What to do with a small windfall when you owe so many....

[redheadlibrarian]

It was a lovely surprise to learn that I have been double-paying the water company for over six years and a check for $4500 is on its way! Yahoo!

Of course, I need 10x that to get out of most of our debt.

So what would you if you had my obligations?

A) To the cc with $45K on it; we are in process of transferring to a 0% APR one
B) To the cc with $3K on it, the one we would prefer to use going forward since it has a nice $3K limit
c) Toward our mortgage; one extra payment per year makes a big difference in the 30 years total
D) To get ahead on life and car insurance bills which are coming down the pipe
E) Pay off the only car payment for $2500, would save $300/month (DH does not want that one)
F) To the personal loan of $15K which is through a credit union and has good terms
G) To our sad savings account, to give cushion to our checking account
H) The black hole that is our checking account.
I) Hell, spend it, you're too far gone anyway

College for the kids, property taxes, and retirement are being handled separately.

Advice appreciated! TIA!

[isaac]

A) To the cc with $45K on it; we are in process of transferring to a 0% APR one
B) To the cc with $3K on it, the one we would prefer to use going forward since it has a nice $3K limit

You plan on continuing to use CC going forward, with $48,000 in CC debt? Noooooo. STOP.

Pay the Car off now, and the $3,000cc, then snowball those payments onto your highest interest balance.

Cut up the cards. Use cash until you're free.

[disneysteve]

It was a lovely surprise to learn that I have been double-paying the water company for over six years and a check for $4500 is on its way! Yahoo!

Of course, I need 10x that to get out of most of our debt.

So what would you if you had my obligations?

A) To the cc with $45K on it; we are in process of transferring to a 0% APR one
B) To the cc with $3K on it, the one we would prefer to use going forward since it has a nice $3K limit
c) Toward our mortgage; one extra payment per year makes a big difference in the 30 years total
D) To get ahead on life and car insurance bills which are coming down the pipe
E) Pay off the only car payment for $2500, would save $300/month (DH does not want that one)
F) To the personal loan of $15K which is through a credit union and has good terms
G) To our sad savings account, to give cushion to our checking account
H) The black hole that is our checking account.
I) Hell, spend it, you're too far gone anyway

College for the kids, property taxes, and retirement are being handled separately.

Advice appreciated! TIA!

You've given a fair amount of info but not really enough to answer your question. Also, you've raised a bunch of even more important questions and comments. isaac jumped on one of them. What do you mean about continuing to use a CC going forward. NO, NO, NO! Under absolutely no circumstances should you be using a credit card for anything. You're buried in debt. You need to live within your means and no longer look to debt to finance your lifestyle.

What do you mean about college being handled separately? Is someone else (grandparents perhaps) taking care of that? If you and your husband are funding that - STOP IT NOW. You can't afford it until everything else is cleaned up.

It would help a lot if you would list your income and each debt including interest rates. Also, how much do you have in savings and what % of income are you contributing to retirement accounts? And explain point D) above. What do you mean about those bills "coming down the pipe"? Does that mean the bills are coming up but you don't have the funds to pay them?

[redheadlibrarian]

You plan on continuing to use CC going forward, with $48,000 in CC debt? Noooooo. STOP.

Pay the Car off now, and the $3,000cc, then snowball those payments onto your highest interest balance.

Cut up the cards. Use cash until you're free.

Oh, I agree with you about cutting up the cards. It's hard to explain to people who have reasonable spouses. : p So we are compromising by saying he can keep the Cap One card with a $1K limit.

Hm, pay off car....I like it!

[Drake3287]

I'm sorry to sound mean but your financial situation is seriously out of control. At this rate college for your kids is not going to happen. Please seek professional help on this and not on an internet forum. Someone needs to map out a long range financial plan for you and your family.

And I have to ask, how does someone make double payments for 6 years and not know it?

[Petunia 100]

You're getting the apple cart ahead of the donkey. Your first step is not to determine what to do with this windfall. Your first step is to create a reasonable budget. Once that is done, it will be easier to see how your $4500 can best be used.

Do you have one? Don't let the word "budget" strike terror into your heart. A budget is simply a spending plan. We can offer suggestions right here if you would like. What money comes in, what are your fixed expenses, how many in your family, etc.

And I have to ask, how does someone make double payments for 6 years and not know it?

I wondered the same thing. How did this happen, OP? Did you set up an automatic payment, enter the wrong amount, and never open a single statement for 6 years?

This is another indication that you are not taking care of your money. If you and your family have goals you would like to reach, you are going to have to change the way you handle your money. Best of luck to you.

[redheadlibrarian]

To those who offered actual advice, thank you.

I know the credit card amount is a lot. They are what's left of extreme medical expenses we had for our DD, who passed away in 2012. We had insurance but it didn't cover everything. I have negotiated extensively with all the providers and this is what is left. We make regular payments on it and the principal has been doing down steadily.

The college fund is from a shared family trust; we sock away all we can to the 401Ks through our paychecks.

We do have a financial advisor who has been wonderful. But I had a small windfall with the overpayment to the water company and didn't want to trouble him.

This is the only billing mistake I've made in my entire life. When we changed banks, I set up the bill pay incorrectly and was paying out every month rather than every other. It's not the worst place in the world.

[disneysteve]

we sock away all we can to the 401Ks through our paychecks.

That may or may not be the best option right at the moment. By all means, you should contribute enough to get the full match. Beyond that, it could make more sense to pay down debt but we really can't comment on that (or on your orignal question) without the details I asked for earlier (income, debt interest rates, etc.). There are many people here happy to help and offer advice once we have the info necessary to do so.

[HappySaver]

Did you set up an automatic payment, enter the wrong amount, and never open a single statement for 6 years?

Petunia was on to something here. You said you set up automatic payments, but weren't you also getting monthly statements that showed the increasingly more negative balance? Who checks those? I don't quite understand how that's possible to automate a variable bill like water anyway - even if your estimated payments are evenly spread out over 12 months, they would have to be re-adjusted periodically (say, every 12 months).

To answer your question, I would go with options B and E. Since you didn't give the rates of either one, first pay off whichever is at the highest rate, and then put the rest towards the other one.

You also may want to just do B or E, whichever is the lower rate but not both, and then put the rest into G. Really depends on more details, like Steve has said.

[TBH]

I know the credit card amount is a lot. They are what's left of extreme medical expenses we had for our DD, who passed away in 2012.

I'm so sorry to hear this.

I think maybe people on this board can sometimes be a little too…enthusiastic. I can't blame you if you don't want to give us even more details since people were so horrified by what you already posted.

The fact is, big credit card balances happen. And it sounds like you're also dealing with a spouse who is maybe resistant to changing his money habits.

I would pick either the low-balance credit card or the car loan and pay it off completely, put aside the rest for the upcoming big insurance bills that it sounds like you don't have the money for, and then leave the rest in savings. Probably if it were me I'd pay the car loan and then put that freed-up $300 monthly payment toward the smaller credit card til it's gone.

I hope you continue to make progress. This really is a good place to get advice and encouragement. Don't let the well-meaning overzealousness scare you away. I've been scolded pretty hard on here too, but I have also gotten a lot of help here.

[Petunia 100]

I know the credit card amount is a lot. They are what's left of extreme medical expenses we had for our DD, who passed away in 2012.

I'm so sorry for your loss.

[Petunia 100]

I think maybe people on this board can sometimes be a little too…enthusiastic. I can't blame you if you don't want to give us even more details since people were so horrified by what you already posted.

I don't understand your comment. People asked her for more info, how does that equal "horrified"?

[Drake3287]

The reason for your high credit card balance should have been explained before you expected responses. Your medical cost reasons are the only thing that would make sense. Good luck with your challenges.

[Eagle]

Advice appreciated! TIA!

@ Redhedlibrarian

First, welcome to the forums!

Second, I’m very sorry for your loss as well. I can only imagine the heartache your family has suffered and the added pressure of medical bills.

Third, without knowing the details as to the interest rates on your accounts I’d probably go with option E) pay off your car to free up the $300 a month. Then tackle the B) credit card with 3k balance. It is great to find extra money!

Honestly, it would be helpful to understand your situation by…
1) understanding how much you guys make a month,
2) what your monthly budget looks like (how much your spending a month),
3) how much you have in checking and savings (your emergency fund),
4) what other assets you have, and
5) the balances on all your debt accounts along with interest rates to said accounts.

We are here to help. Hang in there. You can do this! You can beat this debt!



Kind Regards,
Eagle

[JulieAlbright]

I agree with the suggestion that what you need to do is clearly define your financial goals. Immediate Goals (getting the checking account positive etc), mid-range goals (building an emergency fund, getting debt paid off), and then long range goals (retirement, big ticket items you might want to buy like a new house etc)

These are the kinds of things that if you ask 10 people here what you should do, you'll get at least 8 different opinions. That's fine. Listen to them and then make your own determination.

Once you have that in place, then you can easily see where your money should go.

LOL at the reasonable spouses. Frankly my husband is very reasonable but even still. We got into a mess of a discussion this weekend and I pointed out that his reaction to my saying "I'd like to save more in our Deferred Compensation Plan" was how a lot of men react when their wives want to schedule plastic surgery and go buy 3 new pairs of shoes.