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I will be getting back around $6K from my tax return this year, and can't figure out what to do with it. I just recently cut my hours back at my job back to 20 per week, and I am a single mama, so we are going from low income to poverty essentially. I will be fine financially, with food stamps, section 8 housing, etc, but the $6K can't sit in a savings account, or it will count as an "asset" against me.

Here are the options I can think of off the top of my head.

1. $1K in cash savings for an emergency fund, then the rest toward student loans which are currently in economic hardship deferment. (I owe $55K total)

2. $1K in cash savings for emergency fund and the rest plus my car as a trade in (around $2K) for a newer, more reliable vehicle. My current '98 Civic is starting to have frequent small problems, and I always worry that it is going to break down now that we are in the dead of winter and I live in an area that is not all that great with public transportation, although I *could* use it if I absolutely had to.

3. $1K in cash savings for emergency fund, and the rest toward paying ahead on utility bills, and possibly going on a small vacation to see my sister in law on the other side of the country to introduce DS to cousins that he has never met. (he has no living relatives other than me that he has any contact with, so this would be a pretty big deal for us).

Oh, and I also want to get DS and I passports and a new digital camera as mine just died.

Any words of advice, or other options? I feel funny putting my financial info out here, but just can't quite wrap my brain around what to do.
 

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passports
digital camera
emergency fund
reliable car
 

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Is there any way to get a cheaper but still reliable car so you could go on that vacation? Or could maybe your family chip in a bit? Or you could possibly save a bit more money for those small repairs that come with time, and also have your vacation? I think family is so important and you defenitely deserve a little treat. Plus from a financial standpoint they say it's usually better to keep investing in your clunker than to go out and buy a newer one, unless the clunker is getting pretty bad.
 

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What is your asset limit? Isn't it a couple thousand? If so, that is what I would keep in savings. The max allowed. With your financial situation right now that is better than spending it or even paying down the debt. It's really survival mode now.
 

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Quote:
2. $1K in cash savings for emergency fund and the rest plus my car as a trade in (around $2K) for a newer, more reliable vehicle. My current '98 Civic is starting to have frequent small problems, and I always worry that it is going to break down now that we are in the dead of winter and I live in an area that is not all that great with public transportation, although I *could* use it if I absolutely had to.

The only problem I see with this, is that with only 7,000 you are still looking at an older car. Yes, it is a "newer older" car, but still likely several years old). A quick glance at auto-trader in my area for cars less then 7000 brought up 2004 or around 75K miles as the newest vehicles available. Our cars are are a '99 and a 2000 and I honestly don't really think we have more frequent or expensive repairs on them now, then we did 5 years ago. Things broke down then, and things break down now. The only way to really have no repairs is to buy new, under warrenty.

I would save to your asset limit and then use the rest to pay ahead on the untiilty bills and pay down the student loan debt.
 

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Rather than buy a whole different older used car (because$-5K will only get you so far) I'd stash $2K in cash for use ONLY on car repairs. I have a car slightly older than yours and while little issues do come up the car is completely reliable. I feel like I am far better off feeding money into my car here and there rather than forking over another $5K on a car that will likely need the same repairs in year or two.
 

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Quote:

Originally Posted by ameliabedelia View Post
The only problem I see with this, is that with only 7,000 you are still looking at an older car. Yes, it is a "newer older" car, but still likely several years old). A quick glance at auto-trader in my area for cars less then 7000 brought up 2004 or around 75K miles as the newest vehicles available. Our cars are are a '99 and a 2000 and I honestly don't really think we have more frequent or expensive repairs on them now, then we did 5 years ago. Things broke down then, and things break down now. The only way to really have no repairs is to buy new, under warrenty.

I would save to your asset limit and then use the rest to pay ahead on the untiilty bills and pay down the student loan debt.

Quote:

Originally Posted by tinuviel_k View Post
Rather than buy a whole different older used car (because$-5K will only get you so far) I'd stash $2K in cash for use ONLY on car repairs. I have a car slightly older than yours and while little issues do come up the car is completely reliable. I feel like I am far better off feeding money into my car here and there rather than forking over another $5K on a car that will likely need the same repairs in year or two.
I agree that with these posters that for the amount of money you have it's dicey that you will get a car that won't end up needing to put money into it. A couple of months ago I went the cash route and bought a old Volvo and ended up taking it back since it turned out to need a lot of repairs. In the end we got a car that was 9000 that is a smidge older 2004 but decent miles and was able to get an extended limited warranty on it for 12000 miles. It wasn't the best deal but I have less than stellar credit so it works for me. But based off that experience not all cars you can buy in cash for under 5000 turn out to be a great deal since my previous car (98 Nissan) I bought in 07 for 2800 still ended up costing a few thousand in repairs and it came to a head in Dec when it needed over 2000 in repairs and I said enough is enough.

I say sock some cash away in a car repair fund and pay down some bills. Worse case scenario can you have someone you trust hold this money if you can't keep it in your account.
 
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