What is the the best approach to pay off my debt with a 70,000 lump sum and buy a house in a year?
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i have a 35,000 and 25,000 auto loans out. 12,000 in credit cards. i'm tring to figure out the smartest way to make 41,000 after taxes stretch as far as i can.and maybe buy a house in a year or so.
What is the the best approach to pay off my debt with a 70,000 lump sum and buy a house in a year?First, obviously, do not use the credit cards anymore. Work on getting the credit cards paid off, if they have higher interest rates than the auto loans. Figure out what money you have available to pay toward the debt on the whole. Make minimum payments to the stuff with the lowest interest rates. The stuff with the higher interest rates, pay extra on, as much as you can. Don't eat out too much or go to the movies all the time. You need to work on getting rid of that debt.
Meanwhile, put 10-15% of your take-home pay into a savings account somewhere like ING Direct or another higher-interest savings account. This will be your down payment savings account. You need to pay yourself this savings first, to make sure you will have a good down payment. No-money-down loans are going away in a hurry, so you may not be able to find one when you are looking for a house.
As you get the high interest debt paid off, put that extra money that you now will have towards the next highest interest debt. This way, you'll continually pay down your higher-interest stuff, while still saving for a down payment on a house.
Hope that all made sense. Good luck!
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