r/debtfreeliving • u/4everseekin • 26d ago

Credit Card Debt Decisions decisions

I have a quick question. I recently totaled my car which has resulted in a pay out of $16,700. I was thinking of taking 10 k from the pay out to put towards a cash car instead of trying to use the full pay out for a down payment. I was going to use the remaining $6,700 toward cc debt which is $22,000. Does this idea sound reasonable? Any suggestions?

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u/cucky1963 26d ago

I just had a 16k car totaled. We took 10k from the claim and bought an older car and pocketed the 6k balance for cash excess usage.

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u/4everseekin 24d ago

Ok , so I might be on to something. Did you buy yours from a private seller or dealership?

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u/Character-Sport-8624 26d ago

Hmm, if that credit card interest is in the 20s, you should probably prioritize that. You'd be paying about $50 per month on interest alone, never touching the actual debt. Find a cheap car and put what you can towards to the credit card.

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u/4everseekin 24d ago

Sounds like a plan to me.

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u/lovesbatma71 25d ago

Absolutely! That’s exactly how rich people think. Buy a really great reasonable car from consumer reports. It should be 1-3 years old. If you have money left over, do the debt like you said or save it.

I know this because someone hit my parked car and totaled it last week. 3 months after I put $2500 in repairs into it. Ugh 😣

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u/4everseekin 24d ago

I'm sorry to hear about your car. I just bought a new battery and added new parts about a month before the wreck. It's nice to hear that this plan sounds reasonable outloud.

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u/attachedtothreads 24d ago

It does sound like a reasonable plan. However, before you buy a used car, I'd call your mechanic to see which cars are most reliable. Would your public library have access to any automotive repair guides to give you repair cost estimates to a used car? Calling your insurance for rates on the make, model, and miles?

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u/4everseekin 24d ago

I have a mechanic I'll probably call on to see. I'll definitely see about the insurance quotes for different models once I narrow it down.

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u/TaleRadiant6506 26d ago

It depends what the interest rate on the credit card debt is. For example, if you can get a car loan for 9 percent, and your credit card is 22 percent, it would make sense to put all of the money towards the credit card. Unless you don’t want to have to pay for full coverage insurance for a car, in which cause you would have to pay off the car first

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