tax return

[jona28]

what to do with tax return of $4500. I want to do the best thing with this. we have 2 car loans. (1 is $17000 other is $10,000) CC of $14000.@10.9%. Lots of debt, were working on it.Would it be best to sell $17,000 and use tax return to pay cash for a used cheap car, leading to no payments? Or dump it on CC? confused.

[jennipurrr]

How much is the car with the $17,000 loan worth? Do you need two vehicles? Could you get by with one for a time? If you could, you could sell one car and put the tax refund towards your remaining debt.

If you need two cars then I would lean towards selling the car with the $17,000 loan and using the extra money and refund to buy a solid used car with cash. I would try to find a good used car that you can pay cash for. Mr Money Mustache blog had a good post about the best used car for the buck - http://www.mrmoneymustache.com/2011/11/28/new-cars-and-auto-financing-stupid-or-sensible/

Now you are down to one car payment and a cc payment. I would use the snowball technique to apply your extra money from the $17K loan you got rid of to the highest interest payment, get rid of that and then move on to the last debt.

Also, I would consider building a small emergency fund ($1000 or so right now) if you don't already have one. That way you will not have to go to the CC if you have an unexpected expense pop up.

[jona28]

Car is worth $17000. yes we need 2 vehicles. thanks