[USER]

Hi, I’m 46 and divorced for almost a year. I have one child. I have a lot of credit card debt (~$26k) mostly due to the divorce. I am paying $975 per month on credit cards with a goal to pay it all off in 2.5 years.

Last year my 2005 car left me stranded with transmission problems and I bought a new car (2.5 %interest and $547 payment). I owe about $96k (2.75% interest) on my house and it’s probably worth at least $300k.

I feel like currently with the credit card debt and car payment, I’m almost living month to month and can’t really Save too much because some expensive thing usually comes up (termites this year).

I am contributing to a state retirement plan (9%). I have about $33k in a Roth IRA.

After reading some posts and comments on this page, I took about $6k that was in a money market in the Roth IRA and bought some index funds.

I have about $10k left in cash reserves in the Roth IRA.

Should I buy something (more funds? Which funds?) or leave it in cash?

[Collin]

Get rid of the credit card debt it won’t be 0% forever and it’ll free up cash so you can build a small emergency fund.

Then pay off the car with the money that would’ve gone to credit card payments.

Buying a new car was not a wise move, I doubt you’re positive in the equity on it so just try and pay it off as fast as you can.

Only after that should you worry about investing.

[Bridget]

Pay off your credit card debt first. Both the car loan & mortgage are low enough interest that I wouldn’t worry about eliminating them immediately. Once your cc debt is paid off, I’d make sure you have an emergency fund & *then* worry about investing for retirement beyond any employer match you may be getting from a 401k. If at that point you want to get ahead on your car or mortgage, then you’ll be in a good position to do so. You’ve got this.

[Shawn]

How much is your income. The mistake was buying the new car. I would consider selling it and throwing that payment at the credit cards. Invest 100% of the Roth IRA in index funds.

[Josh]

Credit card use was due to divorce, but I’d make sure that you are honest wi th yourself and that’s true. If it is, then best option is to do a heloc on your home and pay off the cards. Then work to pay off that heloc (it will be 8% or so).

[Author]

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