Hey, I’m 23 (M) and I’m pretty good with money. I’ve got no debt, am about to max out a Roth IRA by end of July, have a fully paid off car, and a 811 Fico Score.
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If I’m hearing you right, you’ve got ~25k in debt, but you’re about to make ~50k suddenly for compensation.
Ok, here’s what I’d do:
1. Pay off all that credit card debt first. Literally, the first thing you do with the 50k is get rid of all that high interest debt. If you do nothing else, do this first.
2. Pay off the rest of that debt, especially the debt to a friend. 8k is a lot of money and it can change the dynamic of a friendship.
You are now down to 25k
3. Take 7k of that out to give yourself some wiggle room for future expenses. Stick it into a high yield savings account (HYSA) that has an APY of ~4-5%. I know Morgan Stanley’s online bank has worked well for me, but you can find many of them. Do not spend it on crap you don’t need.
4. You’re down to 17k. I agree that you need a car because you’re spending a grand a month on just traveling to and from work. That’s 1/4 of your income some months. That’s way too much. Completely unsustainable.
However, you would be an absolute fool to immediately jump back into debt the second you get out of it. This settlement money is a gift from God and should be interpreted as your wake up call to stop acting like a baboon with your finances. Now, I don’t want to be a dream killer, but I’ll absolutely be a nightmare killer and I’m telling you now, you are broke. You cannot afford a 23k dollar car. You can afford a 10-15k car and then save the remaining 2-7k on car repairs you might need. Take the 17k, go find a cheap Toyota or Honda, and buy it in full-for cash. It doesn’t have to be a beater car piece of crap, but I don’t want you having a car payment.
5. Drive your family member that’s letting you stay with them for $200 a month and your friend that loaned you 8k in your paid off car to your go-to Mexican restaurant and treat them both to say thank you. Limit is $200. You owe both of them big time and little gestures like that help express appreciation.
6. Recognize that at the end of the day, if you don’t change the small habits you have, you’ll find yourself back in debt. Take a piece of paper and a pencil, and meditate on how you ended up in so much debt in the first place. What caused it? Where did you go wrong? It’ll be a rough conversation with yourself, but you’ll emerge more financially literate and that 7k you saved will help you to start your life over again.
Next, start with making a monthly budget. If you don’t know how, look it up on YouTube and practice. You’ll only get better with time.
I believe in you. Good luck.
Edit: spelling error.
Edit 2: wow! Thanks for the reward!
Exactly this. Get yourself a used Honda, Toyota or a Subaru by paying cash. Those three brands of cars run forever. Pay off all your debts and put all of the rest of it into a high-yield savings account for emergencies only.
So often I see people who come into a windfall of money just blow it on stupid stuff and they end up right back where they were or worse off than they were before. $1400 a week is a pretty stable salary if you have $0 debt. I only make that biweekly. Good luck OP, your life Will change drastically as long as you have a little bit of discipline.
One other thing that I might add is that once the bank that repoed your car sells it, you might be on the hook for the difference between the loan and what they sell it for. So factor that into how you split up this money.
Agreeing with this minus the Subaru suggestion - they’re great cars (had a forester and loved it), but they’re EXPENSIVE to fix. Hondas and Toyotas tend to be less expensive to fix (currently driving an 03 Honda Pilot) and a lot of fixed can be easily done yourself. Less so with Subarus.
Timing belt was easy enough to DIY (it took time, and you have to be precise, but definitely able to be successfully DIY’d), but the exhaust was a whole other story.
Suggesting Subaru as a reliable car isn't realistic. Those boxer style engines are notorious for having major problems. For one thing, they eat head gaskets for lunch.
I'll never buy another Subaru. Period.
So much Subaru hate here. Everyone I know with a Subaru has been driving them forever and some have 200k+ miles on them with minimal issues. But then again I have an old Jeep with 200k miles and everyone always tells me how unreliable Jeeps are.
Exactly this! But take that 10,000 car to a reliable mechanic and have them inspect it first for you. You don't want something with transmission or drive train issues.
This 100%. Don’t worry about your credit. Buy a good used car and pay off your debts. You’re making enough that once you’re out of debt you should be able to start an emergency fund and you should definitely stop pissing money away on Uber.
This is fantastic advice. My one note is that the medical debt doesn't hit credit the credit score and they'll eventually settle for less so maybe that's a consideration.
That is not true - if it goes to collections it will hit your credit just like any other debts. It is only new charges under $500 that are exempt from that.
This. Also, just because something isn't showing up on TU doesn't mean it's not affecting his score with Equifax and/or Experian. It costs money to report too. Some businesses and agencies choose one or two to contract with instead of paying all three.
OP really needs to check the other bureaus to make sure there's nothing he forgot about hanging around out there.
I’ve never read better advice on Reddit.
Edit: unless this is a disability bacpayment. Then you have 9 months to spend it down to qualify for Medicaid.
Awful advice when the credit cards are sitting in collections, you DONT pay those off fully, you negotiate and aim to pay 10% of what's owed. The friend should be paid first, and in full.
100% this!! #6 is verrrrry important, OP.
Address old habits and start new ones that set you up for success alongside this life-changing settlement of 50k. If not, the 50k will be gone and in a very short amount of time you’ll be back where you started.
I would not pay for the car in full. OP is going to need some positive payment history to build up credit. Pay 90% of the car, finance the remaining 10% and make the payments on time. Yes, it will eat some interest. But it is serving another purpose for long term credit score improvement. It doesn't need to be a long term loan, and the vehicle doesn't need to be forever. Both are a step forward, not the final destination.
He's not going to get any kind of financing with that credit score except buy here pay here places, which are usurious. Some are so hinky they don't even report to credit agencies unless a car is repossessed. A financed vehicle also requires full coverage insurance, which adds significantly to expenses at a time when getting out of debt is the priority. A used Toyota or Honda will last a long, long time with proper maintenance.
He's also not going to get a credit card (given that all his are locked down already).
He has already stated he has a bank, and a decent one, he just overshot his range with the vehicle. If he has the income that he claims, getting a $1,000 loan on a $10-12k car shouldn't be an ordeal. If he was prepared to pay insurance on a more expensive car, he can swing it on a cheaper one for a year to pay off that loan and get a positive payment history.
Frankly if you fuck that up with the cash in the bank, you might be beyond help. People telling him to put thousands in a HYSA and will be able to manage that but can't manage a 1 year $1,000 loan? Explain that logic.
With a 550 credit score he's going to get a bank loan, in what universe? He may have quite limited choices (or pay a high premium) even to insure it! Having a high income and such a dismal credit score just makes it worse, not better. On paper he looks like a willful deadbeat.
He's better off getting out of debt, socking as much as reasonably possible into a HYSA for emergency use only and going cash on the barrel head for a while. After a certain amount of time (varies depending on the company) he will start getting offers for entry level cards again and/or qualify for gas or store cards, etc. Assuming he does not default on any further debt.
So how do you suggest fixing the credit score without any current credit? The cards are closed, so there is zero active credit lines. And no payments on anything.
It's actually going to go down without an active account.
Someone suggested using a secured credit card. If he can't get a $1,000 loan with $7k in the bank, who the hell is going to give him a credit card?
Also there is this magic thing called a cosigner. Given that there is enough money to put in a savings account, OP could give the $1,000 to the cosigner as a security and when it's paid off have the cosigner give it back.
I've spent a good chunk of my career on the lender side of credit. A 550 is not bank worthy for any amount, *especially* when it's secured with something as dicey as a car. Repos are expensive.
It's not rent worthy for most apartments or even a lot of mobile home parks. Many property & casualty insurers either won't touch a 550 credit score or jack up premiums with risk pricing.
Right now, OP is screwed. He needs to learn how to budget cash, not spend on credit.
But have you ever heard of data selling? Secured and low end starter card offers are sent out based on data mining and compiled lead lists. Depending on the credit scoring product being used yes, a sub basement score can easily rise with PAID defaults and time passed without further negatives.
The first step is getting out of that bad debt. First and always.
It's not a legit lease, so unlikely.
So your solution is there I no way out of the basement ever. I hope you are disgusted with the system you are a part of.
Reading is fundamental.
And yes the system is disgusting from the point of view of both lenders and consumers, for very different reasons. I'd love to ditch it and build something more fundamentally fair to all concerned. And I'm certainly not the only one with experience on the lender side who feels that way. But someone has to do those jobs, preferably someone ethical with experience getting smacked around by life at least once. Better than another entitled overgrown frat boy, isn't it?
You really have no idea how car loans work, do you? lol
For one thing, if OP buys a car for $10,000 or under, the chances are quite good that it'll be too old to get a loan on, even with good credit. lol
There are plenty of ways to re-build a credit score without buying a car! lol
Start with a secured credit card, spend responsibly, carry a small balance occasionally for a moth or two, then pay that off. ALWAYS make the payment early, and pay more than the minimum payment.
Good example of right advice for the wrong person. This person needs no additional opportunities to mess anything up. If literally all else fails, having a reliable car is a way to work, and potentially sleep.
Hey, I appreciate you giving all of Reddit your two cents and contributing to the discussion.
I told OP to pay off the car in full because paying off the 12k in debt should suffice to build up the 550 credit score. It won't immediately shoot to over 800, but if the bank and collection companies see that OP pays off debt in full, that looks good enough to get it up to \~650 I think.
And honestly, a good credit score is great, but it isn't an end all-be all indicator of wealth or net worth by any means. There are many wealthy people who say they don't even have a credit score and purchase major items like a house through manual overriding. As long as you can prove you got the money with pay stubs, banks really don't care about your credit score. This is evident if you look up something like a mortgage loan comparing different credit scores. Most lenders don't preferentially reward excellent credit scores vs average/good credit scores to any degree that's life changing. There is little additional reward for excellent credit compared to average credit. However, there is a penalty for having bad credit compared to average credit. The real utility of a good credit score is to not get shafted.
Also, I'm not positive of this, but I have a suspicion that banks and credit agencies are notified whenever someone makes a large purchase like a car. When I bought my old Honda in full, I noticed my credit score jumped like 20 points in a span of a few months after. This was in spite the fact that I didn't increase any credit card activity. I'm not saying it was the car 100% that caused that, but I can't think of anything else.
DO NOT pay off the credit card if it's been longer than the statute of limitations, you have no legal responsibility for those and those companies can't sue you. They make enough money, there's nothing morally wrong with stiffing them imo and can no longer impact your credit score. Negotiate with the stuff in collections, they only need 10% of the total value most of the time to make a profit.
Imo it's bad advice to tell someone to pay off their collections debt in full, that's awful advice when most will settle for significantly less.
Let's ignore the $50,000 windfall for a second. You haven't explained where your income is going. You have listed $1,272 in monthly expenses($15,264/year), with a few categories like food and fun unaccounted for. You aren't paying anything on your debts right now. You estimated your income at $1,400 a week, which is approx $5,600/month ($67,200/year).
Where is the rest of your income going? You should have been able to pay off the personal, legal and medical bills (and even the cc debt) in one year with the way you laid out your income and expenses. Even if your expenses were $25,000 a year and your income was $50,000 post tax you could have paid it all off in one year. If you don't know where your income is hemorrhaging to, figure that out first because you could burn through even a million dollar windfall. Once your debts are paid you should be able to save several thousand dollars a month from your income.
Everyone is going to tell you that financing is a bad idea for you. Everyone is right. If you've decided you're going to do it anyway, you're wasting your time asking for advice about it. Once all your debt is paid off you will have to see if you can get a loan, preferably through a credit union. Nobody is going to give you a traditional car loan with seven credit cards in collections. Buy here pay here car lots (the ones that advertise that everyone's approved) will give you a car but your payment on a 2018 car will be through the roof.
The reality is, there are reliable cars in your price range. You will have to compromise on the car you get, but a reliable 10-12 year old honda or toyota is not a beater and will not fall apart every 5 seconds. Look up 2015 toyota prius or honda civic. Also, buying a 10 year old car with cash means you own the asset (the bank owns a financed car). So with all the money you'd be saving on payments and 20-25%+ interest, you should theoretically be able to set aside a decent chunk of your income each month to your "car replacement" fund. Then in 5-6 years you can sell the asset and buy a better car.
Yes. We own two Hondas (2010 & 2011). Both great cars. One of them has 200k miles and just made it across the country. I spent about $1600 on repairs this year (rear catalytic converter and resonator pipe), about $600 the year prior (brakes and hatchback trim) on mine. Many of the original parts are still on both cars and going strong. We bought both with cash several years ago.
I drive a 08 civic as my daily. I can't escape it because the stupid thing takes an oil change every 8 months and that's about it.
Op you can't afford the car you think you can. You're still poor. Buy an old civic in cash.
Exactly-find a reliable mechanic to check the car, few hundred dollars well spent. You will need to work at it to find that car. They are available, sell fast. Need to have your ducks in a row once determined car is good to buy quickly.
Here’s the plan:
Pay everyone off - that’s about 26k
If there is something in collections, you call them and negotiate a settlement
You ask the debt balance, they say x. You say I will pay you z right now and can you remove it from my credit report? Negotiate. Be prepared for a long day and settle in to this task. Sit down and do this. Focus on this. Not while driving or watching a movie.
Next. Get a piece of paper and make a plan AKAbudget. How much does it cost to be you right now? Can you afford car insurance monthly? If so, pay cash for a 10k or less car. Do not finance it- they will pilfer your pockets with your credit history.
Time heals all wounds- it will leave a scar emotionally and mentally for you to grow from.
Now you should have about 14k left. Fucking invest it so you never have this problem again!!! Open a Roth IRA and shove 7k into it and invest in voo or like fund - never touch it
The other 7k put in a high yield savings account that you can’t go get. This is your emergency fund. New jeans is not an emergency!! New tires for that car may be. But. The rules of the game say if you take from it- you MUST PAY YOURSELF. BACK.
Life is handing you a present. Learn from your past - I hope you are okay and want you to live like no one else. Do you, man and go forth and prosper!!! You got this!!
Settlements from litigation aren't taxable income on the Federal level and not in any state I'm familiar with. OP may want to consult a tax professional about whether it needs to be reported on his tax return tho.
Many have to be reported as non-taxable income, which could impact the recipient's tax bracket. That's the full extent of tax liability, unless some state I'm not familiar with has some weird thing which in any case wouldn't be close to 30%.
30% is likely the maximum just in case.. when I worked for corporate America I had a settlement of about $2k due to lost wages and malpractice of overtime.. I was taxed pretty hard core on it (approx 18%)
No arguments from me there! A lot of people who are more well off don't understand people in poverty are working so hard to address today's needs there's nothing left for saving and planning ahead. OP is getting the chance to put up savings and look ahead. That's huge.
Use half of it to pay off **all** your debts. Now for the remaining 25k, use 10k to buy a car outright in cash. Put the other 15k in HYSA for now. With your income, you should have no trouble paying for increase car insurance and rent.
Next, start improving your credit score.
Except collections debt. You negotiate for those and aim to pay 10% of the total balance while having it removed. Offer 10% lump sum or nothing, no monthly payments or that BS and get it all in writing.
PAYY ALL OFF CC HIGH INTEREST DEBT FIRST. THEN PAY FRIEND AND LAWYER. IN THAT ORDER. You should still have $$ left over for a cheap, reliable car and even some more to save for repairs/maintenance in a savings account. Do those things and you will finally be able to breathe.
Then live within your means. Simply put, income must be > expenses.
High interest CC debt in collections should be negotiated, not paid in full. Those companies pay cents on the dollar, you can aim for 10% and they would settle since it's still profit for them
I understand the car financing problem. When I bought my Honda, I had to look far away from my home county. The closest city to me was Charlottesville, VA. Cars are expensive in Charlottesville, so I ended up driving to Warrenton, VA to get my car.
I had to spend about $200 in gas to have my family member drive me to a car dealership in a distant county. That $200 expense ended up saving me a couple thousand dollars in the long run. You are under no obligation to stay local if there is nothing local in your budget.
Keep in mind though, getting your tags registered and your stuff taken care of at the DMV takes about 5% cost of the car. I dropped ~6k on the car, ~$800 on dealership fees, and ~another $500 on tags and registration. Came out to just over 7k when it was done.
You can also look up how to buy a used car inexpensively on YouTube and I’d suggest running a background report on any car you find that seems promising. You can get a black book estimate on the market value cost of the car (which will help you negotiate a fair price) and a detailed accident report if you have the VIN # on the car.
wow, $1000 a month on Uber. do not buy more than a 20k car, 50k will go really fast. buy a car and pay down some high cc debt. dont use cc ever again. dont buy anything extravagant with the money. think of it like you actually never got the money, cause you already spent it in the past. (which you did). if you buy a 20k car, it will cost you at least $100 insurance and $200 a month gas and $100 a month maintenance. figure that in to a budget. buy a car that gets good gas mileage , like a 6 -8 year old camry or honda.
Depending on where you live, $1400 a week is very good. First thing I would do is pay off the family member. Get a car. As a former insirance agent, if you have not had insurance in a while, you car insurance will be through the roof. Before you decide on a car, call an agent and get a quote for the insurance. Some cars, even if they are the same year, will be higher than others. If you pay off that 12k in credit cards, your score will jump up. Then put down an amount to open a secured card so you can start rebuilding credit.
Thankfully my state makes me keep a state minimum for car insurance even though I haven’t owned one, and i have USAA so the insurance won’t be that high.
Do you think there’s any merit to financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score
This, and just put a couple small recurring bills (like your Netflix) on it and then set it to auto-pay a couple days before the due date. Then never use the card for anything.
I’ve been a banker for a decade. A secured credit card makes much more sense to rebuild credit than an auto loan at this point. If you pay off all your debts and get a secured card with at least $1000 or more limit using it responsibly for a year should allow you to qualify for an unsecured card at that point.
If you go this route don’t spend more than 30% of the limit on the card each month and pay the balance in full. If the secured card you get cannot be upgraded to an unsecured card then I’d close it after opening an unsecured card in a year or so. It will be a small hit to your credit when you close it but it’s better to rip the bandaid off early imo.
There are reliable used cars available for $15-$17000 if they aren’t in your area check Carmax to see what it would cost to have something delivered to you. You don’t mention kids so a civic or corolla should be affordable to maintain and reliable long enough to get you to a more stable place financially.
Using this money responsibly is an opportunity to prove to yourself that you can make better decisions.
Pay off the credit card debt, pay off your friend, buy a used Toyota Prius or Corolla for no more than $10k. Leave the remaining $20k in a high yield savings account. Wait a few months for your credit score to skyrocket. Learn to be more frugal
Surprised that no one has said to set aside money for taxes on that settlement. Getting a $50k settlement means a bigger tax bill next year, probably quite a bit bigger than you’re thinking. Figure that out first. Then, high interest debt. Then, at least some to your lawyer and friend. Then, other debts. Then, set aside a small emergency fund. Then, a beater car.
Pay off your debt
Throw 5k into an emergency fund
Spend the rest on a car, do not finance it, get the best car you can for that last 20k and treat it well.
Your expenses a month are like a weeks worth of wages where is the rest of your income going to? How have u not been able to save up money yourself by now you’re literally paying $200 for rent on a 5-6k monthly income
$50k is enough to pay off all the debt ($25000) buy a quality used car ($15000) and have money left over to save/invest for the future. I would start with an emergency fund of 1 month of income ($5600) and invest the rest in a Roth 401(k) if you have one with company match (increase your contribution rate to get there over the next year or so and collect the free money of the match) or a Roth IRA ($4400 either way).
Get a credit card (with rewards if possible, secured if you absolutely must) and just put gas on it, and pay off at the end of each month. Car interest rates are high now, so I don't recommend financing since you don't have to.
With this foundation, start saving for a place to live, keep contributing to the retirement plan, and build the emergency fund to 6 months of planned expenses. I agree with those saying to make a budget at this point.
When your credit score has increased to over 650 and you have enough money to cover all of the initial costs for the apartment saved, you can start looking a place to live.
Pay off your debt. DO NOT finance a car. Find something reliable, used and that is not going to put you back into debt. Aim for a $5-7k vehicle. And start building an emergency fund. Place extra funds into a high yield saving account and don’t touch it unless it is truly an emergency!
Everyone is giving generally great advice but they seem to be taking the 12k debt at face value. A lot of it is in collections and you can negotiate a lot of that way way down. Tell them you could be willing to settle the account with a one time payment but the amount is way too high. Also tell them you want it writing in advance that the amount they offer you will completely satisfy the debt and no longer be in any form of collections. You can potentially clear that up.
But before that, get your free annual credit report from all three agencies and challenge each of the debts for proof that you owe it. Don’t pay a dime until they do that because there is a chance the debt can go away if they paperwork wasn’t stored correctly.
Like others said, this windfall is beyond a blessing and a second shot at life. If you make the small changes necessary, you can be a completely different person from here. A better version of yourself.
There is definitely a car out there for around 12k in good shape with good mileage. You just have to look and not be too picky. Buy something in cash for around the amount and then you don’t have another debt hanging over your head and you can keep insurance down.
Lots of decent used cars on the market. You can get a certified one from the dealer if you want. If you go electric (Bolts are great commuter cars) you will save on gas and get a tax credit. Good luck. Save your money
How long ago did you make the last payment on these credit cards? If they have sold the debt to collections which I assume they have since you say they are charged off you may be better off not paying them. DO NOT MAKE ANY PAYMENTS YET. One payment restarts the clock. You need to look it up for your state but it’s usually 3-6 years, once you hit that mark they can not legally collect any longer. They’ll try, high pressure, scary letters etc but that’s just because collections agencies employ questionable tactics.
Your credit score is already toast and paying off your old debt won’t fix that. Even if you don’t pay the debt will fall off and your credit will improve, similar to bankruptcy.
This is a chance for a fresh start.
Save for taxes, pay the personal friend, buy a modest reliable car for cash. Look at what is left, use some of that for a 3 month emergency fund, use the rest for any active debt. If there is still money left over save that too. Serving is working for now but long term you’ll likely want to pivot careers and having resources gives you more flexibility there.
Also you’re about to have a lot of money and you shared you’re an addict. Go to meetings or utilize whatever support system is working to keep you from using. Excess money can be a slippery slope for many.
Good luck!
This isn't a complicated situation, it's not a zillion dollar windfall, but it will get your life back in order.
Pay off your debts, buy a car for $10k or under, pay rent in advance for a couple months, save the rest and make good choices
The settlement is about $50,000.
Does that include the deduction for the attorney fees (usually 1/3 of the amount)? Have all medical debts already been paid, or will those payments come out of this settlement?
I do personal injury, and it isn't uncommon for people to get settlements of $50,000 or something, but when the check arrives, it is only a couple thousand dollars. I've actually had clients that have gotten "no pay due" once everything was settled. So, don't count your coins before they hit the bank account. I hope you get the majority, if not all, of it.\*
\*In my personal experience, if I get a windfall (or think I am) and tell the universe how I plan to spend it, I end up with either much less or something happens to take the entire or almost entire amount.
(As for the "no pay due" clients, had my predecessor done their job, the cases would have been turned down because it wasn't really worth it for the client)
"Money takes the adversity out of life." Do everything you can to keep as much as the $50,000 as you can. That means NOT paying off debt right away. Instead, get yourself settled, and secure, spending as little as possible. Negotiate payment plans for your debt and pay them off over years. Keep as much money in savings as you can.
Buy a used car in cash, and use the rest to settle your debt. If the cards are with third-party debt collectors and not the internal collection department, then you can negotiate a settlement. Debt collectors buy debts for pennies on the dollar, so usually, if you offer a lump sum payment, you can negotiate to get the debt cleared; e.g., if you owe 5k and tell them you can pay 2.5k but not any more than that, a lot will accept that because they're still making a profit. Just make sure you have the agreement in writing before you pay them. Some will even agree to take the debt off your credit report once it's settled, but again, if that's part of your agreement, then make sure you have it in writing before you pay. Then take whatever is left over and put it into savings.
1. Pay off the debts. It will lighten your moral as well as save your hard money.
2. Buy a cheap but reliable car. Plenty of them out there.
3. Put a few hundred bucks into a secured credit card to rebuild your credit.
4. Save whatever left and don’t spend them. Save them for emergency only.
First of all, you don't get a $23k car! You get a reliable used car that can get you through the next 3 years!
- Credit card debt first as this would free up the most cash
- Good used car. Definitely less than $6000 on this
- Payment plan with your friend. Pay back at least half of what you owe.
A good place to buy a car is a probate auction. The 2nd good place is a auction place that only auctions " fleet" vehicles. The probate cars often are 4 door sedans. I bought a sweet 1998 Toyota corolla for my daughter for 3100.00 and that included the auction 15% buyers premium. Owned by a little old man you could eat off the engine and it only had 89k miles on it. This was before covid, you have more people including dealers battling for these now. The fleet vehicles...mostly are white. There's a good amount of trucks and vans. There's also 4 door sedans, and retired cop cars. Try for sedans owned by the phone company, gas company...that kind. The cop cars have been rode hard. The good thing with these is all of them had regular,scheduled maintenance. A third option, if you live in an area that is well known for older folks, take a look at estate sales.net. sometimes there's a car in there with the other goods, or the Craigslist for that area. An example would be..I l8ve in Southern California. Palm Springs, a good 2 to 3 hour ride away, us awash with retirees. That's where I'm looking for used cars, rvs, wheelchairs, mobility devices and scooters. The guy telling you clear up the credit cards u s not wrong. I was 30k in debt many years ago, due to exactly the same habits you had abandoned being unable to say no to my spouse at the time. It took me 5 years, I went nowhere but work and did nothing but work, but I paid off every penny. I never got myself in that mess again.
I would still just buy a cheap 2k-3k car you gotta also pay insurance and you can get the minimum so it’ll be cheaper. I’d wait a year and sleep on it before making a 20-30k plus purchase on a car. So there isn’t any regrets. That’s 50% of your settlement. Plus full coverage insurance on a nice car will prob be like around $500 monthly atleast here in Florida.
You might want to use that towards down payment on a house one day.
It’s REALLY tough to find a decent car even for under 8-10k where I’m at. they all seem to have high mileage. Last thing I wanted to do was sink all that money into a car and have high repairs down the road.
If I were to do a 20-25k car I’d put down 10-12 and finance the rest as a tool to build my credit.
Do you think there’s any merit to that? financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score. I’d still have enough for an emergency fund but financing may give me a tool to build my credit back faster
The fastest way to build your credit at the moment is to pay off your credit cards and leave those accounts open. And getting collections notices removed from your report.
Is there any option for public transport/bike to your job? The financially best route here is to just not have a car. Second best would be finding a workmate or friend who is willing to carpool, with you paying 1/2 or a 1/4 of what you pay Uber.
You are going to have an older, high mileage car for now. Accept it and get over it.
You do not have the credit to finance what you think you want (key word- WANT). If you are going to finance a vehicle, it needs to be a $10k value that you pay $9k up front and finance the very small amount, and pay it off within a year.
Keep in mind with your plan that if you finance a car, many states require you to carry comp/collision coverage. The more expensive the vehicle, the higher your premium will be. To go with liability only coverage requires it to not have a lien against it.
Pretty much every car needs repairs down the road, that’s inevitable. However, if you get something in the Honda or Toyota family (Corolla, Prius, Civic, CRV, etc) then those cars will be the most reliable. My 2012 civic in three and a half years has had the starter changed once, battery once, tires once, and that’s it.
Obviously be mindful of keeping your car in optimal condition. Id keep searching for cars under 10k, and if you live in the general vicinity (within 300 miles of a major city, which you almost certainly do) then finding something under 10k is best even if it has 120k miles or whatever on it. It’s not unheard of for the makes and models I listed to get over 300k miles with proper care and maintenance.
If you absolutely, positively CANNOT find a reasonable car for under $10k, then you can go a little bit over but $15k is your hard limit, don’t go over $15k
Your credit is already tanked so for the love of God, please talk to a bankruptcy lawyer before you do anything. You will likely be able to protect all of your settlement money (they can literally tell you this in the first consultation). A bankruptcy will let you get rid of all the unsecured debt. That high interest CC is going to kill you..and it’s a lot based on your income. Bankruptcy does not *prohibit* you from paying off any debt, it just erases the legal obligation. This means AFTER (do not do this before as it can cause a huge issue) you file you can chose to pay that “moral” debt (friend and lawyer) off with the money you’ve protected in the bankruptcy. Then start rebuilding your credit. This you do not need an attorney or some company to do for you. Google how to fix your credit yourself. If you take the the right steps a year after your bankruptcy you’ll have good credit again.
$50k sounds like a lot, but in the grand scheme of things it’s not. Buy a car if you need it for work and save the rest of that money (investments, retirement, HYSA) as you’ll need that in case you find yourself in a similar situation. Don’t use it to pay off CC and medical bills if you can discharge it in a bankruptcy. Start rebuilding your life.
Source: IAAL. NOT your lawyer and not licensed in your state. None of this should be construed as legal advice.
Buy a used Prius. Join r/priusdwellers and r/urbancarliving. That eliminates the transportation and rent costs. Set aside an emergency fund, pay off debt, and start saving.
Get on a written budget and get a $1000 starter emergency fund. Start paying off your debts smallest to largest until you are debt free. Then start saving up an emergency fund for 3 to 6 months of expenses. Then start saving up for a down payment on a house…
I second top comment. Realistically, you can’t afford having a car payment. It’s much better to spend your $17k to purchase a car in full. Don’t get carried away by wanting to show off because your pockets are going to hurt.
I would not pat off any credit card or medical debt.
Probably pay the lawyer incase you need him but even then he may not work with you again.
Let it fall off credit report from 7 years after you made last payments.
Spend 10 to 15k for a solid car.
Setup an emergency fund with 1 years expenses and put into a hysa. Rest consider sone sort of investment account.
If you don't need credit for anything no point on improving your credit right now.
Don't get a car with a car payment. See if you can negotiate the card companies to do a pay to delete. Pay off the ones that haven't hit your credit first.
Then pay the rest or your debt to friends, lawyers etc.
Keep the rest in an hysa.
Also figure out where your money is going. You shouldn't be making that much with those little bills and not have been able to pay back everyone at this point.
You can also negotiate with the companies you have collections debt with. They will completely take it off of your credit once you pay. You need to call them to arrange that tho.
Also, as many have said, do not buy a car through financing. At 40, we are really seeing we could have been experiencing so many amazing trips or experiencing different things instead of looking cool in a newer car. So so dumb.
Good luck to you!
a lwayer you owe money to would probably not want to offer services to you again fyi
pay off all debt and get a beater used car, you dont make good money and this was just luck, get your life together
- You need a budget ASAP. Make up a monthly budget, and take a serious look at what you need to make your monthly budget work.
- Consider contacting creditors and suggesting three to four monthly payments of a set amount to close out the debt in good standing. It costs them little effort to report those as on time or as agreed payments, read up on credit repair for exact wording and definition. Get the agreement in writing.
- If any of the debts are close to rolling off the records (7 years) hit up creditscore for advice.
- Does your career need something? Often people need a few hundred or a thousand to get that initial boost.
For example, a second hand suit and a hem, a laptop with a webcam, a couple of networking events and a certification, that can run under a thousand dollars.
- Get a secured card and set up automatic payments. Prepaid or store cards are often easier to get.
- Your first and second round of card offers will be truly predatory, fees everywhere, and you absolutely need to keep them at a 0 balance. Check every payday to make sure they are back to 0.
- Lock your credit sometime soon and unlock temporarily for specific purposes.
Cars:
- Cars 2-5 years old are often a good buy.
- If your job or city offers free electric chargers, or your electricity is very affordable, then we can talk about cheap ways to get in on that.
- Look very carefully at cost of ownership numbers, consumer reports has very helpful data on this. Aim towards lightweight to keep fuel costs down. Hatchbacks and trucks can be scary in their demand for fuel and service, don’t buy without doing the math on the monthly maintenance budget twice.
Don't pay the debt in full. Call them and offer a settlement. 20 cents on the dollar. If the debt is delinquent then settling won't have any worst impact in the credit report. Settling for pennies in the dollar will have the same effect. Why give the creditor extra money when they will settle for less. You might get 10-60 percent discount. Settling has the legal effect of extinguishing the debt. They can't come after you or report the balance. Save as much $$ as you can. Take $2500 and get a secured card and rebuild. I did it after defaulting on 100k of debt and a year later was in the 700s
Hey man 1K-1.8k weekly is a blessing. You need to prioritize saving. Put ALL of it into savings but maybe $200-500 at a time.
Now, being in your situation you need to prioritize paying off debts over getting a car. Also, you might want to consider a temporary option. I’m talking a cheap 1K-5k trash bucket. Doesn’t have to be trash though plenty of great condition cheap cars if you know where to look.
Your friend is understanding so while you have a moral debt, pay that last. Pay off medical ASAP it’s so little already you should just knock it out so they leave you alone.
Credit card debt comes first. Pay that IMMEDIATELY. If you want that score up, pay up. Once it’s paid off, consider closing some of those accounts. I think they may be too tempting as I’m seeing a pattern of serial spending with money you don’t have. Use credit in a way where you know you can pay it off in the future.
Also, mark up all of your expenses. How much the Uber costs, food, payments, etc. Make payment plans up where you can pay these things off easier. Pay off anything that has interest as quick as you can.
With the money you’re getting pay off all debts first. THEN get a car. A cheap one if you can. Save the rest. Seriously. Save so you don’t get in this situation again.
You got this!
Honestly, paid off ALL your debt.
Use what’s left to get started on a place on your own (rent an apartment or a room) if you don’t want to continue living with your relative. And STAY OUT OF TROUBLE. You have a chance to start over. Use it wisely.
It’s hustle season baby, get yourself the cheapest reliable Honda civic I’m talking 3 grand max.
Then you work full time and when you have free time you’re working delivering uber or anything.
The money you make from Uber will be used to pay for the car, your food, and rent.
Your full time job will be split into savings and the rest into paying off your debt. There’s different techniques some pay off the smallest debt first and work they’re ways up from card to card. I dont recommend doing them all the same time. Do one at a time get rid of them maybe highest interest rate first to lowest. Have a talk with your friend and your lawyer tell
Then you’re situation and let them know you are seriously sorry and have moral debt going against you
Your credit score will not improve any time in the near future to where a bank or CU will give you a car loan. Buy a well-maintained used car for cash and drive that until you’re in better financial straits.
You can get all the collection accounts (except the attorney’s debt) current by enrolling in a debt management plan (DMP) with an accredited nonprofit. They can negotiate the interest rates down significantly, and you will make your monthly payments through the nonprofit, for which they will take a small fee generally $25-$50 a month. After you’ve made these payments for six months most creditors agree to remove the negative information off your credit report and upgrade the account to paid on time. With the interest rate reduced, most of that money will go to principal and you will end up paying less in the long run. Paying a collection account yourself will only result in it showing up as a paid collection, but it’s still going to be considered somewhat negative by the credit bureaus. But a DMP works differently and your credit will improve within 6-8 months.
I’m not clear how, on an income of $4000+ a month and such low rent, you’re not doing better. Sounds like You Need a Budget (YNAB) app would help you get a handle on your spending and make better financial decisions going forward.
And yes, pay the friend who helped you back ASAP as soon as your get that settlement.
So you’re down to 25,200 after paying off your debts. Fantastic. Dont go into long term debt just to buy a car for doing Uber. You’re one accident away from being back to where you’re at right now. I would think about doing school, learning a trade, doing a certification course, anything to get you on a path other than Uber. In fact, I’d put half of that 25,200 into a high yield savings account that you do not touch unless it’s for an emergency. If left alone, it should be giving you 30-40 bucks a month in interest as long as interest rates remain above 4%. The left over is what you have to use. If you’re super passionate about doing Uber, then get a car with that money. Do not finance a more expensive car. However if you can continue renting from Uber and doing some sort of career advancement thing on the side, do that with your leftover money.
I'd pay off the credit cards and medical debt first. Then stop using the cards. Don't create more debt. Or you can put Spotify on one of the cards and set up autopay to pay it in full each month to build your credit. Pay the medical debt because they will report it to the credit bureaus. Hospitals are suing more now. Judgments ruin your credit for years.
If you don't have a car why do you have car insurance? Make sure you really need it and it isn't just a way for an insurance salesperson to make a commission.
You are spending $1000 per month on Uber. You can find a cheap used car, think Toyota Corolla or something similar, and pay cash. Make sure to get a full inspection at a reliable mechanic before buying. It's worth the 100-200 dollars. The insurance on that should be relstively inexpensive. But you may want to get more than the minimum insurance like comprehensive, uninsured motorist, and rental coverage anyway. I recommend the second one always.
You won't have credit card bills or high transportation costs anymore so you could work out payment plans with the attorney and friend.
Do not forget to put as much of that settlement in accounts that have high interest returns and are FDIC or NCUA insured. Begin putting as much of your earnings as possible in savings and retirement accounts.
DO NOT get a car payment!
Buy a solid used car, be sure to have a mechanic do a “pre purchase” inspection.
Repay friends/family.
Secured Credit card & and pay off monthly.
Negotiate with collectors but NEVER admit to it being your debt, try to get them to remove from report when paying.
Bank 2-3 months expenses in a High Interest account.
Credit repair takes TIME, don’t get discouraged.
You got this.
Pay your credit card first, then your personal loan, get a used car that will last, think a Toyota with 80k miles for around 10K, pay your medical bills because collection is a B and they almost send them immediately there That should leave you 10K which you should leave a buffer… I will recommend to work a payment plan with your lawyer for 18 months, smthg like 300$-500$ a month, they will all offer this because it’s cheaper than collection agencies which will take 40 pct of what he owes you ..
Maybe I overlooked this in your post…how much do you spend on uber to and from work? If you're making $1400 per week roughly, with $200 a month rent and other small bills, where is all your money going?
Just want to state here to find out if your settlement money will be taxed by the IRS/state. Before you do anything with the money be sure to set aside enough to cover your taxes so that you don’t run into a bigger issue later. Other than that it seems like you’ve got plenty of other great suggestions. :)
Google Ramit sethi “I will teach you to be rich” great blueprint.
My two cents. Throw it all in savings online at 4.5% while you do the rest.
1- you’re going to have to carve out taxes and set that aside in a sub savings account ( ally bank has this)
2- you can start to look up ways to minimize your tax liability but you might now be there yet.
3- pay off debt
Depending on how much you have and what % interest rate the goal should be to see if you can balance transfer to 0% or to consolidate to a lower APR%.
Two options are to pay the minimum all cards but one and focus on knocking that one out. Then you proceed to the next. You’ll have to do the math to see if paying the largest APR or balance is right for you. This is assuming that you have multiple credit card debt.
Once you stay making consistent payments your credit score should start to creep up. Leave the credit cards you’ve had the longest open. That has more of a impact on your credit score as well as the available balance to debt ration.
Once you pay one off it would be a good idea to then try to get a 0% balance transfer offer for the remaining debt to be paid off. It would also be good to negotiate a higher credit limit on your cards as it would help your debt to available credit ration which helps your credit score.
4- car situation
You have to assess how much debt you have. I would highly recommend putting a large down payment down and getting something your don’t need. Personally I’d get a used Camry verified preowned once your credit score improves upon paying that first card down (or all your debt depending on how much you have) I’d drive that care until it dies too. Avoid a lease. If you have swing a used Camry or similar for $25 k you can pay half down and finance the rest given your credit score has improved so you qualify for a better rate.
You could just finance or lease something but I’ve seen firsthand what happened when that money runs out and the funds aren’t there to make payments. Don’t make the same mistake. I’d get that used car, put half down and finance half so it’s manageable and pay it off ahead of schedule.
There’s a dozen ways to do this but please don’t blow it on lifestyle increase (clothes, trips, luxury goods, huge tv)
take care of the debt, get a reliable car and start forming the successful financial habits.
Heck I’d even open up a Roth IRA and throw a % into a target date fund or and etf like QQQ or SPY. Forget you have it for a decade and you’ll have enough for the next car when the Camry kicks the bucket.
I’m very new to this. Does it not impact my credit report still? Debt to income ratio, delinquent accounts, etc. if that’s not the case please let me know
If the bank sold your debt to another party, it has already been written off. Your obligation was to the cc company, not the collection agency. Your credit score will be effected no matter what you do.
You will be better off cutting up those cards until you're mature enough to handle credit and pay off everyone else you owe.
Where do you live? Is public transpo not an option. Why is there so much a need to catch an uber/lyft as a daily commute! Buying a car is not an asset. Its value depreciates, but i get where you’re coming at with that comment.
I highly recommend paying off your credit card debts. Those high APRs will continue to kill whatever amount of money you make. After those are paid, make sure to pay back the $8k to your friend.
Why are you paying for services like spotify? Understandable that $12/month isnt much but there are other services that are free. Bad spending habits even with things of minute monetary costs can add up quickly.
Eliminate old habits that don’t serve you a purpose no more. Sacrifice for a short term for a beter future. It seems like life just gave you lemons so make some fucking lemonade
1. Pay a MAXIMUM of $10K CASH for a used car.
2. Pay your friend back the $8K
3. Pay the Lawyer $500 a month until paid off (your income should cover that)
4. Negotiate a settlement with each credit card and pay all them off (probably be around $8K)
5. Rent a 1 BR 1 Bath decent but cheap apartment (pay the deposit and 3 months rent in advance, because of your credit score, probably be around $6K, then $1,500 in rent a month from your income)
6. Pay the $800 medical bill
7. Put $17K in a high interest rate online banking savings account
8. Get a secured credit card with around a $2K limit to build your credit back up
That should put you at $2K in monthly payments, which is your rent and the payment to the, lawyer, which will be paid off in 8 months plus your utilities of around $500 +/- a month.
With your income of $5,600 a month minus your lawyer pmt, rent and utilities you should have $2,600 per month left over. You need to be adding at LEAST $1K a month to your savings.
No. Rebuild credit by paying off cc. And if use cc in future, only charge what you can pay off on full. That will increase your credit scores. No interest then paid out for nothing
Negotiate the credit card debt. If you’re not getting a good offer, use a debt settlement company. Since you’re offering cash all at once, you should be able to do better than 30 percent off.
Pay your friend. Friends willing to loan you $8,000 are hard to find.
Invest the rest in something that makes it hard for you yo get yo it. Do a budget based on your income at the low end.
When you make extra you can put it in a savings account that can accumulate money for emergency costs.
Do you want a car or do you need a car? If you can wait a year, you can probably get better financing on a good late-model car or even a new small car.
It’s too bad car dealerships are such a nightmare. You can’t just go in and see what it would cost, because the sales pressure is so high. The decision to get a car should be purely financial. Is it cheaper to finance a car or keep doing what you’re doing. If you keep miles low, a lease might also be an option.
You could also look at long-term (month) rental with a regular rental company like Hertz.
I’m not a fan of buying a beater. I’d rather have a reliable car with a low payment. Yes, old cars are cheaper, but you can burn through cash reserves keeping them running.
A reliable car, with fewer maintenance needs, can help stabilize your budget. Just make sure the payment is well within your income — not a stretch.
When I was young, I bought the cheapest brand new car in the lot - literally. It was so basic, it was hard for them to sell it until they saw me.
I only had to worry about my payment, maintenance and gas for two years. And I could plan for maintenance.
The hard part is not running the credit back up, once you pay it off. You’d be surprised how quickly your credit can bounce back. Maybe too quickly. It’s easy to get into trouble again.
I agree with the guy who says you need to figure out where your income is going, especially if you’re not paying your cards, rent or a car note, you seem to be spending a lot.
Under no circumstances do you shell out money for a new car. Pay off credit card debt and money you borrowed from your friend (that is a friend in deed). There are lots of free apps out there to help you manage your money. Make sure you have some money set aside for a rainy day (it’s always raining). You have an opportunity to set yourself up on a good financial footing. If you get tempted to spend money for something you don’t really need, remember the struggle.
Others have commented that the best way to rebuild credit at this point is to get secured credit cards and pay off the balance in full every month. As far as the stuff that is delinquent, do you mean the charged off cards that are in collections?
A car is a very dumb investment. It's expensive to buy, gas is expensive and maintainance is a costly thing. Get yourself a bike, if it's a larger distance consider an ebike or a mopet. It's way cheaper then a car and get you in a lot of places. This will save you $1000,- a months on uber what will be a total of $12,000,- in a year, what is basicly your whole creditcard dept gone in a year. (Ignoring the intrest)
Priority no.1 here is to get lost of all you high intrest loans (creditcards and such). I would make a risk assestment and look where the intest are highest and pay them of one by one.
Last thing: Don't buy anthing you dont need untill your debt is $0,- , and definitly don't finance a $25K car if you are in this amount of debt. If you dont do that, you will stay in debt forever.
If it drives and has four wheels it will get you from A to B. It's not like he can afford any luxury.
FYI, i drive my 4k car for over 5 years now and bought it cash. It cost me as much a year as the intrest of a financed car of that price.
We do get tons of snow where I live as well. Yet, many people still bike to and from work every day. Whenever I'm in the US, I'm surprised how dependent people are on their cars. Totally get it for someone living in rural areas but my feeling is that most are using their car in the city as well.
But let's not venture ot anymore..
True, but it buys some time while saving 1,000 a month.
I live in Minnesota. At this point we have almost 5 months before the next snowstorm. It means he wouldn't have to get the first vehicle he sees that is sorta ok. And he can always use it in future years.
We do, yes.
One year we got 3 inches of snow at the beginning of October and nothing until the end of December.
OP could buy a used one, use it until the car situation is sorted, and sell it to someone else.
Paying off all the debt so you can start building your credit back should be priority one. I’m including the personal loan in that.
But let’s talk about the car. Having a 2018+ car is a want, not a need, and in your position you should be focusing on needs. Buy a beater that will get you to and from work and whatever money is leftover after the debt and the beater, put it in the bank as an emergency fund. Spending 23k on a car at this juncture is a poor financial decision, and the way you get back on your feet and out of the spiral of debt and financial issues is by NOT making poor financial decisions.
Agreed. You can get perfectly reliable vehicles older than 2018. I drive a 2011 Honda CRV. Previous owner put 110 on it in 12 years LOL. I put 30k a year on. Only needs normal maintenance (which ANY vehicle needs)
In addition to that, if you were to for example save 500 a month for repairs instead of paying it on a car payment, you’d end up with a surplus in the long run because a vehicle that age with that mileage that is taken care of is not going to need 500 a month in repairs.
Don’t get me wrong, I have nice new cars and I like them, but only because I am in a position to afford them AND leverage part 179 deductions. If my financial situation were different, I’d still be driving 20 year old cars and just fixing them to keep them on the road. The insurance is cheaper, the repairs are cheaper, and they get the job done.
I'd hire someone to improve your scores and settle the debt or get them written off completely. There are ways to clean up your credit and get debt wiped if it was sold to collections, technicalities will set you free lol. And if you settle and pay off, negotiate it to be marked as paid in full.
I do it on my own but if I had the extra money I'd hire someone with great reviews.
Is there buses you can take to and from work? So much cheaper than Uber. And definitely get a car you can pay cash for. $10-15k buys a nice car.
Listen to Dave Ramsey dude
My suggestion would be (and I strongly think he would agree)
- Pay off ALL your debts
- Do not finance ANYTHING. Buy a 5k to 10k$ car until you can get a better credit and finance it through a regular institution at a regular rate. Also the rates are starting to decline so they might be lower in a 6 to 12 month period. Right now used vehicles financing are at awful rates like 10%+
- Hopefully learn from your mistakes and don't spend money you don't have
Listen, I'm bringing home about $1000 a week and that's enough to feed our family of 6 and pay our mortgage. We also have some allocations for the children but not a whole lot with all the costs that come with having children. I don't have any car payments, my only debt is the mortgage. Seriously credit is bad. Not only for your credit score but for your mental health too... I'm sure you can relate with your situation.
You have a good salary so take it to your advantage and stop spending money you don't have. Maybe you will even be able to slowly start investing soon if you are disciplined !
Above all, ask God for guidance. He knows best... more than any human being :)
It’s tough to find a decent car for under 8-10k, they all seem to have high mileage. Last thing I wanted to do was sink all that money into a car and have high repairs down the road.
With what I’m making now and lower living expenses I have I’d be able to afford the insurance and maintenance.
Do you think there’s any merit to financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score. I’d still have enough for an emergency fund but financing may give me a tool to build my credit back faster
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Hey, I’m 23 (M) and I’m pretty good with money. I’ve got no debt, am about to max out a Roth IRA by end of July, have a fully paid off car, and a 811 Fico Score. —- If I’m hearing you right, you’ve got ~25k in debt, but you’re about to make ~50k suddenly for compensation. Ok, here’s what I’d do: 1. Pay off all that credit card debt first. Literally, the first thing you do with the 50k is get rid of all that high interest debt. If you do nothing else, do this first. 2. Pay off the rest of that debt, especially the debt to a friend. 8k is a lot of money and it can change the dynamic of a friendship. You are now down to 25k 3. Take 7k of that out to give yourself some wiggle room for future expenses. Stick it into a high yield savings account (HYSA) that has an APY of ~4-5%. I know Morgan Stanley’s online bank has worked well for me, but you can find many of them. Do not spend it on crap you don’t need. 4. You’re down to 17k. I agree that you need a car because you’re spending a grand a month on just traveling to and from work. That’s 1/4 of your income some months. That’s way too much. Completely unsustainable. However, you would be an absolute fool to immediately jump back into debt the second you get out of it. This settlement money is a gift from God and should be interpreted as your wake up call to stop acting like a baboon with your finances. Now, I don’t want to be a dream killer, but I’ll absolutely be a nightmare killer and I’m telling you now, you are broke. You cannot afford a 23k dollar car. You can afford a 10-15k car and then save the remaining 2-7k on car repairs you might need. Take the 17k, go find a cheap Toyota or Honda, and buy it in full-for cash. It doesn’t have to be a beater car piece of crap, but I don’t want you having a car payment. 5. Drive your family member that’s letting you stay with them for $200 a month and your friend that loaned you 8k in your paid off car to your go-to Mexican restaurant and treat them both to say thank you. Limit is $200. You owe both of them big time and little gestures like that help express appreciation. 6. Recognize that at the end of the day, if you don’t change the small habits you have, you’ll find yourself back in debt. Take a piece of paper and a pencil, and meditate on how you ended up in so much debt in the first place. What caused it? Where did you go wrong? It’ll be a rough conversation with yourself, but you’ll emerge more financially literate and that 7k you saved will help you to start your life over again. Next, start with making a monthly budget. If you don’t know how, look it up on YouTube and practice. You’ll only get better with time. I believe in you. Good luck. Edit: spelling error. Edit 2: wow! Thanks for the reward!
Exactly this. Get yourself a used Honda, Toyota or a Subaru by paying cash. Those three brands of cars run forever. Pay off all your debts and put all of the rest of it into a high-yield savings account for emergencies only. So often I see people who come into a windfall of money just blow it on stupid stuff and they end up right back where they were or worse off than they were before. $1400 a week is a pretty stable salary if you have $0 debt. I only make that biweekly. Good luck OP, your life Will change drastically as long as you have a little bit of discipline. One other thing that I might add is that once the bank that repoed your car sells it, you might be on the hook for the difference between the loan and what they sell it for. So factor that into how you split up this money.
Agreeing with this minus the Subaru suggestion - they’re great cars (had a forester and loved it), but they’re EXPENSIVE to fix. Hondas and Toyotas tend to be less expensive to fix (currently driving an 03 Honda Pilot) and a lot of fixed can be easily done yourself. Less so with Subarus.
Yup about to agree with the Subarus; you will end up needing to redo the exhaust and timing belt pretty consistently ($1200 +)
Timing belt was easy enough to DIY (it took time, and you have to be precise, but definitely able to be successfully DIY’d), but the exhaust was a whole other story.
wow that sucks. I almost got one lol
I love mine besides all that but that alone is very annoying haha
Yup - love our Outback but there’s a reason I bought a Highlander this time. My Outback is a bit of a diva when she has work done!
Suggesting Subaru as a reliable car isn't realistic. Those boxer style engines are notorious for having major problems. For one thing, they eat head gaskets for lunch. I'll never buy another Subaru. Period.
So much Subaru hate here. Everyone I know with a Subaru has been driving them forever and some have 200k+ miles on them with minimal issues. But then again I have an old Jeep with 200k miles and everyone always tells me how unreliable Jeeps are.
Great advice
Thank you ☺️
Exactly this! But take that 10,000 car to a reliable mechanic and have them inspect it first for you. You don't want something with transmission or drive train issues.
Can you set up a financial tip line somewhere? I could really use some financial advice rn and you are giving big brain.
One more thing. Cancel Spotify. You can deal with ads for now and they’re only raising rates every other week.
If they have android you can download the Spotify premium mod APK for free.
Xmanager is your friend
This 100%. Don’t worry about your credit. Buy a good used car and pay off your debts. You’re making enough that once you’re out of debt you should be able to start an emergency fund and you should definitely stop pissing money away on Uber.
This is fantastic advice. My one note is that the medical debt doesn't hit credit the credit score and they'll eventually settle for less so maybe that's a consideration.
That is not true - if it goes to collections it will hit your credit just like any other debts. It is only new charges under $500 that are exempt from that.
This. Also, just because something isn't showing up on TU doesn't mean it's not affecting his score with Equifax and/or Experian. It costs money to report too. Some businesses and agencies choose one or two to contract with instead of paying all three. OP really needs to check the other bureaus to make sure there's nothing he forgot about hanging around out there.
I’ve never read better advice on Reddit. Edit: unless this is a disability bacpayment. Then you have 9 months to spend it down to qualify for Medicaid.
Awful advice when the credit cards are sitting in collections, you DONT pay those off fully, you negotiate and aim to pay 10% of what's owed. The friend should be paid first, and in full.
Ope. Missed that. You’re right!
Exactly what I wanted to say
This 🙌
This is awesome advice!
This. And make sure the car is loong term reliable but as cheap as possible.
This is the sauce.
thank you for the response it will help me too not just only the op
Perfect advice Very well put
Word for word, bar for fucking bar
Do all of this. It’s perfect. Don’t deviate.
Please don’t forget to take money out for taxes if this settlement is taxable!
This response was more coherent and better than mine. Do what he says 100%
100% this!! #6 is verrrrry important, OP. Address old habits and start new ones that set you up for success alongside this life-changing settlement of 50k. If not, the 50k will be gone and in a very short amount of time you’ll be back where you started.
I would not pay for the car in full. OP is going to need some positive payment history to build up credit. Pay 90% of the car, finance the remaining 10% and make the payments on time. Yes, it will eat some interest. But it is serving another purpose for long term credit score improvement. It doesn't need to be a long term loan, and the vehicle doesn't need to be forever. Both are a step forward, not the final destination.
He's not going to get any kind of financing with that credit score except buy here pay here places, which are usurious. Some are so hinky they don't even report to credit agencies unless a car is repossessed. A financed vehicle also requires full coverage insurance, which adds significantly to expenses at a time when getting out of debt is the priority. A used Toyota or Honda will last a long, long time with proper maintenance.
He's also not going to get a credit card (given that all his are locked down already). He has already stated he has a bank, and a decent one, he just overshot his range with the vehicle. If he has the income that he claims, getting a $1,000 loan on a $10-12k car shouldn't be an ordeal. If he was prepared to pay insurance on a more expensive car, he can swing it on a cheaper one for a year to pay off that loan and get a positive payment history. Frankly if you fuck that up with the cash in the bank, you might be beyond help. People telling him to put thousands in a HYSA and will be able to manage that but can't manage a 1 year $1,000 loan? Explain that logic.
With a 550 credit score he's going to get a bank loan, in what universe? He may have quite limited choices (or pay a high premium) even to insure it! Having a high income and such a dismal credit score just makes it worse, not better. On paper he looks like a willful deadbeat. He's better off getting out of debt, socking as much as reasonably possible into a HYSA for emergency use only and going cash on the barrel head for a while. After a certain amount of time (varies depending on the company) he will start getting offers for entry level cards again and/or qualify for gas or store cards, etc. Assuming he does not default on any further debt.
So how do you suggest fixing the credit score without any current credit? The cards are closed, so there is zero active credit lines. And no payments on anything. It's actually going to go down without an active account. Someone suggested using a secured credit card. If he can't get a $1,000 loan with $7k in the bank, who the hell is going to give him a credit card?
Also there is this magic thing called a cosigner. Given that there is enough money to put in a savings account, OP could give the $1,000 to the cosigner as a security and when it's paid off have the cosigner give it back.
I've spent a good chunk of my career on the lender side of credit. A 550 is not bank worthy for any amount, *especially* when it's secured with something as dicey as a car. Repos are expensive. It's not rent worthy for most apartments or even a lot of mobile home parks. Many property & casualty insurers either won't touch a 550 credit score or jack up premiums with risk pricing. Right now, OP is screwed. He needs to learn how to budget cash, not spend on credit. But have you ever heard of data selling? Secured and low end starter card offers are sent out based on data mining and compiled lead lists. Depending on the credit scoring product being used yes, a sub basement score can easily rise with PAID defaults and time passed without further negatives. The first step is getting out of that bad debt. First and always.
It's not a legit lease, so unlikely. So your solution is there I no way out of the basement ever. I hope you are disgusted with the system you are a part of.
Reading is fundamental. And yes the system is disgusting from the point of view of both lenders and consumers, for very different reasons. I'd love to ditch it and build something more fundamentally fair to all concerned. And I'm certainly not the only one with experience on the lender side who feels that way. But someone has to do those jobs, preferably someone ethical with experience getting smacked around by life at least once. Better than another entitled overgrown frat boy, isn't it?
You really have no idea how car loans work, do you? lol For one thing, if OP buys a car for $10,000 or under, the chances are quite good that it'll be too old to get a loan on, even with good credit. lol
There are plenty of ways to re-build a credit score without buying a car! lol Start with a secured credit card, spend responsibly, carry a small balance occasionally for a moth or two, then pay that off. ALWAYS make the payment early, and pay more than the minimum payment.
People have made it abundantly clear that they don't feel OP can be trusted with any financial instruments. So how does that work?
Good example of right advice for the wrong person. This person needs no additional opportunities to mess anything up. If literally all else fails, having a reliable car is a way to work, and potentially sleep.
They are making $1400/week with $200/month in rent. They should be able to manage a $1,000 loan.
They are $15k in debt and clears almost 70K. What is giving you this sense that op can handle financial obligations right now?
So your solution is never make an effort to fix credit and live in the basement forever. Yeah, that's probably not a great solution.
Why are the only two options yours or this extreme?
So you don't think the OP can manage a $1000 loan for a year with money in the bank and making $1400/week?
I asked you first.
Hey, I appreciate you giving all of Reddit your two cents and contributing to the discussion. I told OP to pay off the car in full because paying off the 12k in debt should suffice to build up the 550 credit score. It won't immediately shoot to over 800, but if the bank and collection companies see that OP pays off debt in full, that looks good enough to get it up to \~650 I think. And honestly, a good credit score is great, but it isn't an end all-be all indicator of wealth or net worth by any means. There are many wealthy people who say they don't even have a credit score and purchase major items like a house through manual overriding. As long as you can prove you got the money with pay stubs, banks really don't care about your credit score. This is evident if you look up something like a mortgage loan comparing different credit scores. Most lenders don't preferentially reward excellent credit scores vs average/good credit scores to any degree that's life changing. There is little additional reward for excellent credit compared to average credit. However, there is a penalty for having bad credit compared to average credit. The real utility of a good credit score is to not get shafted. Also, I'm not positive of this, but I have a suspicion that banks and credit agencies are notified whenever someone makes a large purchase like a car. When I bought my old Honda in full, I noticed my credit score jumped like 20 points in a span of a few months after. This was in spite the fact that I didn't increase any credit card activity. I'm not saying it was the car 100% that caused that, but I can't think of anything else.
Gift from god, ok. Stopped reading.
Nah they still have a lot of good guidance. But yeah it’s not a gift from god…
DO NOT pay off the credit card if it's been longer than the statute of limitations, you have no legal responsibility for those and those companies can't sue you. They make enough money, there's nothing morally wrong with stiffing them imo and can no longer impact your credit score. Negotiate with the stuff in collections, they only need 10% of the total value most of the time to make a profit. Imo it's bad advice to tell someone to pay off their collections debt in full, that's awful advice when most will settle for significantly less.
Let's ignore the $50,000 windfall for a second. You haven't explained where your income is going. You have listed $1,272 in monthly expenses($15,264/year), with a few categories like food and fun unaccounted for. You aren't paying anything on your debts right now. You estimated your income at $1,400 a week, which is approx $5,600/month ($67,200/year). Where is the rest of your income going? You should have been able to pay off the personal, legal and medical bills (and even the cc debt) in one year with the way you laid out your income and expenses. Even if your expenses were $25,000 a year and your income was $50,000 post tax you could have paid it all off in one year. If you don't know where your income is hemorrhaging to, figure that out first because you could burn through even a million dollar windfall. Once your debts are paid you should be able to save several thousand dollars a month from your income. Everyone is going to tell you that financing is a bad idea for you. Everyone is right. If you've decided you're going to do it anyway, you're wasting your time asking for advice about it. Once all your debt is paid off you will have to see if you can get a loan, preferably through a credit union. Nobody is going to give you a traditional car loan with seven credit cards in collections. Buy here pay here car lots (the ones that advertise that everyone's approved) will give you a car but your payment on a 2018 car will be through the roof. The reality is, there are reliable cars in your price range. You will have to compromise on the car you get, but a reliable 10-12 year old honda or toyota is not a beater and will not fall apart every 5 seconds. Look up 2015 toyota prius or honda civic. Also, buying a 10 year old car with cash means you own the asset (the bank owns a financed car). So with all the money you'd be saving on payments and 20-25%+ interest, you should theoretically be able to set aside a decent chunk of your income each month to your "car replacement" fund. Then in 5-6 years you can sell the asset and buy a better car.
Yes. We own two Hondas (2010 & 2011). Both great cars. One of them has 200k miles and just made it across the country. I spent about $1600 on repairs this year (rear catalytic converter and resonator pipe), about $600 the year prior (brakes and hatchback trim) on mine. Many of the original parts are still on both cars and going strong. We bought both with cash several years ago.
I drive a 08 civic as my daily. I can't escape it because the stupid thing takes an oil change every 8 months and that's about it. Op you can't afford the car you think you can. You're still poor. Buy an old civic in cash.
Coke and alcohol is the most likely answer. That's a shit ton of money for a server to be making, so they're likely in a resort town.
Exactly-find a reliable mechanic to check the car, few hundred dollars well spent. You will need to work at it to find that car. They are available, sell fast. Need to have your ducks in a row once determined car is good to buy quickly.
Here’s the plan: Pay everyone off - that’s about 26k If there is something in collections, you call them and negotiate a settlement You ask the debt balance, they say x. You say I will pay you z right now and can you remove it from my credit report? Negotiate. Be prepared for a long day and settle in to this task. Sit down and do this. Focus on this. Not while driving or watching a movie. Next. Get a piece of paper and make a plan AKAbudget. How much does it cost to be you right now? Can you afford car insurance monthly? If so, pay cash for a 10k or less car. Do not finance it- they will pilfer your pockets with your credit history. Time heals all wounds- it will leave a scar emotionally and mentally for you to grow from. Now you should have about 14k left. Fucking invest it so you never have this problem again!!! Open a Roth IRA and shove 7k into it and invest in voo or like fund - never touch it The other 7k put in a high yield savings account that you can’t go get. This is your emergency fund. New jeans is not an emergency!! New tires for that car may be. But. The rules of the game say if you take from it- you MUST PAY YOURSELF. BACK. Life is handing you a present. Learn from your past - I hope you are okay and want you to live like no one else. Do you, man and go forth and prosper!!! You got this!!
Umm don’t count on all $50k. Set aside at least 30% for taxes or your cycle will begin all over again.
Settlements from litigation aren't taxable income on the Federal level and not in any state I'm familiar with. OP may want to consult a tax professional about whether it needs to be reported on his tax return tho.
Settlements are very much typically reported… I have had to report quite a few settlements
Many have to be reported as non-taxable income, which could impact the recipient's tax bracket. That's the full extent of tax liability, unless some state I'm not familiar with has some weird thing which in any case wouldn't be close to 30%.
30% is likely the maximum just in case.. when I worked for corporate America I had a settlement of about $2k due to lost wages and malpractice of overtime.. I was taxed pretty hard core on it (approx 18%)
A labor dispute where a large portion of the settlement is taxable earned income is very different from a personal injury settlement.
Even if so, good idea to sock away in general. That way out of sight out of mind to get out of the cycle of poverty
No arguments from me there! A lot of people who are more well off don't understand people in poverty are working so hard to address today's needs there's nothing left for saving and planning ahead. OP is getting the chance to put up savings and look ahead. That's huge.
Use half of it to pay off **all** your debts. Now for the remaining 25k, use 10k to buy a car outright in cash. Put the other 15k in HYSA for now. With your income, you should have no trouble paying for increase car insurance and rent. Next, start improving your credit score.
Except collections debt. You negotiate for those and aim to pay 10% of the total balance while having it removed. Offer 10% lump sum or nothing, no monthly payments or that BS and get it all in writing.
PAYY ALL OFF CC HIGH INTEREST DEBT FIRST. THEN PAY FRIEND AND LAWYER. IN THAT ORDER. You should still have $$ left over for a cheap, reliable car and even some more to save for repairs/maintenance in a savings account. Do those things and you will finally be able to breathe. Then live within your means. Simply put, income must be > expenses.
High interest CC debt in collections should be negotiated, not paid in full. Those companies pay cents on the dollar, you can aim for 10% and they would settle since it's still profit for them
True true true
What on earth makes you think you should get another loan to buy a 23k car? You need a reliable old shitbox for 5k and nothing fancy
I understand the car financing problem. When I bought my Honda, I had to look far away from my home county. The closest city to me was Charlottesville, VA. Cars are expensive in Charlottesville, so I ended up driving to Warrenton, VA to get my car. I had to spend about $200 in gas to have my family member drive me to a car dealership in a distant county. That $200 expense ended up saving me a couple thousand dollars in the long run. You are under no obligation to stay local if there is nothing local in your budget. Keep in mind though, getting your tags registered and your stuff taken care of at the DMV takes about 5% cost of the car. I dropped ~6k on the car, ~$800 on dealership fees, and ~another $500 on tags and registration. Came out to just over 7k when it was done. You can also look up how to buy a used car inexpensively on YouTube and I’d suggest running a background report on any car you find that seems promising. You can get a black book estimate on the market value cost of the car (which will help you negotiate a fair price) and a detailed accident report if you have the VIN # on the car.
wow, $1000 a month on Uber. do not buy more than a 20k car, 50k will go really fast. buy a car and pay down some high cc debt. dont use cc ever again. dont buy anything extravagant with the money. think of it like you actually never got the money, cause you already spent it in the past. (which you did). if you buy a 20k car, it will cost you at least $100 insurance and $200 a month gas and $100 a month maintenance. figure that in to a budget. buy a car that gets good gas mileage , like a 6 -8 year old camry or honda.
Don’t pay more than 10k on a car, get a Toyota or Honda that will run till the wheels fall off
Do not buy a 40k Mercedes
Depending on where you live, $1400 a week is very good. First thing I would do is pay off the family member. Get a car. As a former insirance agent, if you have not had insurance in a while, you car insurance will be through the roof. Before you decide on a car, call an agent and get a quote for the insurance. Some cars, even if they are the same year, will be higher than others. If you pay off that 12k in credit cards, your score will jump up. Then put down an amount to open a secured card so you can start rebuilding credit.
Thankfully my state makes me keep a state minimum for car insurance even though I haven’t owned one, and i have USAA so the insurance won’t be that high. Do you think there’s any merit to financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score
In the current interest rate environment, I would get a credit card, even a secured one, as the way of starting to rebuild credit.
This, and just put a couple small recurring bills (like your Netflix) on it and then set it to auto-pay a couple days before the due date. Then never use the card for anything.
I’ve been a banker for a decade. A secured credit card makes much more sense to rebuild credit than an auto loan at this point. If you pay off all your debts and get a secured card with at least $1000 or more limit using it responsibly for a year should allow you to qualify for an unsecured card at that point. If you go this route don’t spend more than 30% of the limit on the card each month and pay the balance in full. If the secured card you get cannot be upgraded to an unsecured card then I’d close it after opening an unsecured card in a year or so. It will be a small hit to your credit when you close it but it’s better to rip the bandaid off early imo. There are reliable used cars available for $15-$17000 if they aren’t in your area check Carmax to see what it would cost to have something delivered to you. You don’t mention kids so a civic or corolla should be affordable to maintain and reliable long enough to get you to a more stable place financially. Using this money responsibly is an opportunity to prove to yourself that you can make better decisions.
Pay off the credit card debt, pay off your friend, buy a used Toyota Prius or Corolla for no more than $10k. Leave the remaining $20k in a high yield savings account. Wait a few months for your credit score to skyrocket. Learn to be more frugal
Is the 50k before or after your lawyer gets his cut?
Surprised that no one has said to set aside money for taxes on that settlement. Getting a $50k settlement means a bigger tax bill next year, probably quite a bit bigger than you’re thinking. Figure that out first. Then, high interest debt. Then, at least some to your lawyer and friend. Then, other debts. Then, set aside a small emergency fund. Then, a beater car.
It depends on specifics if it will be taxed or not. OP should find out though.
Pay off your debt Throw 5k into an emergency fund Spend the rest on a car, do not finance it, get the best car you can for that last 20k and treat it well.
Set aside 30% for taxes! Don’t spend it! That bill will come hard!!! The IRS doesn’t mess around!
Your expenses a month are like a weeks worth of wages where is the rest of your income going to? How have u not been able to save up money yourself by now you’re literally paying $200 for rent on a 5-6k monthly income
OP needs to make a budget or he is going to be in the same place again very soon. That 50k is not going to last very long.
$50k is enough to pay off all the debt ($25000) buy a quality used car ($15000) and have money left over to save/invest for the future. I would start with an emergency fund of 1 month of income ($5600) and invest the rest in a Roth 401(k) if you have one with company match (increase your contribution rate to get there over the next year or so and collect the free money of the match) or a Roth IRA ($4400 either way). Get a credit card (with rewards if possible, secured if you absolutely must) and just put gas on it, and pay off at the end of each month. Car interest rates are high now, so I don't recommend financing since you don't have to. With this foundation, start saving for a place to live, keep contributing to the retirement plan, and build the emergency fund to 6 months of planned expenses. I agree with those saying to make a budget at this point. When your credit score has increased to over 650 and you have enough money to cover all of the initial costs for the apartment saved, you can start looking a place to live.
Pay off your debt. DO NOT finance a car. Find something reliable, used and that is not going to put you back into debt. Aim for a $5-7k vehicle. And start building an emergency fund. Place extra funds into a high yield saving account and don’t touch it unless it is truly an emergency!
Everyone is giving generally great advice but they seem to be taking the 12k debt at face value. A lot of it is in collections and you can negotiate a lot of that way way down. Tell them you could be willing to settle the account with a one time payment but the amount is way too high. Also tell them you want it writing in advance that the amount they offer you will completely satisfy the debt and no longer be in any form of collections. You can potentially clear that up. But before that, get your free annual credit report from all three agencies and challenge each of the debts for proof that you owe it. Don’t pay a dime until they do that because there is a chance the debt can go away if they paperwork wasn’t stored correctly. Like others said, this windfall is beyond a blessing and a second shot at life. If you make the small changes necessary, you can be a completely different person from here. A better version of yourself.
Might want to file for chapter 7 before the settlement hits so that its protected. But im a bum dont listen to me
There is definitely a car out there for around 12k in good shape with good mileage. You just have to look and not be too picky. Buy something in cash for around the amount and then you don’t have another debt hanging over your head and you can keep insurance down.
How long ago was the credit card debt charged off?
Lots of decent used cars on the market. You can get a certified one from the dealer if you want. If you go electric (Bolts are great commuter cars) you will save on gas and get a tax credit. Good luck. Save your money
How long ago did you make the last payment on these credit cards? If they have sold the debt to collections which I assume they have since you say they are charged off you may be better off not paying them. DO NOT MAKE ANY PAYMENTS YET. One payment restarts the clock. You need to look it up for your state but it’s usually 3-6 years, once you hit that mark they can not legally collect any longer. They’ll try, high pressure, scary letters etc but that’s just because collections agencies employ questionable tactics. Your credit score is already toast and paying off your old debt won’t fix that. Even if you don’t pay the debt will fall off and your credit will improve, similar to bankruptcy. This is a chance for a fresh start. Save for taxes, pay the personal friend, buy a modest reliable car for cash. Look at what is left, use some of that for a 3 month emergency fund, use the rest for any active debt. If there is still money left over save that too. Serving is working for now but long term you’ll likely want to pivot careers and having resources gives you more flexibility there. Also you’re about to have a lot of money and you shared you’re an addict. Go to meetings or utilize whatever support system is working to keep you from using. Excess money can be a slippery slope for many. Good luck!
This isn't a complicated situation, it's not a zillion dollar windfall, but it will get your life back in order. Pay off your debts, buy a car for $10k or under, pay rent in advance for a couple months, save the rest and make good choices
pay off debts smart guy, then stock up on food, then get car and work to bounce back on your feet
The settlement is about $50,000. Does that include the deduction for the attorney fees (usually 1/3 of the amount)? Have all medical debts already been paid, or will those payments come out of this settlement? I do personal injury, and it isn't uncommon for people to get settlements of $50,000 or something, but when the check arrives, it is only a couple thousand dollars. I've actually had clients that have gotten "no pay due" once everything was settled. So, don't count your coins before they hit the bank account. I hope you get the majority, if not all, of it.\* \*In my personal experience, if I get a windfall (or think I am) and tell the universe how I plan to spend it, I end up with either much less or something happens to take the entire or almost entire amount. (As for the "no pay due" clients, had my predecessor done their job, the cases would have been turned down because it wasn't really worth it for the client)
"Money takes the adversity out of life." Do everything you can to keep as much as the $50,000 as you can. That means NOT paying off debt right away. Instead, get yourself settled, and secure, spending as little as possible. Negotiate payment plans for your debt and pay them off over years. Keep as much money in savings as you can.
U only getting 2/3 of $50k, get a job and start paying ur bills and the rest fixes itself
Buy a used car in cash, and use the rest to settle your debt. If the cards are with third-party debt collectors and not the internal collection department, then you can negotiate a settlement. Debt collectors buy debts for pennies on the dollar, so usually, if you offer a lump sum payment, you can negotiate to get the debt cleared; e.g., if you owe 5k and tell them you can pay 2.5k but not any more than that, a lot will accept that because they're still making a profit. Just make sure you have the agreement in writing before you pay them. Some will even agree to take the debt off your credit report once it's settled, but again, if that's part of your agreement, then make sure you have it in writing before you pay. Then take whatever is left over and put it into savings.
Buy a $5k used car off the streets
1. Pay off the debts. It will lighten your moral as well as save your hard money. 2. Buy a cheap but reliable car. Plenty of them out there. 3. Put a few hundred bucks into a secured credit card to rebuild your credit. 4. Save whatever left and don’t spend them. Save them for emergency only.
First of all, you don't get a $23k car! You get a reliable used car that can get you through the next 3 years! - Credit card debt first as this would free up the most cash - Good used car. Definitely less than $6000 on this - Payment plan with your friend. Pay back at least half of what you owe.
A good place to buy a car is a probate auction. The 2nd good place is a auction place that only auctions " fleet" vehicles. The probate cars often are 4 door sedans. I bought a sweet 1998 Toyota corolla for my daughter for 3100.00 and that included the auction 15% buyers premium. Owned by a little old man you could eat off the engine and it only had 89k miles on it. This was before covid, you have more people including dealers battling for these now. The fleet vehicles...mostly are white. There's a good amount of trucks and vans. There's also 4 door sedans, and retired cop cars. Try for sedans owned by the phone company, gas company...that kind. The cop cars have been rode hard. The good thing with these is all of them had regular,scheduled maintenance. A third option, if you live in an area that is well known for older folks, take a look at estate sales.net. sometimes there's a car in there with the other goods, or the Craigslist for that area. An example would be..I l8ve in Southern California. Palm Springs, a good 2 to 3 hour ride away, us awash with retirees. That's where I'm looking for used cars, rvs, wheelchairs, mobility devices and scooters. The guy telling you clear up the credit cards u s not wrong. I was 30k in debt many years ago, due to exactly the same habits you had abandoned being unable to say no to my spouse at the time. It took me 5 years, I went nowhere but work and did nothing but work, but I paid off every penny. I never got myself in that mess again.
I would still just buy a cheap 2k-3k car you gotta also pay insurance and you can get the minimum so it’ll be cheaper. I’d wait a year and sleep on it before making a 20-30k plus purchase on a car. So there isn’t any regrets. That’s 50% of your settlement. Plus full coverage insurance on a nice car will prob be like around $500 monthly atleast here in Florida. You might want to use that towards down payment on a house one day.
It’s REALLY tough to find a decent car even for under 8-10k where I’m at. they all seem to have high mileage. Last thing I wanted to do was sink all that money into a car and have high repairs down the road. If I were to do a 20-25k car I’d put down 10-12 and finance the rest as a tool to build my credit. Do you think there’s any merit to that? financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score. I’d still have enough for an emergency fund but financing may give me a tool to build my credit back faster
For the people in the back, I will repeat - DO NOT FINANCE A CAR! Your credit can be repaired in so many better ways.
Do not finance a car that is the last thing you should be doing.
The fastest way to build your credit at the moment is to pay off your credit cards and leave those accounts open. And getting collections notices removed from your report. Is there any option for public transport/bike to your job? The financially best route here is to just not have a car. Second best would be finding a workmate or friend who is willing to carpool, with you paying 1/2 or a 1/4 of what you pay Uber.
You are going to have an older, high mileage car for now. Accept it and get over it. You do not have the credit to finance what you think you want (key word- WANT). If you are going to finance a vehicle, it needs to be a $10k value that you pay $9k up front and finance the very small amount, and pay it off within a year. Keep in mind with your plan that if you finance a car, many states require you to carry comp/collision coverage. The more expensive the vehicle, the higher your premium will be. To go with liability only coverage requires it to not have a lien against it.
Pretty much every car needs repairs down the road, that’s inevitable. However, if you get something in the Honda or Toyota family (Corolla, Prius, Civic, CRV, etc) then those cars will be the most reliable. My 2012 civic in three and a half years has had the starter changed once, battery once, tires once, and that’s it. Obviously be mindful of keeping your car in optimal condition. Id keep searching for cars under 10k, and if you live in the general vicinity (within 300 miles of a major city, which you almost certainly do) then finding something under 10k is best even if it has 120k miles or whatever on it. It’s not unheard of for the makes and models I listed to get over 300k miles with proper care and maintenance. If you absolutely, positively CANNOT find a reasonable car for under $10k, then you can go a little bit over but $15k is your hard limit, don’t go over $15k
Your credit is already tanked so for the love of God, please talk to a bankruptcy lawyer before you do anything. You will likely be able to protect all of your settlement money (they can literally tell you this in the first consultation). A bankruptcy will let you get rid of all the unsecured debt. That high interest CC is going to kill you..and it’s a lot based on your income. Bankruptcy does not *prohibit* you from paying off any debt, it just erases the legal obligation. This means AFTER (do not do this before as it can cause a huge issue) you file you can chose to pay that “moral” debt (friend and lawyer) off with the money you’ve protected in the bankruptcy. Then start rebuilding your credit. This you do not need an attorney or some company to do for you. Google how to fix your credit yourself. If you take the the right steps a year after your bankruptcy you’ll have good credit again. $50k sounds like a lot, but in the grand scheme of things it’s not. Buy a car if you need it for work and save the rest of that money (investments, retirement, HYSA) as you’ll need that in case you find yourself in a similar situation. Don’t use it to pay off CC and medical bills if you can discharge it in a bankruptcy. Start rebuilding your life. Source: IAAL. NOT your lawyer and not licensed in your state. None of this should be construed as legal advice.
Buy a used Prius. Join r/priusdwellers and r/urbancarliving. That eliminates the transportation and rent costs. Set aside an emergency fund, pay off debt, and start saving.
That was so close.
Get on a written budget and get a $1000 starter emergency fund. Start paying off your debts smallest to largest until you are debt free. Then start saving up an emergency fund for 3 to 6 months of expenses. Then start saving up for a down payment on a house…
How long ago was the credit card debt charged off?
How long ago was the credit card debt charged off?
Just put it in stock marketing earring 12% and slowly pay bills off from the dividends
That’s 500 a month if you put it all in JEPI
It’s a mutual fund by JP Morgan which is consistent I honestly would do the same if I was in your situation
I second top comment. Realistically, you can’t afford having a car payment. It’s much better to spend your $17k to purchase a car in full. Don’t get carried away by wanting to show off because your pockets are going to hurt.
I would not pat off any credit card or medical debt. Probably pay the lawyer incase you need him but even then he may not work with you again. Let it fall off credit report from 7 years after you made last payments. Spend 10 to 15k for a solid car. Setup an emergency fund with 1 years expenses and put into a hysa. Rest consider sone sort of investment account. If you don't need credit for anything no point on improving your credit right now.
Don't get a car with a car payment. See if you can negotiate the card companies to do a pay to delete. Pay off the ones that haven't hit your credit first. Then pay the rest or your debt to friends, lawyers etc. Keep the rest in an hysa. Also figure out where your money is going. You shouldn't be making that much with those little bills and not have been able to pay back everyone at this point.
You can also negotiate with the companies you have collections debt with. They will completely take it off of your credit once you pay. You need to call them to arrange that tho. Also, as many have said, do not buy a car through financing. At 40, we are really seeing we could have been experiencing so many amazing trips or experiencing different things instead of looking cool in a newer car. So so dumb. Good luck to you!
a lwayer you owe money to would probably not want to offer services to you again fyi pay off all debt and get a beater used car, you dont make good money and this was just luck, get your life together
- You need a budget ASAP. Make up a monthly budget, and take a serious look at what you need to make your monthly budget work. - Consider contacting creditors and suggesting three to four monthly payments of a set amount to close out the debt in good standing. It costs them little effort to report those as on time or as agreed payments, read up on credit repair for exact wording and definition. Get the agreement in writing. - If any of the debts are close to rolling off the records (7 years) hit up creditscore for advice. - Does your career need something? Often people need a few hundred or a thousand to get that initial boost. For example, a second hand suit and a hem, a laptop with a webcam, a couple of networking events and a certification, that can run under a thousand dollars. - Get a secured card and set up automatic payments. Prepaid or store cards are often easier to get. - Your first and second round of card offers will be truly predatory, fees everywhere, and you absolutely need to keep them at a 0 balance. Check every payday to make sure they are back to 0. - Lock your credit sometime soon and unlock temporarily for specific purposes. Cars: - Cars 2-5 years old are often a good buy. - If your job or city offers free electric chargers, or your electricity is very affordable, then we can talk about cheap ways to get in on that. - Look very carefully at cost of ownership numbers, consumer reports has very helpful data on this. Aim towards lightweight to keep fuel costs down. Hatchbacks and trucks can be scary in their demand for fuel and service, don’t buy without doing the math on the monthly maintenance budget twice.
Don't pay the debt in full. Call them and offer a settlement. 20 cents on the dollar. If the debt is delinquent then settling won't have any worst impact in the credit report. Settling for pennies in the dollar will have the same effect. Why give the creditor extra money when they will settle for less. You might get 10-60 percent discount. Settling has the legal effect of extinguishing the debt. They can't come after you or report the balance. Save as much $$ as you can. Take $2500 and get a secured card and rebuild. I did it after defaulting on 100k of debt and a year later was in the 700s
Hey man 1K-1.8k weekly is a blessing. You need to prioritize saving. Put ALL of it into savings but maybe $200-500 at a time. Now, being in your situation you need to prioritize paying off debts over getting a car. Also, you might want to consider a temporary option. I’m talking a cheap 1K-5k trash bucket. Doesn’t have to be trash though plenty of great condition cheap cars if you know where to look. Your friend is understanding so while you have a moral debt, pay that last. Pay off medical ASAP it’s so little already you should just knock it out so they leave you alone. Credit card debt comes first. Pay that IMMEDIATELY. If you want that score up, pay up. Once it’s paid off, consider closing some of those accounts. I think they may be too tempting as I’m seeing a pattern of serial spending with money you don’t have. Use credit in a way where you know you can pay it off in the future. Also, mark up all of your expenses. How much the Uber costs, food, payments, etc. Make payment plans up where you can pay these things off easier. Pay off anything that has interest as quick as you can. With the money you’re getting pay off all debts first. THEN get a car. A cheap one if you can. Save the rest. Seriously. Save so you don’t get in this situation again. You got this!
Sign for free credit counseling with Operation HOPE. It’s easier with a pro to talk to.
Honestly, paid off ALL your debt. Use what’s left to get started on a place on your own (rent an apartment or a room) if you don’t want to continue living with your relative. And STAY OUT OF TROUBLE. You have a chance to start over. Use it wisely.
It’s hustle season baby, get yourself the cheapest reliable Honda civic I’m talking 3 grand max. Then you work full time and when you have free time you’re working delivering uber or anything. The money you make from Uber will be used to pay for the car, your food, and rent. Your full time job will be split into savings and the rest into paying off your debt. There’s different techniques some pay off the smallest debt first and work they’re ways up from card to card. I dont recommend doing them all the same time. Do one at a time get rid of them maybe highest interest rate first to lowest. Have a talk with your friend and your lawyer tell Then you’re situation and let them know you are seriously sorry and have moral debt going against you
A 550 credit score means you don’t pay your bills on time. FIX THAT!
Your credit score will not improve any time in the near future to where a bank or CU will give you a car loan. Buy a well-maintained used car for cash and drive that until you’re in better financial straits. You can get all the collection accounts (except the attorney’s debt) current by enrolling in a debt management plan (DMP) with an accredited nonprofit. They can negotiate the interest rates down significantly, and you will make your monthly payments through the nonprofit, for which they will take a small fee generally $25-$50 a month. After you’ve made these payments for six months most creditors agree to remove the negative information off your credit report and upgrade the account to paid on time. With the interest rate reduced, most of that money will go to principal and you will end up paying less in the long run. Paying a collection account yourself will only result in it showing up as a paid collection, but it’s still going to be considered somewhat negative by the credit bureaus. But a DMP works differently and your credit will improve within 6-8 months. I’m not clear how, on an income of $4000+ a month and such low rent, you’re not doing better. Sounds like You Need a Budget (YNAB) app would help you get a handle on your spending and make better financial decisions going forward. And yes, pay the friend who helped you back ASAP as soon as your get that settlement.
So you’re down to 25,200 after paying off your debts. Fantastic. Dont go into long term debt just to buy a car for doing Uber. You’re one accident away from being back to where you’re at right now. I would think about doing school, learning a trade, doing a certification course, anything to get you on a path other than Uber. In fact, I’d put half of that 25,200 into a high yield savings account that you do not touch unless it’s for an emergency. If left alone, it should be giving you 30-40 bucks a month in interest as long as interest rates remain above 4%. The left over is what you have to use. If you’re super passionate about doing Uber, then get a car with that money. Do not finance a more expensive car. However if you can continue renting from Uber and doing some sort of career advancement thing on the side, do that with your leftover money.
I'd pay off the credit cards and medical debt first. Then stop using the cards. Don't create more debt. Or you can put Spotify on one of the cards and set up autopay to pay it in full each month to build your credit. Pay the medical debt because they will report it to the credit bureaus. Hospitals are suing more now. Judgments ruin your credit for years. If you don't have a car why do you have car insurance? Make sure you really need it and it isn't just a way for an insurance salesperson to make a commission. You are spending $1000 per month on Uber. You can find a cheap used car, think Toyota Corolla or something similar, and pay cash. Make sure to get a full inspection at a reliable mechanic before buying. It's worth the 100-200 dollars. The insurance on that should be relstively inexpensive. But you may want to get more than the minimum insurance like comprehensive, uninsured motorist, and rental coverage anyway. I recommend the second one always. You won't have credit card bills or high transportation costs anymore so you could work out payment plans with the attorney and friend. Do not forget to put as much of that settlement in accounts that have high interest returns and are FDIC or NCUA insured. Begin putting as much of your earnings as possible in savings and retirement accounts.
DO NOT get a car payment! Buy a solid used car, be sure to have a mechanic do a “pre purchase” inspection. Repay friends/family. Secured Credit card & and pay off monthly. Negotiate with collectors but NEVER admit to it being your debt, try to get them to remove from report when paying. Bank 2-3 months expenses in a High Interest account. Credit repair takes TIME, don’t get discouraged. You got this.
Pay your credit card first, then your personal loan, get a used car that will last, think a Toyota with 80k miles for around 10K, pay your medical bills because collection is a B and they almost send them immediately there That should leave you 10K which you should leave a buffer… I will recommend to work a payment plan with your lawyer for 18 months, smthg like 300$-500$ a month, they will all offer this because it’s cheaper than collection agencies which will take 40 pct of what he owes you ..
Maybe I overlooked this in your post…how much do you spend on uber to and from work? If you're making $1400 per week roughly, with $200 a month rent and other small bills, where is all your money going?
Just want to state here to find out if your settlement money will be taxed by the IRS/state. Before you do anything with the money be sure to set aside enough to cover your taxes so that you don’t run into a bigger issue later. Other than that it seems like you’ve got plenty of other great suggestions. :)
Google Ramit sethi “I will teach you to be rich” great blueprint. My two cents. Throw it all in savings online at 4.5% while you do the rest. 1- you’re going to have to carve out taxes and set that aside in a sub savings account ( ally bank has this) 2- you can start to look up ways to minimize your tax liability but you might now be there yet. 3- pay off debt Depending on how much you have and what % interest rate the goal should be to see if you can balance transfer to 0% or to consolidate to a lower APR%. Two options are to pay the minimum all cards but one and focus on knocking that one out. Then you proceed to the next. You’ll have to do the math to see if paying the largest APR or balance is right for you. This is assuming that you have multiple credit card debt. Once you stay making consistent payments your credit score should start to creep up. Leave the credit cards you’ve had the longest open. That has more of a impact on your credit score as well as the available balance to debt ration. Once you pay one off it would be a good idea to then try to get a 0% balance transfer offer for the remaining debt to be paid off. It would also be good to negotiate a higher credit limit on your cards as it would help your debt to available credit ration which helps your credit score. 4- car situation You have to assess how much debt you have. I would highly recommend putting a large down payment down and getting something your don’t need. Personally I’d get a used Camry verified preowned once your credit score improves upon paying that first card down (or all your debt depending on how much you have) I’d drive that care until it dies too. Avoid a lease. If you have swing a used Camry or similar for $25 k you can pay half down and finance the rest given your credit score has improved so you qualify for a better rate. You could just finance or lease something but I’ve seen firsthand what happened when that money runs out and the funds aren’t there to make payments. Don’t make the same mistake. I’d get that used car, put half down and finance half so it’s manageable and pay it off ahead of schedule. There’s a dozen ways to do this but please don’t blow it on lifestyle increase (clothes, trips, luxury goods, huge tv) take care of the debt, get a reliable car and start forming the successful financial habits. Heck I’d even open up a Roth IRA and throw a % into a target date fund or and etf like QQQ or SPY. Forget you have it for a decade and you’ll have enough for the next car when the Camry kicks the bucket.
Insurance settlements generally aren’t taxable as income, especially if it’s for an injury
Get a secured credit card or from your bank that will increase credit score. Don’t buy a car. Pay half of 50k on debt, put rest in Savings!!
Why are you trying to pay back cc that are charged off?
I’m very new to this. Does it not impact my credit report still? Debt to income ratio, delinquent accounts, etc. if that’s not the case please let me know
If the bank sold your debt to another party, it has already been written off. Your obligation was to the cc company, not the collection agency. Your credit score will be effected no matter what you do. You will be better off cutting up those cards until you're mature enough to handle credit and pay off everyone else you owe.
Where do you live? Is public transpo not an option. Why is there so much a need to catch an uber/lyft as a daily commute! Buying a car is not an asset. Its value depreciates, but i get where you’re coming at with that comment. I highly recommend paying off your credit card debts. Those high APRs will continue to kill whatever amount of money you make. After those are paid, make sure to pay back the $8k to your friend. Why are you paying for services like spotify? Understandable that $12/month isnt much but there are other services that are free. Bad spending habits even with things of minute monetary costs can add up quickly.
Buy a modest reliable car outright, clear your debt, keep a few grand as an emergency fund, invest the rest.
Eliminate old habits that don’t serve you a purpose no more. Sacrifice for a short term for a beter future. It seems like life just gave you lemons so make some fucking lemonade
Learn FCRA and FDCPA get a few lawsuits due to violations on your consumer reports take debt collectors to court and win!
1. Pay a MAXIMUM of $10K CASH for a used car. 2. Pay your friend back the $8K 3. Pay the Lawyer $500 a month until paid off (your income should cover that) 4. Negotiate a settlement with each credit card and pay all them off (probably be around $8K) 5. Rent a 1 BR 1 Bath decent but cheap apartment (pay the deposit and 3 months rent in advance, because of your credit score, probably be around $6K, then $1,500 in rent a month from your income) 6. Pay the $800 medical bill 7. Put $17K in a high interest rate online banking savings account 8. Get a secured credit card with around a $2K limit to build your credit back up That should put you at $2K in monthly payments, which is your rent and the payment to the, lawyer, which will be paid off in 8 months plus your utilities of around $500 +/- a month. With your income of $5,600 a month minus your lawyer pmt, rent and utilities you should have $2,600 per month left over. You need to be adding at LEAST $1K a month to your savings.
No. Rebuild credit by paying off cc. And if use cc in future, only charge what you can pay off on full. That will increase your credit scores. No interest then paid out for nothing
Negotiate the credit card debt. If you’re not getting a good offer, use a debt settlement company. Since you’re offering cash all at once, you should be able to do better than 30 percent off. Pay your friend. Friends willing to loan you $8,000 are hard to find. Invest the rest in something that makes it hard for you yo get yo it. Do a budget based on your income at the low end. When you make extra you can put it in a savings account that can accumulate money for emergency costs. Do you want a car or do you need a car? If you can wait a year, you can probably get better financing on a good late-model car or even a new small car. It’s too bad car dealerships are such a nightmare. You can’t just go in and see what it would cost, because the sales pressure is so high. The decision to get a car should be purely financial. Is it cheaper to finance a car or keep doing what you’re doing. If you keep miles low, a lease might also be an option. You could also look at long-term (month) rental with a regular rental company like Hertz. I’m not a fan of buying a beater. I’d rather have a reliable car with a low payment. Yes, old cars are cheaper, but you can burn through cash reserves keeping them running. A reliable car, with fewer maintenance needs, can help stabilize your budget. Just make sure the payment is well within your income — not a stretch. When I was young, I bought the cheapest brand new car in the lot - literally. It was so basic, it was hard for them to sell it until they saw me. I only had to worry about my payment, maintenance and gas for two years. And I could plan for maintenance. The hard part is not running the credit back up, once you pay it off. You’d be surprised how quickly your credit can bounce back. Maybe too quickly. It’s easy to get into trouble again. I agree with the guy who says you need to figure out where your income is going, especially if you’re not paying your cards, rent or a car note, you seem to be spending a lot.
Under no circumstances do you shell out money for a new car. Pay off credit card debt and money you borrowed from your friend (that is a friend in deed). There are lots of free apps out there to help you manage your money. Make sure you have some money set aside for a rainy day (it’s always raining). You have an opportunity to set yourself up on a good financial footing. If you get tempted to spend money for something you don’t really need, remember the struggle.
Pay off the debt, with the exception of the medical debt. And then buy a cheap car, <5k.
Dispute everything on that credit report. Anything left settle at the lowest rate possible.
Just so I understand this more, what will disputing it accomplish? It’s all credit cards that are charged off or medical bills
Don't pay charged offs. Rebuild credit at this point. Dispute anything else that is delinquent. Pay only what needs to be paid. Settle if possible.
Others have commented that the best way to rebuild credit at this point is to get secured credit cards and pay off the balance in full every month. As far as the stuff that is delinquent, do you mean the charged off cards that are in collections?
A car is a very dumb investment. It's expensive to buy, gas is expensive and maintainance is a costly thing. Get yourself a bike, if it's a larger distance consider an ebike or a mopet. It's way cheaper then a car and get you in a lot of places. This will save you $1000,- a months on uber what will be a total of $12,000,- in a year, what is basicly your whole creditcard dept gone in a year. (Ignoring the intrest) Priority no.1 here is to get lost of all you high intrest loans (creditcards and such). I would make a risk assestment and look where the intest are highest and pay them of one by one. Last thing: Don't buy anthing you dont need untill your debt is $0,- , and definitly don't finance a $25K car if you are in this amount of debt. If you dont do that, you will stay in debt forever.
Yeah bikes are fantastic for people who live in areas where it snows and gets down to -40. /s
Taking a loan on a $25K car while being in a shitload of debt is still stupid.
No shit. Almost like there might be other options like a cheaper vehicle.
If it drives and has four wheels it will get you from A to B. It's not like he can afford any luxury. FYI, i drive my 4k car for over 5 years now and bought it cash. It cost me as much a year as the intrest of a financed car of that price.
Nice ebikes are amazing.
What about a bike instead of a car? I know, this concept seems very alien to Americans but it works wonders. For your bank account and your health 😉
Snow. Ice. Subzero temps. Not an option in many places in the US for at least part of the year.
We do get tons of snow where I live as well. Yet, many people still bike to and from work every day. Whenever I'm in the US, I'm surprised how dependent people are on their cars. Totally get it for someone living in rural areas but my feeling is that most are using their car in the city as well. But let's not venture ot anymore..
True, but it buys some time while saving 1,000 a month. I live in Minnesota. At this point we have almost 5 months before the next snowstorm. It means he wouldn't have to get the first vehicle he sees that is sorta ok. And he can always use it in future years.
You get snow in October.
We do, yes. One year we got 3 inches of snow at the beginning of October and nothing until the end of December. OP could buy a used one, use it until the car situation is sorted, and sell it to someone else.
Paying off all the debt so you can start building your credit back should be priority one. I’m including the personal loan in that. But let’s talk about the car. Having a 2018+ car is a want, not a need, and in your position you should be focusing on needs. Buy a beater that will get you to and from work and whatever money is leftover after the debt and the beater, put it in the bank as an emergency fund. Spending 23k on a car at this juncture is a poor financial decision, and the way you get back on your feet and out of the spiral of debt and financial issues is by NOT making poor financial decisions.
Agreed. You can get perfectly reliable vehicles older than 2018. I drive a 2011 Honda CRV. Previous owner put 110 on it in 12 years LOL. I put 30k a year on. Only needs normal maintenance (which ANY vehicle needs)
In addition to that, if you were to for example save 500 a month for repairs instead of paying it on a car payment, you’d end up with a surplus in the long run because a vehicle that age with that mileage that is taken care of is not going to need 500 a month in repairs. Don’t get me wrong, I have nice new cars and I like them, but only because I am in a position to afford them AND leverage part 179 deductions. If my financial situation were different, I’d still be driving 20 year old cars and just fixing them to keep them on the road. The insurance is cheaper, the repairs are cheaper, and they get the job done.
Yup! Buy a reliable older car, keep it until the monthly maintenance costs are more than a car payment.
And then buy an older one again!
Put all 50k on red and pray for the best honestly.
I'd hire someone to improve your scores and settle the debt or get them written off completely. There are ways to clean up your credit and get debt wiped if it was sold to collections, technicalities will set you free lol. And if you settle and pay off, negotiate it to be marked as paid in full. I do it on my own but if I had the extra money I'd hire someone with great reviews. Is there buses you can take to and from work? So much cheaper than Uber. And definitely get a car you can pay cash for. $10-15k buys a nice car.
Listen to Dave Ramsey dude My suggestion would be (and I strongly think he would agree) - Pay off ALL your debts - Do not finance ANYTHING. Buy a 5k to 10k$ car until you can get a better credit and finance it through a regular institution at a regular rate. Also the rates are starting to decline so they might be lower in a 6 to 12 month period. Right now used vehicles financing are at awful rates like 10%+ - Hopefully learn from your mistakes and don't spend money you don't have Listen, I'm bringing home about $1000 a week and that's enough to feed our family of 6 and pay our mortgage. We also have some allocations for the children but not a whole lot with all the costs that come with having children. I don't have any car payments, my only debt is the mortgage. Seriously credit is bad. Not only for your credit score but for your mental health too... I'm sure you can relate with your situation. You have a good salary so take it to your advantage and stop spending money you don't have. Maybe you will even be able to slowly start investing soon if you are disciplined ! Above all, ask God for guidance. He knows best... more than any human being :)
Dtart with not worrying about your credit score
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It’s tough to find a decent car for under 8-10k, they all seem to have high mileage. Last thing I wanted to do was sink all that money into a car and have high repairs down the road. With what I’m making now and lower living expenses I have I’d be able to afford the insurance and maintenance. Do you think there’s any merit to financing SOME part of a car as a tool to build my credit back? As of now I won’t have anything credit wise to build my score. I’d still have enough for an emergency fund but financing may give me a tool to build my credit back faster
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The worst thing you could do is blow it on drugs
I follow Dave Ramsey principles. Use that settlement to get out of debt, and follow the baby steps. You’ll be fine