We've come into a sum of money unexpectedly - a little over $5,000, to be exact. We have been slowly paying off our large amount of debt over the past year and expected to be debt-free other than our mortgage and car payments by this time next year. So this will obviously speed the process up a good bit. DH and I are having a little conflict as to which debts to pay off with this money, though. I want to see what you all think.
Option #1 - When DH and I were separated/divorced, he co-signed on a loan for a truck for one of his buddies. Said buddy stopped making the truck payments, so DH took possession of the truck. DH's younger brother (17 at the time) was needing a vehicle, so DH's mom bought the truck from DH. DH paid the truck off, but he needed $10,000 (?!?!) to furnish his new house, so he kept the truck in his name for some stupid reason and used it as collateral on a $10,000 loan from a small-time loan company in our area. Since the truck is still in Chris's name, we are required to keep insurance on it. We have full coverage on it. Actually, DH's mom agreed to pay us back every month for the insurance on the truck, since DH's brother is the one driving it, but she hasn't done so yet in 3 years. The balance on the loan is $4200 now, and we pay $255/month on it. We also estimate that we pay somewhere around $100-150 for insurance on the truck.
One of us thinks we should pay this loan off and therefore get out from under DH's brother's truck. We would be saving $255 a month plus whatever amount that our insurance would decrease (somewhere around $100+ a month). And we wouldn't be tied up in that truck anymore and responsible for his brother's vehicle insurance.
Option #2 - The other of us thinks we should pay off several smaller debts (a credit card with $1200 on it that has a minimum payment of $100/month, another credit card with $1000 on it that has a minimum payment of $60/month, my engagement ring which we owe $1200 on with a payment of $165/month, and another loan company loan that we owe $1800 on with a payment of $122/month). This would probably end up saving us a little more money each month, but the other party's concern is that we could pay these smaller debts off a lot easier/quicker by saving to pay them off, since we will probably NEVER save $4200 to pay off the other loan all at once. Also, we would still have the problem of being tied up in DH's brother's truck and having to pay for his vehicle insurance.
Either way, we would use the leftover money (around $800-1000 either way) to pay for upcoming baby-related purchases.
Which do you think seems like the better option?
Option #1 - When DH and I were separated/divorced, he co-signed on a loan for a truck for one of his buddies. Said buddy stopped making the truck payments, so DH took possession of the truck. DH's younger brother (17 at the time) was needing a vehicle, so DH's mom bought the truck from DH. DH paid the truck off, but he needed $10,000 (?!?!) to furnish his new house, so he kept the truck in his name for some stupid reason and used it as collateral on a $10,000 loan from a small-time loan company in our area. Since the truck is still in Chris's name, we are required to keep insurance on it. We have full coverage on it. Actually, DH's mom agreed to pay us back every month for the insurance on the truck, since DH's brother is the one driving it, but she hasn't done so yet in 3 years. The balance on the loan is $4200 now, and we pay $255/month on it. We also estimate that we pay somewhere around $100-150 for insurance on the truck.
One of us thinks we should pay this loan off and therefore get out from under DH's brother's truck. We would be saving $255 a month plus whatever amount that our insurance would decrease (somewhere around $100+ a month). And we wouldn't be tied up in that truck anymore and responsible for his brother's vehicle insurance.
Option #2 - The other of us thinks we should pay off several smaller debts (a credit card with $1200 on it that has a minimum payment of $100/month, another credit card with $1000 on it that has a minimum payment of $60/month, my engagement ring which we owe $1200 on with a payment of $165/month, and another loan company loan that we owe $1800 on with a payment of $122/month). This would probably end up saving us a little more money each month, but the other party's concern is that we could pay these smaller debts off a lot easier/quicker by saving to pay them off, since we will probably NEVER save $4200 to pay off the other loan all at once. Also, we would still have the problem of being tied up in DH's brother's truck and having to pay for his vehicle insurance.
Either way, we would use the leftover money (around $800-1000 either way) to pay for upcoming baby-related purchases.
Which do you think seems like the better option?