[cristina47454]

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Out of NOWHERE, we suddenly have $20k!!!!!! And we were so strapped this month that my dh is doing odd jobs for my family

We have no Emergency Fund and about $70k in cc debt, everywhere from 15% to 6% interest. DH finally got a steady job that will pay all of our bills with an extra 1K to throw at cc every month (or put into an EF).

How would you split it up?

 

[sanguine_speed]

Can you negotiate with those credit card companies? Let them know you can make a large lump sum payment if they can reduce your interest?

I'd save at least 6 months' basic living expenses first, however.

 

[p1gg1e]

Id save 6 months of expenses and throw the rest of that at your debt lowest to highest and use the extra money freed up to throw at more debt!

 

[lovemykeiki]

Quote:

Originally Posted by p1gg1e Id save 6 months of expenses and throw the rest of that at your debt lowest to highest and use the extra money freed up to throw at more debt!

Ditto.

 

[ctdoula]

Wow, awesome! I wish we were so lucky.

 

[cristina47454]

Seriously? Six months of living expenses?? At that rate, none of the $$ goes toward debt at all

 

[*Erin*]

yay! no advice, but congratulations! how freaking awesome!!!

 

[lyterae]

I do think that an emergency fund of 1000.00 is a good place to start (we lean towards the Dave Ramsey way)

If your DHs new job is steady/secure, maybe only put away 2-3 months of living expenses as a security blanket?

Tithe if you believe in doing so.

Chuck the rest of it to pay some stuff off. I can only imagine how nice it would be to mail out checks to some of those places and get debt paid down. We are on the long haul right now working on it, we just got our emergency fun done last month and caught up on our bills.

 

[aircantu1]

Quote:

I do think that an emergency fund of 1000.00 is a good place to start (we lean towards the Dave Ramsey way)

Ditto.

Then I'd cut up the cards and put the rest toward debt

 

[wifeandmom]

With the interest rates you listed, I'd put every penny of it in an emergency fund.

I say this for several reasons.

1. Your DH is starting a new job. I might think differently if he had a super secure job situation, though probably not even then considering the overall state of the economy right now.

2. You are going to already be paying an extra $1000 per month towards your debt. I'd start with whatever has the highest interest rate, then go from there.

3. Obviously if your DH is doing "odd jobs for family" right now til his new job starts, you guys either didn't have or have exhausted whatever emergency fund you had. You don't ever want to be in that position again, kwim? That is the biggest reason for sticking every bit of it in an emergency fund for right now.

 

[onlygirls]

I would put it all into the emergency fund.

Live off of DH's income and pay off as much debt as you can WITHOUT touching the emergency fund.

 

[Dandelionkid]

With all the credit being reduced across the board it makes most sense to keep it for emergencies. Congrats!

 

[velochic]

I would not split it up. Put every bit of it in an emergency fund. In this economy, your dh could lose his job again. The EF could keep you afloat as he looks for a new job. You have to worry first about food and shelter.

 

[shakashoe]

I would only differ from the others here in one respect, I'd take $1000 and set it aside to stockpile food. There are many threads as to the wisdom of it here so I won't go into it. If you don't have a stand alone freezer, get one. Then put every other penny away for a rainy day. Food is a type of "emergency fund" anyway!

 

[sanguine_speed]

Quote:

Originally Posted by cristina47454 Seriously? Six months of living expenses?? At that rate, none of the $$ goes toward debt at all

Well, if your basic living expenses are $3333 a month, then yes! But that sounds high...

 

[cristina47454]

Our minimum credit card payments are $1500 month (we've been throwing an extra $600 on average at it). So I include that in basic living expenses. Our basic living expenses (incl. credit card expenses) are about $4500/month, STRIPPED. (State health ins, no cable, no eating out, bundled trip to save on gas, stockpiling food...). We had a substantial EF at one point, but yes it's been depleted. I wonder secretly whether DH would have tried harder to find employment if it hadn't been there...

 

[lucyem]

Susie Ormon was on Oprah telling people to build up an emergency fund first and then pay off debt. Her reasoning was in a worst case scenario you may no longer be able to count on a credit card. The CC companies are cutting limits and closing accounts.

http://www.usnews.com/articles/busin...card-debt.html

She has a good point. In your situation with your bills etc I would plop that money into a CD and sit on it. Maybe put 2 thousand against your highest interest rate CC bill but thats it. Stockpiling some food might not be a bad idea just in case.

 

[EFmom]

I'd also keep most of it in an emergency fund, and maybe put 2K into the debt. I wouldn't squander it on stockpiling food. That's what the emergency fund is for if you end up needing it. Just make sure it's genuinely dealt with as emergency only money.

 

[Peppamint]

I'd do it a la Dave Ramsey Snowball fund and put away $1,000 emergency fund, about $500-$1000 for odd expenses like kid clothes, winter boots, etc and then send the rest to credit card debt. That would save you bundles in credit card interest over the next couple of years!

 

[cristina47454]

My thought up to now was that if I can pay down some of the debt it will essentially lower my monthly living expenses by a couple hundred dollars. i was honestly surprised so many of you said to put it all in an EF. Wow. So right now I'm thinking $3500 to DH cc which is 15% interest and maxxed out...he needs a cc for his job and his expenses will all be reimbursed, but right now he's been using our debit card which got us into this mess this month. $2000 to lay the BOFA bastards to rest (if you've seen my other posts about them) and the rest to the EF in a high yield acct. That frees up $250 month is credit card minimums that can go towards our snowball, making it closer to $1000 month. Then we'll sock away $500/mo in savings every month and put an ADDITIONAL $500 towards the snowball, making it a $1500 debt payment. If things go south, I'll go back to min payments on the credit card, freeing up $1100 in cash/mo. What do you think?