Hi,

My husband and I both work typical full time jobs and I was basically paying the minimum on my loans and credit cards.  However, we recently inherited a very large collection of comic books dating all the way back to the 30's and 40's.  Right now we are working on moving these books for additional income and so far the amount we're making is so great we've had to claim ourselves as small business owners selling out of our home.  My question for everyone is, how should I distribute this additional income in order to help pay off debt?  What is the smartest way to start using this money intelligently and productively?  How much should I use to pay off current debt?  How much should I use for long neglected improvements to my home? How much should I put in savings?  

All thoughts and opinions are welcome!

 

Original Post

As I have mentioned before on this community, I personally like to take a balanced approach when it comes to finances.

It is something my mentor taught me and something I try to put into practice as consistently as possible.

For your situation, I would recommend doing the same thing.

By taking a balanced approach I mean dividing the money into different percentages and distributing it accordingly.

For me, this would include savings, giving, investing and debt reduction.

For you, you could add extra categories such as home improvements, etc.

When you divide your money up this way, everything stays much more balanced.

So you will be saving while at the same time paying off debt and making improvements to your home.

Doing this insures that one category doesn't eat up all your money and then another aspect of your finances gets hit and you find yourself in a worse situation than you started with.

This balanced approach has really helped me and I believe it would be helpful in your situation as well.

Agreed, however, I would put as much as possible towards the debt, and continue to focus on the debt as it decreases. It's easy to get complacent as the amount you owe goes down, but the feeling of being out of debt is worth it! Saving is important as well, so that you are able to avoid the debt next time.  I don't have percentages or amounts in mind as I don't know your current situation. But really, I don't think you can go wrong with debt payments, saving, giving, or investing! (Or even the occasional vacation Our minds and bodies need self-care too.) 

I personally would tackle all of the debt or as much as possible with the plan to not go back into debt. This is especially for credit cards with those extremely high interest rates. The freedom of not having those debts on your mind every month beats seeing pennies on the dollar in interest on your savings account. So for me, 100% credit card and personal loan debt is what I would focus on, then emergency funds, then enjoy whats left or more of your hard earned money you work for everyday.

Having an emergency fund is important and so is having some "fun money" so you don't feel like you are always pinching pennies.  I agree with the balanced approach, with a little twist. I figure up all the bills/ loans to divy up my income, always putting more than the minimum on the payment. Then, I pay a just little more on the card/ loan that has the highest interest rate. When that is paid off, I apply the amount I was paying on that bill and apply it to the next highest interest rate IN ADDITION to what I was already paying. For example, credit card #1 I pay $40, loan #1 I pay $35 and credit card #2 I pay $35. When credit card #1 is paid off, I pay $75 on loan #1. When loan #1 is paid off, I pay $110 on credit card #2 and continue that method until all the debit is paid off. At that point, I will put the total amount I had been paying into an emergency fund or vacation fund or retirement savings. (or split it up among those accounts.) Since you are getting an extra income that will disappear once the comic books are gone, put the home repair bill in as one of the debts. Good luck!

I practice a little minimalism when it comes to debt. I don't buy anything but necessities until it's paid off. Surprisingly when I give to others or contribute to the food bank and the thrift stores, things in the Universe seem to line up for me. I'm totally serious. I buy extra food and give it to the food bank and my financial situation improves.

I like what other have said above. A holistic approach is best in my opinion. You need to be able to have some fun and be able to give to others. My only other take on this is try to consolidate your debt as you go into lower interest rate vehicles. Your goal is to heal your finances like you would your body. Stop the bleeding first and then work on clotting, and growing new healthy skin.

I agree totally. I'm not my financial situation. I'm bigger than the cloud over me. I let those things become a teacher. If I sit down long enough I find out that I made my own mess. I bought a car I really couldn't afford or used my credit cards too many times. So... Universal correction here I am.

I would use the balanced approach as well. You mentioned wanting to do some needed home repairs; I would definitely make those repairs as they will add to the value of you house should you ever decide to sell. Save a small amount to "treat" yourself to something you have been wanting but couldn't justify buying.  

To quote Dave Ramsey, “CASH is KING”. I have experienced similar situations myself in trying to payoff debt with a windfall. I personally would give back a percentage whether to your local church or other non profit. Next would be to make sure a that you had a good emergency fund established for the future. Then begin paying off your debt with the snowball system. Start with paying off the smallest debt. Work your way through your debt until it is gone. If you only pay portions of each debt, you still have debt when your out of money. Pay the smallest one completely off then start on the next one. I wish you the best at becoming debt free!!!

TheHannaLee posted:

Hi,

My husband and I both work typical full time jobs and I was basically paying the minimum on my loans and credit cards.  However, we recently inherited a very large collection of comic books dating all the way back to the 30's and 40's.  Right now we are working on moving these books for additional income and so far the amount we're making is so great we've had to claim ourselves as small business owners selling out of our home.  My question for everyone is, how should I distribute this additional income in order to help pay off debt?  What is the smartest way to start using this money intelligently and productively?  How much should I use to pay off current debt?  How much should I use for long neglected improvements to my home? How much should I put in savings?  

All thoughts and opinions are welcome!

 

Hi Hanna, 

I would definitely use as much of the additional income I could to first pay off your debt. Is your home in dire need of home improvement that things could fall apart right away if you didn’t take care of it? If not, I would try to pay off all the debt first before thinking of using the money towards savings and home improvement. 

My income is $900/mth.  I am on disability.

Rent.                       $375

Utilities.                   $125

Internet.                  $25

Pers. Loan.             $97

Car ins./renter        $93

Dog.                         $10

Gas.                          $50/ mth

 

That leaves me with $125 for month. 

My prescription plan is to cost me $30/mth (which we did not have to pay for 2 yrs ago).  My meds went from $30/mth to $150/mth.  So needless to say I am not able to get meds.  So I have an avg of $125/mth for food.

I'm unable to go to Dr cause of co-pays and deductibles.

Please tell me where do I"budget cut" to make ends meet?  I do not live close to bus so getting rid of car is not an option.  Social services claims I make too much for food stamps, Medicaid or fuel assistance.  What can I do?

Hey, my earnings come in Kenya shilling but the principal is the same i
bet.percentages.That is:
10% Tithe 30% personal needs 40% family 10% savings 10% charity
Ithen share out the percentages according to the budget.what I cant then is
pushed to the next month with first priority.

Kinyua

On Tue, 10 Sep 2019 at 17:36, The Penny Hoarder Community <
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