January 22, 2009
What should I do with the money I made selling my house?
yup its me asked:
I recently relocated and sold my house. I gained around 33k in profit. I have tons of cred. card debt and I am debating what to do with the money. My mom thinks I should save the money for another house but with this debt I would never get approved for a mortgage. My cred. score is good cause I never miss payment. I want to save 10k of it for an emerg. fund or maybe to use as future downpayment. My 23k leftover will earn maybe 4.5% interest in savings while my CC debt racks up 15%+ interest a mo. I am living paycheck to paycheck cause of this debt. But if I send 23k to reduce my CC debt by about half i will be able to save more money & have cash to spend on necessities instead of using my CCs. Help! Do I send the 23k to pay down CCs thus reducing my expenses, debt and saving myself thousands in future interest or do I save now & continue to live try to pay off these bills slowly? I have a kid on the way in a few months & one of our goals is to either move to a 2BR apt or buy a house
I recently relocated and sold my house. I gained around 33k in profit. I have tons of cred. card debt and I am debating what to do with the money. My mom thinks I should save the money for another house but with this debt I would never get approved for a mortgage. My cred. score is good cause I never miss payment. I want to save 10k of it for an emerg. fund or maybe to use as future downpayment. My 23k leftover will earn maybe 4.5% interest in savings while my CC debt racks up 15%+ interest a mo. I am living paycheck to paycheck cause of this debt. But if I send 23k to reduce my CC debt by about half i will be able to save more money & have cash to spend on necessities instead of using my CCs. Help! Do I send the 23k to pay down CCs thus reducing my expenses, debt and saving myself thousands in future interest or do I save now & continue to live try to pay off these bills slowly? I have a kid on the way in a few months & one of our goals is to either move to a 2BR apt or buy a house
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Comments on What should I do with the money I made selling my house? »
Pay off your debt! This interest rate is killing you. Hold on to some cash for “emergencies” but also remember that by paying down you’re debt you are opening yourself up to available credit – USE THIS FOR EMERGENCIES! Rather than paying over 15% in interest.
There are so many options for low down payment options – holding onto the cash AND the debt just doesn’t make sense!
pay of a few of the higher interest credit cards….do not close the cards..get all of your balances below 50% of your available credit if possible…that way you will be able to maximize your credit score so you can get the best rate possible when you go to buy again and can look into a 100% purchase program….but paying high interest on credit cards is like throwing money out the window….
You need to pay off the CC debt! It is the smartest thing you can do. You won’t regret it.
pay ur debts with it first b4 thinking of any other thing
I would forget about paying off your debt for now. What you should do is find a ” for sale by owner” house that needs lots of fixing up. You can get into these kinds of houses because the owners are usually very desperate to get rid of the house. Often times, they will even finance it so it won’t be hard to get financing. The next thing you do is take your extra money and start fixing it up. It shouldn’t take more than 6 monthes. Then turn around and sell it for no less than 30k more than what you bought it for. That’s net. So if it took you 10k to fix it up, then you need to sell it for 40k more than what you bought it.
When this happeneds, you just made 30k in 6 monthes. Pack your things and do it again. Think of it, you only spent a few thousand dollars and you could easily make 60k a year.
Your should first find out if you will owe any capital gains taxes on the house. If you’ve owned for more than two years, then you should be okay.
Saving $10k or so back for an emergency is a good idea. Use the rest to pay off your highest rate interest credit card. That will free up money in future months, which you should direct towards the remainder of your credit cards.
Most importantly, stop using your credit cards. If you pay them down, but keep using them, then you’ll get nowhere. If you have an emergency, then tap into the $10k you’ve saved.