Financial Opinions?

If the full amount will let you pay off a debt, then do that. Otherwise, I would put $1000 in the bank and use the rest to pay down debt.

I agree with Brooke....Dave Ramsey is amazing in holding you by the hand and telling you what to do to get things straight.........Get $1000 in the bank, cut up credit cards, and put rest to smallest debts.....

I agree with the Dave Ramsey idea. $1000 for emergency saving and the rest on debt. BTW, his book Financial Peace is great. Lots of churches have seminars this summer. Maybe check it out if you're having trouble. It's really changed our life. Congrats on your windfall!!

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Go to the library or use $25 of the 2700 to get Dave Ramsay's Total Money Makeover book.

That's a lot of debt, but you DO need to have $1000 in a baby emergency fund.
CUT UP ANY & ALL CREDIT CARDS NOW!

Pay off the smallest debt FIRST or chunk the 2700 onto the smallest debt. Then start applying that debt's payment on the next smallest debt and keep repeating until all debts are paid off.

Good luck! This book will help you get completely out of debt and then your paycheck will not be mostly going to minimum payments or credit card payments at all! And wouldn't that be SWEET?!

We follow Dave Ramsey's Financial Peace. Get $1,000 in an emergency fund (so add whatever amount to your savings so that you'll have at least $1,000) and use the rest to cover your debt. Good luck!

I read a few of the responses and one of the things I did not see addressed is how to manage your debt exactly:

You need to make a list of your debts (I am assuming credit cards) and arrange them in order of highest interest rate and also highest debt. If you have a few with low balances - like one with a $1000.00 balance and one with a $700.00 balance, take the windfall and pay those off.

You also need to call all of the credit card companies and ask for a lower interest rate - the worst that can happen is that they say no - which is the position that you are in right now, so there is no loss. But, they might say yes.

You need to see if you can apply for a card with a super low rate and transfer your current balances to a lower rate card - that will help you save some money in interest.

You need to make a committed plan to paying off the debt. Plan on charging NO more so that you are not adding to the debt. Plan on committing x amount of money each month to paying off debt.

Seriously, $12,000 is a large debt and at this point, I think it will take you years to pay it off. If you have extras, you need to start thinking about cancelling them (cable, multiple cell phones, etc).

Good luck,
L.

read dave ramsey's "total money makeover" before you do anything with it. it will change your life i promise - you are at a crossroads right now! at least read the book before you decide. congrats! :)

Pay off your smallest debt first (credit card, student loan, something not revolving). Once it's paid in full, take the amount of those payments and roll them toward the next highest debt, and so on, until all the little ones are gone, and you're putting a giant payment toward the biggest one!

$1000 to savings, the rest toward debt. That's what Dave Ramsey would say.

I would put it in an emergency fund.

My logic--it would most definitely help pay down your debt... but odds are an emergency (flat tire, illness, job loss, you name it) will come up that you could use the money to pay for. Also, by putting it into savings you are at least making interest, albeit, not much, it's something. If you don't have it in reserve, how are you going to pay for an emergency? By wracking up more debt with high interest... and you're right back where you started.

Read Dave Ramsey's financial freedom -- I would urge you to keep it in a money market or another CD that is liquid and ready if an emergency comes up. But that's just my opinion.

What I would do is as follows:
1st: Pay all bills 1 month up in advance
~That way you are always ahead instead of behind and you can save more and not feel as stressed about bills each month.

2nd: Take 1/2 of what's left and put it towards your debt.
~Start with highest interest rate or if it is enough to pay off 1 card, do that.

3rd: Take 1/4 of what's left and put it into savings/emergency fund.
~If you do not feel comfortable with the 4th step put the whole 1/2 here.

4th: Take the remaining 1/4 and splurge on something fun but that you need.
~I know myself, I would want/need to do *something* fun with it but if you are not like me, then put all the rest into your savings.

Unexpected $money$ is THE BEST kind of $money$!

Do you have a three month (at least) security buff. As in do you have three months worth of income set aside "just in case" if not then this money needs to go into an easy access account for the chance that such emergency should happen. If you do have an emergency account set up then Yes paying off debt will save you more money then having it in a piddly interest bearing account! 2-5% interst is small beans compared to 7-25% interest on debt.

I would use it to pay down debt also.

i would pay down my debt, because it will lower your payments and then allow you to save what you no longer have to pay. its a debt snowball. pay off your smallest debts first, and then use what money you were going to use to pay those towards your next higher and so on until you're out of debt.

I had to laugh because almost everyone here either recommended Dave Ramsey or gave Dave Ramsey advice (emergency fund, pay off smallest debt 1st, debt snowball, pay off debt and save for a downpayment before buying a house..) Love it!! We always ask WWDRD-- what would DR do?lol

If you haven't already checked out Dave Ramsey, get his Total Money Makeover (the library will have it also)- you'll definately get your financial self-confidence!! I provided the link to the Amazon site so you can see the reviews. If you don't have a lot of time to read (like us), I recommend the audio version. DH listened during his commute (twice!)- if you knew my DH, you'd know that's a big deal :)

http://www.amazon.com/Total-Money-Makeover-Financial-Fitn...

Also check out his website for free access to his radio show (live or archived)

http://www.daveramsey.com/radio/home/

Best wishes!!! :o)

you need to pay down your debt! put enough in savings to have your savings total equal to $1000(and then DO NOT TOUCH IT) - then use the rest of the $2700 to pay down your debt. if any are smaller amounts or medical bills - call and say "my total is $500, but if i pay you $250 by phone RIGHT NOW, will you forgive the remainder of the debt?" - that is especially likely if it's a medical bill. you can't afford to "save for a house" right now if you can't keep your head above water as it is, concentrate on paying down your debt as soon as possible, then you can start socking away money for a house with a clean slate. good luck and congrats on finding that money!!!!!!!!!!!!!!

But...before you pay down any debt, try to request and see if you can get any debt forgiveness or new, more favorable, payment terms. That will make your pay down of debt stretch more, and keep that $1000 of emergency fund a little less likely to be called upon so quickly.

Without knowing the details, I would take $200-$500 and put into your savings and put the rest toward paying down the debt.

I vote for half and half. Congratulations on your windfall!

I agree with others, go through the Dave Ramsey Financial Peace and you will be able to focus and get out of debt!