Hi Money Minder,
Yo, I’m a 27-year-old firefighter with a wife and stepchild. I bring in around $80k a year, while the wifey pulls in about $50k. I’ve made some not so smart money choices in the past, oops.
So, I still owe $8.5k on an $11k loan with a crazy high 16% interest rate. Plus, I’ve got around $6k hanging out on my credit cards. The missus handles her own finances, thankfully. Oh, and I’m about to pocket $20k tax-free for an injury I got on duty.
My car, an ’09 Accord, is basically on its deathbed with a bunch of issues. We’re also thinking about moving into a house in a year. Should I use my injury award to buy a new car and keep chipping away at my debt, or knock out the debts first and then think about a car loan? We really need a truck, but they’re pricier. I’m totally stumped here, appreciate any advice.
Cheers,
[Name Here]
Response from THE MONEY MINDER:
Hello There,
Congratulations on receiving the net award for your line-of-duty injury; I hope you are on the road to recovery. It sounds like you are in a bit of a financial quandary with your debts and the need for a new vehicle, particularly considering your impending move to a house. Taking a practical approach, I would suggest prioritizing paying off your high-interest personal loan and credit card debt first. With the $20k award, you can wipe out these debts, which will free up your monthly finances and relieve some financial stress. Next, considering the state of your current vehicle, it might be wise to use a portion of the remaining funds to purchase a reliable used vehicle outright. This will save you from additional financing costs and ensure you have a dependable mode of transportation. As for the truck you mentioned needing, perhaps you could explore more affordable options or consider saving up for it once you have stabilized your finances. This way, you can tackle your debt, secure reliable transport, and work towards your goal of moving into a house. All the best from THE MONEY MINDER.
