I just inherited $10 883. I'm kind of wondering what to do with it. Here's a brief summary of my situation:
Debt (interest): Balance (payment)
VISA (.99% consolidation rate until Feb 2014): 2800 (who knows, like $15, I currently dump 1900 on this/month)
Student Line of credit* (4.5%): 14 500 (130)
Car loan (2.9%): 18 100 (376) - The car is worth about 10k
*Sort of like a private student loan, cosigned by my father.
I'm also going back to school in September. It may be paid for by military disability. However, I've been waiting three years for a decision on that and I'm done wasting my life so I'm going whether they pay for it or not. Worst case, tuition could potentially cost me 13k, and I'd be working part time and most of our needs would be met by my spouse's salary.
So, I'm not really sure what to do with this windfall.
1. I've been fantasizing about selling my car and using a portion of the proceeds to buy a bike for my partner (and replace mine with a slightly nicer one) and going full bicycle. This would save us about 20% of our income per month (bringing us up to 80% savings rate) and wiping out more than half of our debt at once. It requires some lifestyle redesign, and we're being separated by the military next month so I don't really know what to do about that.
2. Pay down highest interest debt and carry on as if nothing happened.
3. Save for potential unemployment until August. I'll have my answer whether the military is giving me disability or not no later than mid-August. I kind of really want to go this way, since the cost in interest is only about $3001 if I put the money in a 2.6% savings account (advertised rate on my savings account). After I leave the military, I can either pay my tuition or pay off debt with the money. However, when I leave the military I'll be getting about 30k in retirement contributions and severance, so saving or not right now isn't really a dealbreaker either way.
1 interest cost on 36 000 at 3.9% for six months minus interest earned on 10 883 at 2.6% for six months. Not sure if I did this right.