What should we do with this money?

[blessedmama59]

My fiance had to cash in on a 401K he had with a previous job bc the stocks were plummeting and he had already lost close to $3,000. So now we have $5,600 that we're not sure what to do with. I have suggested that he should pay off the cc debt he has from his previous marriage ($5,400) and we also considered putting it in savings for a downpayment on a house. Then there's always the option of just putting it in checking and doing whatever with it (not smart, IMO). He is a little compulsive with money, so I know deep down he would love to just spend it on whatever. His response to using it for the cc is that his ex basically pays the payment on it monthly. She sends him a $100 check every mth and the payment is usually $150. The interest rate is 28% and I would personally just love to get rid of that debt so we're not paying on it for years to come. Also, the only other debt we have are two car payments, one of which could be paid off soon.

[nd_deadhead]

At 28% interest, if you continue paying $150/month to the cc, it will take you 80 months (almost 7 years) to pay off, and you will have paid $6500 in interest (in addition to the $5400 principal).

I would try to get him to pay this off as quickly as possible!

The other option would be to pay off the car loan that is almost done, put the rest toward the cc, and apply what you used to pay to the car toward the cc instead (in addition to the $150). Or you could apply the $100 from ex toward the car loans after you pay off the cc.

I suggest you take $100 and go out for a nice dinner or something, and use the rest wisely!

Good luck.

[Poddi]

If he paid off the CC with a lump sum, will his ex stop sending in the checks?

[zinemama]

Pay off the cc debt asap before Mr. Compulsive finds a way to spend it on something you really don't want him to.

[jess_paez]

Originally Posted by Poddi

If he paid off the CC with a lump sum, will his ex stop sending in the checks?

if he and his ex racked up that debt together, i would pay it off and bank her 100$ a month until it's reasonable she's paid her share and with no interest- that benefits her!

as long as she's not entitled to any 401k $

[zebra15]

Since you are taking $$ out of a retirement account make sure you are putting money aside for the IRS. There are some penatlies for early withdrawls. IMO debt aside I would be rolling that money over to another retirement account.

[annethcz]

Originally Posted by zebra15

Since you are taking $$ out of a retirement account make sure you are putting money aside for the IRS. There are some penatlies for early withdrawls. IMO debt aside I would be rolling that money over to another retirement account.

ITA. Cashing out the 401k after taking a loss just finalizes the loss and makes it impossible for the money to be recovered.

[MissMommyNiceNice]

REally, he doesn't want to pay the cc? Pay it off! Bank the money from the ex in a savings account or IRA. I hope he had them keep some money from it for taxes.

Good luck!