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#1 of 38 Old 02-06-2010, 02:54 PM - Thread Starter
 
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i know i've read on here before that it depends what is important to you.
But generally would you invest, pay down debt, save in a cd?

Assuming
1. you have abotu 100,000 in debt (student loans, cars,)
2. you dont own own a home in live in a hgh col area and have bad credit.
3. have no money to your name as far as savings, 401 k, life insurance etc.
4. live pay check to pay check
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#2 of 38 Old 02-06-2010, 03:04 PM
 
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I would take the money and move to a LCOL area where I could buy a house outright and find a job making less money, but have a decent enough space to be more self sufficient.

BUT this is b/c I believe the old standby's are not going to survive: 401k, retirement, stocks. I believe you should invest in your home, owning it and making it WORK for you.

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#3 of 38 Old 02-06-2010, 03:30 PM
 
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Primarily I would pay down as much debt as I could, while putting away some into savings for emergencies and looking into relocating to a LCOL area.

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#4 of 38 Old 02-06-2010, 03:35 PM
 
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How old am I?
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#5 of 38 Old 02-06-2010, 03:41 PM - Thread Starter
 
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your in your early 30's, husband in late 30's.

and you haha are thinking that the most important thing to you to invest in heart wise is that you would like a small home on some land so that you can be sustainable and "off the grid" ish in the future. Need to work to pay bills, energy, water whatever but would feel safe knowing that YOU have the ability to grow your own food, own a cow for milk, some chickens, not today but if in emergency scenario.
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#6 of 38 Old 02-06-2010, 03:43 PM
 
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Easy. (I'm assuming this is $100,000 after taxes.)

-Burn my student loans (~$35K)
-Burn our mortgage (also about ~$35K)
-Remodel our house

Then, since we wouldn't have a house payment anymore, save $500/mo and our tax returns for about three years and start shopping for land. Buy land, and live in our house while building a stone house (and barn) on the land. Then, either keep this house as a rental, or for DS to live in while attending college.

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#7 of 38 Old 02-06-2010, 03:43 PM
 
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Well, your investments are going to be taxable investments... that is, they won't grow tax-free and will affect you every year. You can invest in a Roth IRA to the tune of $5k each year, but that leaves a lot to be taxable.

Therefore, this question is really too complicated to answer. It would depend on your marginal tax bracket, your investment personality, the interest rates on your debt, how long you plan to stay in your current location, how secure your job is, how secure your life (in general is), how many kids you have, plan to have, what you want to do for their futures, how old you are, when you plan to retire, where you plan to retire, how well you manage your money... I could go on and on. The answer is... 5. Too little information to answer question.
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#8 of 38 Old 02-06-2010, 03:44 PM
 
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I should add: I am 31, DH is 30, and we have retirement savings. Our kids get free university tution through DH's employer.

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#9 of 38 Old 02-06-2010, 04:07 PM
 
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I agree with Velochic that there is too little detailed information to give a detailed answer.

However, in general, I would base my decisions partly on my current day situation and partly on the situation I want to be in the next few immediate years, retirement years, and in-between years (in that order, but not in equal percentages).

I can say for sure if I had very little money in any type of savings, I would NOT put all the money towards debt. I firmly believe people do best when they save money concurrently as they reduce their debt. It tends to build new sustainable habits. The psychological aspects often play out such that folks who have racked up debt and pay it off without accumulating savings, end up back in debt. Money is wrapped up in so many aspects of who we are and how we behave. Spending time on what makes you tick financially is time well spent, IMO.

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#10 of 38 Old 02-06-2010, 04:29 PM
 
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Quote:
Originally Posted by yukookoo View Post
i know i've read on here before that it depends what is important to you.
But generally would you invest, pay down debt, save in a cd?

Assuming
1. you have abotu 100,000 in debt (student loans, cars,)
2. you dont own own a home in live in a hgh col area and have bad credit.
3. have no money to your name as far as savings, 401 k, life insurance etc.
4. live pay check to pay check
In that situation, I'd use it to pay off the debt, then I'd probably have much more room in my budget for the other things.

In my situation, I'd pay off my loc and student loans (just over $20,000 total), take a real vacation with dh and the kids, max the kids' RESP contributions for the year, and pay someone to redo my kitchen and basement on a budget. Then with the extra $400/month I'd have in my budget, I'd up dh's RRSP contributions. Thinking about it makes me happy, even though I know $100,000 is not about to fall from the sky into my lap.
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#11 of 38 Old 02-06-2010, 04:45 PM
 
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nm, missed the second part of the question.
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#12 of 38 Old 02-06-2010, 04:49 PM
 
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Pay off half the debt.

Then move to a low COL area where I can find a job and buy an inexpensive home or trailer and work on building my credit and saving up.

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#13 of 38 Old 02-06-2010, 06:24 PM
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for me, i would pay off all the debt. in fact, that amount would pay off my school debt and leave a bit left over for me to put into savings.

then, i would adjust my situation so that i can begin to put into savings and 401k. i would predominately save up to have a down payment for an affordable house/condo or whatever we want that we can afford. and then i would build savings up again after that point.
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#14 of 38 Old 02-06-2010, 07:26 PM
 
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I would negotiate all debt and spend 60 paying it down or off

I would put 10 in savings and use the other 30 as a down payment on my little farm
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#15 of 38 Old 02-06-2010, 07:28 PM
 
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I would negotiate all debt and spend 60 paying it down or off
This kills your credit. If your credit is already bad, this is a very bad idea. Besides money spent should be paid back if you have the means. Negotiating to pay less is, IMHO, a bit unethical unless you really have no choice. And there are plenty of reasons to have no choice and I respect that, but if you suddenly come into 100k, that's not really a good reason to pay less than you owe... this does trickle down to the taxpayers eventually.
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#16 of 38 Old 02-06-2010, 07:32 PM
 
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I would FOR SURE use every penny of it needed to pay of your debt. This will free up the amount you were paying every month on the debt to put toward savings, insurance, save for a house, etc.

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#17 of 38 Old 02-06-2010, 07:32 PM
 
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Move

Buy a house

Apply the rest to debt based on interest/min. amount due

Use my recovered cashflow to max out 401 and savings

File for the house credit and apply to more debt

ETA: and what would *I* do?

Give it to each of our families to pay off their debts.

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#18 of 38 Old 02-06-2010, 09:16 PM
 
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In this situation I'd probably do this: $20K to savings, $40k to debt, $40k as a good enough downpmt on a house that they may overlook the credit issues. Otherise I may toy with the idea of buying a modest house outright and applying all the savings I have from that to debt and a savings fund, but I don't know that I'd go that route.
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#19 of 38 Old 02-06-2010, 09:30 PM
 
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Pay off all debt and build a savings with the money I had been putting toward debt. By the time I had a good savings and could afford a house, my credit would likely be much better.

I'm Kellie :, married to Chris , and mom to one baby girl (7/12/09).
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#20 of 38 Old 02-06-2010, 10:35 PM
 
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I would put aside a six month's emergency fund in a decent investment, pay the rest to the highest interest debts.

If it were me, I'd put 50% into investments, 50% onto the house.

Quote:
Originally Posted by yukookoo View Post
Need to work to pay bills, energy, water whatever but would feel safe knowing that YOU have the ability to grow your own food, own a cow for milk, some chickens, not today but if in emergency scenario.
I wouldn't trade my current real life security off the possibility of an apocalypse someday.
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#21 of 38 Old 02-06-2010, 11:08 PM
 
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I would take out appropriately valued life insurance policies on myself and my DH and pay the first year's premium up front.

I would put $10,000 in savings for an emergency fund.

I would put the other ~$89k on the debt and then spend the next [x period of time] paying off the remaining $10k of debt.

At that point, you would be debt free with a nice emergency cushion which would hopefully free up enough space in your budget to start saving for your goals - real estate, retirement, self-sustainability, maybe all of the above. That extra space in your budget should also allow you to afford the continuing premiums on the life insurance plans.
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#22 of 38 Old 02-06-2010, 11:09 PM
 
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With your OP list I would...

Put $20K into savings/moving/future downpayment

Put the other $80 on those debts and then continue paying.

Then I would look for a job in a low COL area, purchase a small house there with as much down as possible, leaving about 6 months worth of living expenses in savings and knock out the last 20K in debt as soon as possible.
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#23 of 38 Old 02-06-2010, 11:56 PM
 
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With your OP list I would...

Put $20K into savings/moving/future downpayment

Put the other $80 on those debts and then continue paying.
That's what I would do too. $20K in savings, $80K in debt.

I hate debt. The only debt dp and I owe right now is the house. Both cars are paid off, no CC debt (we both have a CC that we use but pay both off in full every month), no medical debt or other bills. We are very fortunate.

In my situation, if I ran into 100,000.... I'd get married $$ is the only reason we are not right now- ds has autism and dp's insurance won't cover autism related services. As long as we aren't married then the government doesn't take dp's income into account for ds's medicaid (because dp isn't the bio-dad). Once we get married then they take dp's income into account and ds looses his medicaid and, thus, all his therapy. But with 100,000 and some wise investing, we would be able to afford his therapy so we would happily get married

ETA- the $100,000 wouldn't last long in therapy/autism land but it would hopefully get us through a few years until I'm through college and have a job with insurance for ds

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#24 of 38 Old 02-07-2010, 12:38 AM
 
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Not quite sure what I would do in your situation. Probably consider moving (if possible), pay down debt then if anything was left over start saving for the down payment on a home.

In MY situation...
I'd pay off all my debt (17K)
Set aside 20K to finish school (tuition wouldn't be that much, but I'd want a bit of breathing room)
Put the rest towards a house, DP is a tenured so we aren't going to be moving.

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#25 of 38 Old 02-07-2010, 11:26 AM
 
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Debt gives my hives. I don't sleep well when dh and I have debt. Not sure it is the smartest choice, but I would pay off all the loans.

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#26 of 38 Old 02-07-2010, 11:46 AM
 
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I'd save 5 thousand for an emergency fund & use the rest to get rid of debt. Then I'd create a new budget & re-focus my whole life towards getting myself where I want to be, living how I want to live.

This is awesome ~ Enjoy

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#27 of 38 Old 02-07-2010, 01:57 PM
 
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taxes

15% emergency fund

rest to my mortgage

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#28 of 38 Old 02-07-2010, 04:09 PM
 
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Pay off debt.

Buy new car.... mine have both about had it.

Any leftover goes to savings.
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#29 of 38 Old 02-07-2010, 04:28 PM
 
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put aside enough to live on for 3 to 6 months as an emergency fund (I'm a bit neurotic about this. My DH's field is unpredictable and we've suddenly found ourselves w/o his income several times)

use the rest to pay off as many of the highest interest debts you that you can completely get rid of. then use what you had been paying on those debts to pay down the remaining debt more quickly.

sorry for the lack of caps i'm nak-ing.

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#30 of 38 Old 02-07-2010, 09:01 PM
 
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I would set up an emergency fund (enough for 3-6 months of living expenses) and then use the rest of pay of debt. Don't add to your debt by purchasing a home. And inevitably the rate you are paying on your loans is significantly more than you would be making on investments.

You could consider using some of the money to move to a lower COL area if that makes sense based on your situation. For example, we live in a high COL area, but my husband's industry is only located in high COL areas. We live in Seattle...our other options are pretty much San Francisco, New York, London...so compared to those, Seattle is a great deal. But if you could find work in a lower COL area, it might not be a bad idea to make that change. But I would still pay of debt first and buy a house second!
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