Money Matters
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What should I do with this money?

So if you remember my prior posts, my car broke down on me for good. The transmission went out. :(

Well after I get off work today, I am going to clean out the inside and outside of my car, take pictures of it then post an ad on Craigslist to try to sell it.

I am hoping to get $500 to $600 for it. So here's my question. What should I do with the $500 or $600?

Apply to my delinquent credit card debt which is about $1600? Put it into my savings account (I don't have any savings right now at all so BF keeps saying I should use it as a savings cushion)? Or use it as a down payment and try to get a used car loan from the bank?

I was planning on buying my parents' old 1996 Buick sedan but it keeps breaking down, sort of. Like recently, the air conditioning keeps going out and the car also needed a new tire. Just minor things like that, here and there. But I also don't want to be constantly replacing and/or fixing those minor things. I want a newer, dependable car. I was hoping to get a 2005 Ford Focus or Toyota Corolla. But I'm open to older cars and different models. I just want something dependable and that I don't have to constantly fix!

I thought I could maybe use the $500 as a down payment for a used car loan. I spoke with my bank and she said the minimum loan amount is $3000. There is no age limit. But the car has to be worth at least $3000.  

So what should I do? Thanks in advance, I know I keep posting a lot lately but I swear, this summer has been rough financially! Looking forward to when things get better :/ 

Daisypath Anniversary tickers

Re: What should I do with this money?

  • Start paying down your debt. It affects so much of your life and the more you ignore the more it will cost you over time. 

    There's no point in taking out more debt (car loan) when you can't afford the debt you currently have.

    It's a hard lesson, but it can be a vicious cycle if you don't get it under control now.  

  • Put most of it on the credit card. If you can go without a car for a bit, take this time to pay that debt down and save up. You'll raise your credit score and save major money in interest when you do get one. With a little bit of savings, you'll be able to use that next time you have an emergency. 
  • Pay the CC. That's a negative mark on your credit report, which you should try to get cleaned up as quickly as possible.

    Just an FYI: if you still have a delinquency on the credit report, which it sounds like you do with this CC, the bank is not going to give you a car loan no matter how small it is. They cannot prevent you from applying and they must take an application if you ask them to do so (per lending laws), but they will most likely not approve the application. Just want you to be prepared for that.

    Also, if you have $0 in savings, then perhaps you want to split the money you get from the car sale between the CC and a small cushion for savings.

    It's a tough call. B/c both are important, but either choice is a good one...you can't really go wrong either way, IMO.

  • Pay off your credit card! Live without a car until your credit is back in order. Take the bus. It's MUCH cheaper and while sometimes annoying, it's the responsible thing to do to get your finances back on track.  

  • Emergency savings. Ordinarily I'd say credit card, but if you literally have no savings, that has to come first.
  • I'm not sure what stage of "delinquency" you're at with your credit card debt but I can tell you that if the credit card company decides to take you to court, the attorney's fees and court costs will be significant.

    They can do a bank levy (TAKE the money from your accounts), in fact, i know of one company where someone had a credit card delinquency and had their pay deposited in the same banks checking account. The bank froze that deposit as a payment towards the debt (totally legal) and sought permission from the courts to have it (most of it) paid towards the debt.

    It sounds like you're not doing well financially so I would either put the money in an account to make the monthly payments that you can't make, or I'd use the majority of it ($400 or so) to put on the credit card to reduce your interest, and keep $200 for an emergency fund.

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