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pay off debt vs necessary home repair

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wmhatt
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pay off debt vs necessary home repair  Reply with quote  

I am a single middle age women who has been divorced for almost 2 years. I got the house in the divorce, because my ex had filed bankruptcy a few years before we divorced. He let go many of the maintenance of the house and many things need fixing. (long story made short) Moving would give me a higher payment and I would have less than what I have now.

I have some money set aside ($6,000)but I am wondering if I should pay off my debt, credit card, bank loan, life insurance loan, daughters student loan, and some small medical bills all coming to around $12,000 or keep saving for a rainy day? I do see a $2000 -$3000 expense coming up this summer.

I keep going back and forth on what I should do everything I read says to pay off credit cards aggressively but I am apprehensive on doing that.

any advice?

Thanks
Post Fri Mar 24, 2017 5:36 pm
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christcorp
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"Paying Off" implies you have enough money to be debt free. Unfortunately, you don't. You say you have about $6,000 saved; and about $12,000 in debt.

First thing is for you to sit down and determine how much each month it's costing you to make the payments on the credit card, bank loan, life insurance loan, daughters student loan, and some small medical bills. Then, based on the interest rates, determine what it's costing you in the end once they are paid off. Chances are, the credit card debt is in the "TEENS" for an interest rate. The student loan is probably in the 5-7% range. The bank loan could be close to 10%. Only you know the answer to that. You need to figure it out. How much you are paying each month and the interest rates.

Then; I would check with your bank or other and see if you can get a consolidation loan to pay off ALL of those debts at one time, and have 1 monthly payment per month. Hopefully a SMALLER payment than you are paying currently with the separate payments.

Once you have this resolved, then get an estimate of what it will cost to do the repairs on the house you need. At the same time, see how much equity you have in the house. Depending on the interest rate for an equity loan or home improvement, this could be another option for taking out enough to pay the $12,000 debt and repairs.

It all depends on:
1. How much in debt you owe
2. How much the interest rates are
3. How much your payments are
4. How much equity you have in the house
5. And what interest rate you can borrow at.

But you'll never do well if you use the credit cards. That is ALWAYS the WORST thing you can do. NO ONE should EVER have credit card debt. Credit cards are only for convenience. If you can't pay off the credit card in full when the bill comes in, you either shouldn't have charged it, or you should have borrowed the money some other way. Never hold a balance on a credit card.

If you can get some of these questions and options looked at, let us know what your choices are. Best of luck.
Post Fri Mar 24, 2017 6:53 pm
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oldguy
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I would start with the house - if you have equity, refi the house. Your goal should be to get rid of the high rate, shortterm debt - and convert to low rate longterm debt.
Eg, $25,000 borrowed on a 12% CC for 5 years requires $556/m to service it. But $25,000 borrowed on a 4% mortgage for 30 years requires only $119/m. That way you cold get rid of all loans except the mortgage.

And I would get rid of that life insurance, 'whole' life costs 8 to 10 times more than 'term' life - if you need insurance for a dependent, use only 'term'.

Don't let the house maintenance get out of control - most small things can grow into major things when you let them go. So put some priority there.
Post Fri Mar 24, 2017 9:07 pm
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wmhatt
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I got two really good answers one about rooting and a very sarcastic reply. For those who replied in a constructive manner thank you.
Post Thu Apr 27, 2017 4:09 pm
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littleroc02us
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If it were me, I'd keep the cash liquid,. First reason is because you stated you'll need 2 to 3k for a house repair. That leaves maybe 3k which I would put in the bank for an EF. Don't touch this for anything but an emergency. Going forward I'd start tackling and rid of all debt except mortgage. Wouldn't it feel great to be debt free and have money to spend.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Thu Apr 27, 2017 8:39 pm
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CarlCobb
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Hi there! Both are necessary paying off the debt are also necessary and the home repair is also necessary at the moment. I suggest you to do the thing which is most important for you. You may also take the help from an expert to do the home repairing. Few days back my friend was also facing such problem, she was also into the track of paying the debt and also wanted to make the home repairing which was damaged due to water. She paid the debt and also taken the help from a and also got the home repairing done.
Post Fri May 12, 2017 1:26 pm
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Petert0204
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pay off debt vs necessary home repair  Reply with quote  

I agree with Christcorp here. You need to determine your expenses.
Post Wed May 31, 2017 4:33 am
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alexcross
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Personally I agree with christcorp. You should just sit down with a notepad and a calculator and figure out your expenses.
Post Sat Jul 08, 2017 10:36 pm
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Cecille Hollinshead
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You should tackle bad debt first.Figure out what will give you the biggest boost. From a financial perspective, it's smart to pay off your highest-rate bad debt first. After all, putting $500 towards a $3,000 credit card bill with an 18% interest rate will save you far more than paying off a $500 bill at 6%.
Post Mon Jul 24, 2017 11:20 pm
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NachoV
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quote:
Originally posted by Cecille Hollinshead
You should tackle bad debt first.Figure out what will give you the biggest boost. From a financial perspective, it's smart to pay off your highest-rate bad debt first. After all, putting $500 towards a $3,000 credit card bill with an 18% interest rate will save you far more than paying off a $500 bill at 6%.

interesting thoughs, thanks for sharing
10.0.0.1
Post Mon Dec 11, 2017 2:57 pm
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