What are best options for handling debt and finances

Question

officially divorced about a year and I've been renting a place for about a year and a half, I'm still on the mortgage account but will be officially off in about a month. The mortgage has been paid all along so I'm ok there, but my credit has suffered in other ways. I really need to upgrade my living arrangement for many reasons, but I also have credit card debt that needs to be addressed as well. I will have access to a decent amount of funds shortly, and my first thought is to pay down as much debt as possible, and then look to upgrade. I know by doing this it will start to impove my credit, but at the same time I'm concerned that by putting all of this money into debt reduction, I won't have resources to make any changes in my living arragements. I realize that some more patience may be in order, but I've been more than patient and we are simply too cramped in an apt. Should I consider only using some of the money towards debt or is there some other angle I haven't considered? Thanks for any insights or creative ideas - I tend to internalize items and try to solve them alone, but this may be a situation better served by outside ideas and suggestions. Thanks.

Answer 1

It may seem more reasonable to spend the money on getting a new and better place. In fact it may give you the emotional motivation to continue to commit to getting your finances in order. However, even without looking at the specific numbers, mathematically, it is always best to pay off debt first. You don’t want to use the money to place you in a better home (not sure if that is buying or renting a bigger space) if once you are there, you will struggle with daily cost of living. A larger place will translate into larger expenses. Additionally, a good credit score actually helps you get a better place. If you are buying, you will get a better rate if you wait and improve your credit first. And if you are renting, your credit score may cause them to charge a higher monthly rate or not qualify you at all.  If you absolutely MUST choose to do so, at least split the money and use “some” of it pay off your highest interest rate card.  

Good luck

Answer 2

The best option for debt trouble is negotiating your debts with your credit companies to keep the payments from swallowing all of your income. Typically, you have to get a counseling agency to call on your behalf. If you try to work with them yourself, many of them will not cooperate with you because you are not enrolled in credit counseling. Try http://www.womenindebt.info. Good luck!