using windfall...cash or vehicle? WWYD?

[canuckgal]

I have a fairly large LOC that is our "only" debt (25,000), we only have a mortgage payment and no vehicle payments.  (It's composed of 2 vehicles...definitely need both as we are semi rural....and some Visa bills and some of dh's past school expenses.  Put all this together on it before I knew about snowballing...our truck was almost paid off, I could have snowballed....Grrr..)

We generally can put anywhere from 800-1000.00 on it per month right now.  My question is what would you do if you get some windfalls, like income tax returns, or suddenly get 3000.00 or something?   (I have had income tax returns almost that much)

The reason I am asking is we have a dunce of a car right now.  Our truck is fine (2002 F-150 with only 97,000 on it, dh REFUSES to sell it and we plan to drive it until it is a rust-bucket...it is so devalued we wouldn't get much for it for another vehicle and get far ahead in the debt anyway), but I wrote off our car a year ago in an accident.  We got a 14yr old Honda Civic with a rebuilt engine (only 160,000 on the engine) however we have had to put 1800.00 on it so far in the last year, and are now driving with a check engine light on ever since...have been told it's the catalytic converter and when that goes might as well ditch the vehicle.

I am wondering if I should put things like tax returns, stuff like that on the LOC in an effort to pay off as fast as possible, or get a vehicle with it of course only when the time really comes (save a vehicle fund and ideally have 3000-4000 by the time we need a new vehicle).  My reasoning is that say in two years we whittle 6000-7000 away on the LOC, but then we are taking two steps back and putting a debt on it in the form of a used vehicle...and that is a debt with interest.

Thoughts anyone?

Tina

[mattemma04]

I would say to get a reliable car.You can try auctions for a good deal. You both need a decent car.Once you start putting more and more into a car with the never ending repairs then it is time to move on.

[happysmileylady]

For the situation you describe, I would split it.  Putting a chunk on the debt will feel good, but I also think it's a good idea to have a start on a car fund for when the time comes. 

[bodhitree]

Personally, I would start a car fund and once you have the absolute minimum that you would be willing to spend on a car once your current car dies, then start focusing on paying down the debt again. It would just be so discouraging to have your debt go back up in order to buy a car. Actually, I'm in a similar situation. We have one decent car that we owe $2300 on and one POS car that we own free and clear, then we also have $68000 in student loans. I think we're going to focus on paying off the current car loan, then build a fund to replace the older car, then work more on the student loans.