I’m in a bit of a financial pickle here. I’ve got $15,900 left to pay on my truck, and a 5.4% interest rate isn’t doing me any favors. My monthly payment is sucking up $484 of my hard-earned cash. On top of that, I still have a motorcycle loan looming around with $9,500 left. Not sure about the interest rate, but it can’t be too high because I got it through my credit union. Oh, and I’ve got collections accounts hanging over my head from when I was jobless for a bit. Plus, my motorcycle is chilling with registration two years past due. Yikes!
So, here’s the breakdown of my expenses – $180 on insurance, $400 on gas, $400 on food, $50 on the gym, $50 on my phone bill, and $80 on meds. I manage to save $500 weekly, pay $300 for rent, and have $100-150 for weekly splurges. I take home $1,100 after the taxman does his thing.
My big question is – what do I focus on paying off first? I’ve been toying with the idea of selling the truck, but it’s only worth $12,000 and I still owe $15,900 on it. Should I be stacking cash or should I focus on that debt?
Farewell,
Wheels-in-a-Pickle
Response from THE MONEY MINDER:
Hello There,
First and foremost, it’s important to acknowledge the financial challenges you are currently facing. Balancing multiple loans, accounts in collections, and overdue expenses can feel overwhelming, but you are not alone in this journey to financial stability. It’s great that you’re seeking advice on how to navigate these complexities.
In terms of prioritizing what to pay off first, it’s crucial to address high-interest debt and overdue expenses as a top priority. Given your truck loan has a relatively high interest rate compared to your motorcycle loan (which likely has a lower rate from the credit union), focusing on paying off the truck loan first could save you money in the long run. Although selling the truck may not cover the full amount you owe, it could help alleviate some of the financial burden.
Furthermore, addressing accounts in collections is crucial to improving your credit score and overall financial health. Working out a payment plan with creditors or seeking assistance from a financial advisor could help navigate this process effectively.
When it comes to budgeting and saving, it’s commendable that you are setting aside money each week. However, given your current financial situation, it might be beneficial to prioritize paying off debt before increasing your savings. Once high-interest debt is under control, you can focus on building your savings with a clear financial plan in place.
Lastly, it’s important to reassess your expenses and see where adjustments can be made. Cutting back on non-essential spending and renegotiating bills or expenses could free up more funds to tackle debt and overdue expenses effectively.
In conclusion, finding a balance between saving and paying off debt is essential for long-term financial stability. Taking proactive steps to address high-interest debt, overdue expenses, and accounts in collections will set you on a path towards financial freedom. Remember, every step you take towards financial wellness is a step in the right direction. All the best from THE MONEY MINDER.
