Reliable car or eliminate debt?

Question

My fiance and I have a total of $4000 in debt ($3000 on a credit card and $1000 in student loans). His grandparents' friends have been saving up money for him since he was young and they're giving him nearly $5000 in a few weeks.

Now, we're trying to decide what to do with the money. I would like to use half on the debt and use the other half to buy a newer car because the car we have now is falling apart (it's a 92 Chevy Corisca). The transmission is going bad and I KNOW that it will cost a lot to fix. I think buying a newer car would be wise in our situation. Also, I will be receiving $1500 in October that we can use to finish paying off the debt so in the end, we'll do what he wants anyways.

He thinks that we should just pay off all the debt and spend the rest on car repairs. I don't think this is wise because in a few months, the car might p**p out on us and we'll be stuck with no car and end up with more debt by either having to fix it or buy a new car.

What should we do?

Answer 1

maybe if i were in your position, i'd pay off the debts as your husband said, then the remaining money i'd save or put in a savings account where it could accumulate over time. then get a loan that you could easily pay off, or get a loan consolidation for all your current loans and that would save you a ton of money in the long run :)

i also could recommend you this website where they offer loans for everything plus debt help/settlement :) http://instantloansearch.com goodluck w/ everything!

Answer 2

I would pay off the credit card debt and start saving now for another car.

Your primary goal should be to start saving money now in case your car suddenly needs repair or replacement. The credit card debt is preventing you from saving, so you should pay that off immediately. If the student loan payments are high, you should pay that off too. Put as much money into savings as you can in order to build it up as quickly as possible.

It is important to avoid keeping a balance on your credit card. That is how people get into trouble with debt -- they build up a balance that they can no longer pay off. You are lucky you are getting that money, otherwise you could probably be one of those people.

Answer 3

The first thing I would do would be to put $1,000.00 aside in an emergency fund.  That way if the car does p**p out you are prepared.  I would use the other $4,000.00 to pay off your existing debt.  As soon as that is paid off, take whatever amount you were paying on the debt and put it into savings for a newer car.  Keep saving until you have enough to pay cash for a good reliable used car.  You already know that you will be getting another $1,500 in a few months and you can add that to the new "pre-owned" car fund.