I have received a lump sum of money and have no clue what to do with it. I’m in my early twenties and am currently in university. I have a part time job starting in four weeks, but I’ve been unemployed for the last seven months and have been living off of my high interest credit card (not my finest work but desperate times). My new job is temporary (I am still looking for other work), not higher paying and the job market is extremely volatile where I live (I can’t move for work, I need to stay near my university). I have now received $1000 over the total amount of my credit card debt, in cash as a gift. I have to pay my tuition for this year of university out of pocket and student loans are not an option currently. I am unsure if I A) pay my credit card debt off completely with the cash gift, live off my temp job and hope to get hired somewhere else before I have to start living off my credit card again. Or B) don’t touch my credit card debt, bank the cash gift, live off my temp job until I need to dip into my gifted money if I haven’t found work yet. The answer seems so clear but I’m unsure of myself and horrified of making detrimental money mistakes this early in my life.
I have received a lump sum of money and have no clue what to do with it.
byu/Aggravating-Ideal-98 inpersonalfinance
Posted by Aggravating-Ideal-98
7 Comments
Save it. Trust me. I’ve blown both redundancy and inheritance on crap, even paying off debt, to get more later on. By all means, waste a grand or so, but put as much ways as possible, AND NO NOT BLOW IT
yep pay the credit card debt. the apy on the credit card will wreck you over time and your worst case scenario is having to take on debt again – but even if you do this well you’ve reset all your debt and have prevented interest from accruing.
You can always put it in a HYSA account while you figure out what to do with it
People get money and we think we have to act on it immediately. But there’s usually no need to do that
Take a hard look at how you accrued credit card debt. Because if you pay it off but continue the same spending (habits, decisions, living situation, income, etc.) you’ll likely just rack that debt back up pretty quick
Pay off the credit card debt immediately you will be getting charges crazy interest on it. Anything left term deposit for now credit unions are offering around 4% at the moment so not too bad.
real talk ur young u’ll make more money later but if u let debt follow u around it becomes a chain better to cut it now than drag it thru ur 20s
Pay the debt as your priority- still bank the money over and live off your temp job money; the best way to learn to live very thriftily is when you have a little cushion in case you mess up.
Congrats on the gift—huge win in your 20s! 😊 With CC rates averaging 22%, pay off that debt first to kill the interest monster. Stash the extra $1k as a quick emergency buffer for tuition or surprises. Smart moves now pay off big later—what’s your interest rate?