separate savings account(ING direct) and pay yourself a fixed amount every paycheck. Then use a debit card to pay for things. If you get a house now, you 95% of the time end up paying more than if you were renting when you add up mortgage payments, taxes, and maintanance/improvement costs. Dont rely on the tax deduction because it doesnt come close to evening out.
 
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spidey07

No Lifer
Aug 4, 2000
65,469
5
76
Originally posted by: Elbryn
In order for the invest the money in something instead of paying off your debt, you would have to get a higher return on your money than you are currently paying in interest. If you are holding credit card debt, that wont work as you would need something like 25% investment return to overcome the high interest of CC debt. If you are holding 2% student loans, investing the money in something reasonable would get you a decent return. If you feel you arnt that good at managing your money and spend too much, pay off your debt, cut up your credit cards, open a separate savings account(ING direct) and pay yourself a fixed amount every paycheck. Then use a debit card to pay for things. If you get a house now, you 95% of the time end up paying more than if you were renting when you add up mortgage payments, taxes, and maintanance/improvement costs. Dont rely on the tax deduction because it doesnt come close to evening out.
Click to expand...

Getting an extra 500 bucks a month from buying a house more then evened it out for me. Also having long standing accounts with his credit cards is a good thing.

It all depends. Having debt is not a bad thing if managed properly.
:)
 
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Shockwave

Banned
Sep 16, 2000
9,059
0
0
I'd pay off debts as this is the biggest obstacle in affording the house you want. In my case, I was approved on a loan *almost* as much as a guy I work with who has a combined household income of around twice what mine is. Why? I have 1 debt counted against me for a home loan. My student loan. He has 2 car payments, child support and student loans. While the small payment you make each month for debt may not seem like alot to you, they can weight quite heavily in a home loan. And it really sucks to know you just cant get approved on a loan for the house you want, and your only short by 10 or 15 grand cause of some rinky dink little debt you have,
 
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Shockwave

Banned
Sep 16, 2000
9,059
0
0
I'd probably save about 5k of it in a house fund if your serious about getting a house, unless its going to be a while before you go looking. My total costs from start to finish to close were right around 7 grand.
 
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