Sell the F150! Use 25K to buy a used 10-15K car/truck
Payoff the CCs with highest APR first.
This also improve the FICO score for future loans.
Reduce the overall spending for next couple of years till he can restart again!
@jetsfan2013 wrote:Im hoping to get some advice from the community for my family member (younger brother). He is roughly $110k debt post divorce, and trying to pick up the pieces financially.
What he has shared:
Annual income - $125K, with a bonus being paid out of $25K next month that he wants to use to springboard his debt payoffs.
Debts - $123k
Ford F150 he plans on likely selling - $53K
Student Loan - $31K
Credit Cards - $34K
Line of Credit - $3K
Personal Loan - $2.2K
He shared he is upside down on his F150 by $7K, however the $840/mo payment is weighing on him, and he is willing to take a chunk of the bonus money he receives and apply that to that debt to complete the sale.
After that - he is torn on if he should attack the revolving debt first, the student loans, etc.
1. Obviously if the truck payment is killing him he needs to do whatever he needs to do to get out from under it.
2. Then he should focus on the revolving stuff; get rid of the PLOC [balance] altogether; get the credit cards to 28% or less on each, then zero some out if there's anything left over.
A possible strategy, if he hasn't explored refinancing the truck loan, would be:
(a) put some of the money aside temporarily;
(b) pay down revolvers as mentioned above;
(c) see if scores have improved significantly;
(d) if scores have improved significantly, explore refinance at lower rate, particularly with a credit union.
But of course if he doesn't need the truck for making a living, he should sell it.
@jetsfan2013 wrote:Why the suggestion of getting rid of the PLOC?
I didn't mean get rid of it, I meant get rid of the balance.
@jetsfan2013 wrote:Im hoping to get some advice from the community for my family member (younger brother). He is roughly $110k debt post divorce, and trying to pick up the pieces financially.
What he has shared:
Annual income - $125K, with a bonus being paid out of $25K next month that he wants to use to springboard his debt payoffs.
Debts - $123k
Ford F150 he plans on likely selling - $53K
Student Loan - $31K
Credit Cards - $34K
Line of Credit - $3K
Personal Loan - $2.2K
He shared he is upside down on his F150 by $7K, however the $840/mo payment is weighing on him, and he is willing to take a chunk of the bonus money he receives and apply that to that debt to complete the sale.
After that - he is torn on if he should attack the revolving debt first, the student loans, etc.
Before paying down the truck he should get an offer from Carmax or another dealer. The shortage of solid used vehicles and chips for new ones has made used cars way more valuable. He just might get an offer over what he owes or possibly just take it off his hands for an even exchange. The money he saves if he can do this can be applied to other debts. Once he has an offer he knows how much of a gap if any he might need to close so he doesn't spend any more than he needs to on getting out of this.
I would pay off the PLOC and personal loan first. Set aside $5k - $7k for savings. Apply the rest to the credit cards using snowball method to pay them down to AZEO. If the student loans are federal ones with a low interest rate I would get the other debt reduced then use hefty repayment monthly on the student loans.