Comments on: What Debts Should You Pay Off First When You Get Extra Money?

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@fingers714 Paying off your debts is always a good thing. You should feel pride that you are moving in a positive direction. Sorry to hear about the judgement. Hopefully you can get that resolved. Look for my direct email on this issue.

By: fingers714

fingers714 — Thu, 01 Jan 1970 00:00:00 +0000

@Philip Taylor @fingers714

Philip,

I paid all my debts except for one that is caught up in legal action from the creditor. They are suing me and a judgement is pending. I don’t have the funds nor do I have any assets. In your opinion how should I handle the pending judgment? Its scheduled for a hearing in March. Also, Should I regret paying my other debts that were in collections since this judgement is coming? I felt I was doing the right thing by paying them.

I wanted to pay the debts to rebuild my credit but it doesn’t look good now with this pending judgment. I almost feel I just wasted a few thousand dollars.

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@kll9589 Yes, that’s what I’d do. I’m assuming that your credit card interest rate is much higher than the car note interest rate and I’m assuming that the car not interest rate is not above 5% or 6%.

By: kll9589

kll9589 — Thu, 01 Jan 1970 00:00:00 +0000

@Philip Taylor Thank you! I just want to make sure I am hearing your advice correctly… pay off the credit card THEN save and not worry about the car note as much?

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@kll9589 I can only tell you what I did in this exact situation 5 years ago. I first paid off my credit card debt and then I saved 20% for a down payment. Just my opinion, but doing both of these things is a better signal that you are ready to buy a house than a certain debt ratio.

By: kll9589

kll9589 — Thu, 01 Jan 1970 00:00:00 +0000

My debt to income is 14%. I am starting to prepare for a home purchase in the near future. Is it better to take extra money per month and apply it towards my car loan or low credit card balance, or put it in my savings account?

By: kll9589

kll9589 — Thu, 01 Jan 1970 00:00:00 +0000

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@fingers714 I think your priority here should be to have a thousand or so set aside in a small savings account. Then you should get rid of all of that debt in collections, as well as all of the misc debt. The personal debts can wait, and don’t have any effect on your credit-worthiness, unless they take you to court, which is unlikely. The debt in collections is a much higher priority. Good luck to you.

By: fingers714

fingers714 — Thu, 01 Jan 1970 00:00:00 +0000

I just received 6000. from a settlement. For me its found money but its actually all the money I have since I don’t have any savings. I’d like to pay off some outstanding debts that have gone to collections and some misc debts and make a car payment or two but I also owe some personal debt to friends and family. I’d like to also invest a third into my business. Whats the priority here, my friends and family or my outstanding debts. I’m having trouble sorting this out in my head. If handled properly I can make headway but I’ll be bone dry in the end. I’d like to save a few bucks too!

By: PB

PB — Thu, 01 Jan 1970 00:00:00 +0000

@Philip Taylor

PT thanks for your advice. I had the same idea on the PMI, just wanted to see your thoughts.