Wedding Woes

Windfall worries

Dear Prudence,
I struggle with consistent employment and my husband works retail. We live very conservatively and barely make ends meet. My mother (probably and justifiably assuming I’ve passed the point when I’m ever going to finish my degree) recently turned over to me the $20,000 trust she’d intended I use for college. I know from regrettable experience how quickly money can disappear into day-to-day expenses, and I don’t want the windfall to go to waste. There are also several large expenses that have been haunting us for a while that I could put the money toward (repairing and paying off the car, getting out of credit card debt, etc.). Should I use it immediately on something like that, sit on it and try to avoid using it as much as possible (knowing that it may be much diminished from one minor emergency after another), or block myself access to it completely to avoid the temptation and let it continue to accrue value while we keep on trying to become responsible, well-paid adults on our own?

—Sudden Surplus

Re: Windfall worries

  • Speak to your bank. They have financial advisers.

    That being said, it would be most beneficial to pay off things. Start with either the highest interest or highest amount to be paid. Do that first.
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  • Talk to a financial advisor. Maybe they'll say pay down some debt and invest/protect some of it. Maybe they'll say pay down all the debt. But an expert is really the only one that can help you make the best decision here, not Prudie. 

    Too bad Slate used to have a financial advice columnist, but they canned her when she tried to unionize. 

    In general, I think it would be best to pay off whatever they're paying the most interest on, which sounds like it's likely the credit card debt.  Depending on what kind of repairs the car needs, that might be an even bigger priority, or maybe they can do both.
  • edited June 2017
    Pay off the credit card debt first. 

    Then meet with a financial counselor about the rest and to get basic financial literacy help. I'm not a financial counselor, but I would invest the rest. I'm going out on a limb here and guessing these people do not have a retirement plan. This is an excellent opportunity to start one.

  • Also not a financial advisor but I would pay off the credit card. If the car payments have been manageable then let it stay. Repair the truly necessary before it becomes a bigger money pit. 
    save what ever is left over as an emergency fund
  • levioosalevioosa Southern California
    5000 Comments 500 Love Its Fourth Anniversary 5 Answers
    Credit card for sure. I'd also like to know how much CC debt she has. Because $4K in debt is a looooot different than $25K in CC debt. If it's way up there, I'd probably tackle that first and keep a few grand in an emergency fund. My CC has a 21% interest rate. If I racked up $25K in debt there's no way I'd ever be able to pull out of it with my current financial income. 

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