I just came into 70k which is all in the stock market..What should I do?

I have debts that total 40k...(cars, credit cards, HELOC)

BoA card 4,800 13%apr
BoA card 1,200 13%apr
Best Buy 1,800 17%apr
Chase 1,300 13%
Master Card 600 7%
Car and small buisness loan 14,000 10%
HELOC 14,500 6.25%

I hate to sell these stocks while they are so low but getting completley out of debt would be like my own personal bailout...I am never going to be stupid and spend money like this again....debt can be the devil...I bought to many wants and not needs...All my needs are covered

I am a social worker who makes 38k per year....all advice appreciated...Thank you

WOW, you have a great choice at the moment.

I am with Kevin on the order you should pay it off. You also have an opportunity to turn your situation around completely.

Now is a great time to be investing in stocks. In order to get to a new high stocks have to about double from here, a 100% return. That will take a few years but there will be huge returns in the future I believe.

I know what I would do. I would pay off the Best Buy which is the highest rate. Then the next three smallest cards to eliminate the payments. That leaves most of the money invested. The remaining money could generate more than the interest if invested in some of the stocks paying very high dividends with today's low prices.

Then use the dividends to pay off the debts and although the money is at risk in the market you have a great potential for huge gains.

Then you can use the income and some of your wages to pay down the debt more. Remember you now have three less payments so you can increase payment on the next lowest amount to try to eliminate another one.

Often car loans with the dealers have penalties that almost doesn't make them worth paying off. Check the loan documents.

I certainly wouldn't pay off the HELOC if it is tax deductable. Your after tax cost is well under what you can earn with dividends. Note, the dividends will be taxable. Then any capital gains are free money.

This leaves most of the money invested. While it seems tempting to simply pay off the debt, my idea gives you a plan to be richer for life if you change the way you operate and leave most of the money invested.

If you paid off all the debt with your windfall , then saved and invested what had been paying making in payments, that would work too. But would you? It is not that likely. The tendency for somebody that was living over their means like you had, is not to do that.

It was stupid to get in over your head with debt. I'm not trying to be mean only a bit of "tough love".

As addicting as borrowing and spending can be, saving and investing can be as addictive IF you reward yourself for it. The more you save the more you have to spend. I do not think that people realize what a fine line there is between debt compounding and interest compounding. With debt the more debt you incurr the more you need to borrow. With investing it works the same in the opposite. The more money you save the more money you have to spend. I include paying off debt as "saving" too. The return is assured.

You have a life changing bonus. I suggest you change your life. To succeed I say you need to "keep your eye on the prize". You are already thinking well. I found that people need to keep a good track of their net worth, debts, assets, every month or quarter. You need to do this so you can pat yourself on the back. Otherwise the money you use to make payments will seem like it is just "gone" almost as spent because it came out of your account. But if you track the declining debt you can say "Look how far I have come! Look how much more I am worth by paying off debt".

I think this would greatly reduce your desire to take on more debt as you would head in the wrong direction by borrowing more.

A program like MS Money for your budget, I used Quicken, will give you the numbers and monitor your budget, your gains, your debts, and your net worth. Learn it and use it. It helps give you the positive reinforcement you need to keep on track.

One reason I took the time to write so much is I think this really could be a life changing moment as I said. A chance to change from an overspender to a saver and an investor which will make you richer for life. Just a little more each month but adds up huge over a lifetime.

You might even find as you pay off debts and have more free cash flow you might wanting to invest $500 a month or more to increase your money. Sure, at 8% it only means another $3 a month to spend. But every month it increases $3. It looks like little money but until you pull that money out it pays you for a lifetime and it really adds up. It means you are less likely to take on debt which costs, not rewards.

Most people get very rich slowly and over a long time. The more you save the more it generates. That makes it easier to save and you can then save more. Then it grows faster.

The other reason I said so much and suggest paying off the remaining debt over time is that I think the low stock prices now, even if they fall over the next year, are at lifetime lows and also an opportunity of a lifetime with a 5 year or more timeframe.

If you are concerned about your investing skills. I suggest unless you get an advisor, I might sell the stock and put the money in a growth and income fund. Something like Vanguard's Wellesley. You will want income to pay off the debts and some growth to take advantage of the low prices. Income funds will rise much more slowly than a pure stock fund, with a recovery after this recessi

well, you should defiantly pay off your debts. that's the first thing.

make sure you keep the rest of the money in a bank account for a little bit. you want to make sure you have enough cash to cover any taxes that the government will charge on that 70k.

in early February next year (as soon as you get your tax documents (w2, 1099's, etc.), go see a tax person, and let them do your taxes for you this year.

then, you'll know exactly how much money you have left over. if you don't have an emergency fund (enough to pay for ~6 months of expenses), then keep it in cash in a savings account (well, enough that you'll reach the 6 month mark, anyway).

after that, use the money to max out your retirement accounts for the year. as always, invest in your 401k (or 403b, or whatever you have) up to the match, then fully fund an IRA (preferably a Roth IRA), than plow the rest back into your 401k.

take the money that you would have put into your retirement account, and put it in a savings account, and do the same thing next year.

Well...pay off all debt right now...the leaves you with $30,000. I don't know what your age is...but that $30,000 could be a nice retirement gift if you can invest it at, say 9% for 30 years, you would have $398,030.35

You did not say what stocks you have. But I will tell you this. 13% is worth liquidating those investments for. You need to attempt to live within your means.

Thanks for being as informative as reasonably possible about your current situation. It is rare in this space.

I may NOT immediately payoff the debt. It depends on terms of each debt instrument separately, and how your personal situation is impacted. I will make some assumptions.

First, if it was me, and it isn't, I would consider potentially paying down some debt. The 14K@10% car & biz loan jumps out at me first, assuming 3-5 year payoff. If true, this is a high payment relative to the others individually. Getting rid of one large payment can really add some comfort to bring the picture back in focus. I'm guessing no balloon feature on the equity line as well near term.

I would love to talk dividends now. If income is resulted from the stocks why not let them pay down some debt for you too. So, you may not have to sell at all. Stocks produce some income, and margin account debt is lowest of all, so on higher payment/interest situations, use stocks to, in essence, refinance the entire debt picture by borrowing at super low interest through your margin account.

When considering credit cards remember to count annual fees as part of the net interest expense. I would attack them in this order:
1) Best Buy 1800 @ 17% 2) Master Card 600 @ 7%
3) BoA 1200 @ 13% 4) Chase 1300 @ 13%
5) BoA 4800 @ 13%

Don't sell unless you have too, taxes could be worse than debt.

Another question that hasn't been asked is how did you come into these funds....
The reason i ask is taxes... If you have a high basis (step up after death valueinheritance) in these stocks fire-sell them all lock in the tax losses. Stay out of the market for 30 days to ensure you don't get hit with a wash sale rule...
- Please pay off all your debts. This should be the very first thing you do. The interest on those cards will destroy any earnings you will recieve. This is the first thing I preach to people "Pay off your DEBTS!"
- 30 Days after the sale, pay off all your debts and put whats left to work. Put half directly in the market and then begin to drip the rest in over a 2-6 month period (you can link your investment account directly to a bank account and begin auto contributions) . This will allow you to dollar cost average the price in, reducing the market timing effect. Timing the market is worthless (i know i'll get killed by some tech.. investor) but these are my beliefs I invest on fundementals. I do use tech analysis the exact day i'm trading a security but thats just to get an idea of how much i want to pay for the security.
- If you have a long time horizon 10+ Diamonds, Spiders and the Financial etf & REIT etf (in extreme moderation of course for financial and reit) look very good.
- Remeber some of the best investmnets over time are the hardest to buy when the markets ugly.

get out completely
13 week t-bills
keep cash on hand for repossesd sales of houses/cars/etc

pay off all debts and taxes first. that is key. It doesn't matter if you have to sell stocks to do it. Mortgage should be included in the debts. At this point it looks like the market could go either way and with debts that appear to be costing more (simply for maintenance) than you will most likely get in dividends from the stocks I would say sell out.

If, and this is very rare, the dividends from the stocks are higher than the cost of servicing the debt (and the companies that you own are big and stable, banks don't count) than hold onto the stocks and pay down the debts with the extra earnings from the interest.

Doing a quick calculation of what you are paying in interest only it is almost $3,600 per year.If you include your total yearly payments on these bills, I an sure it would total $6,000.00 or more.I would suggest you pay off all debts or at least the high interest ones cut up your credit cards except the 7% Mastercard and pay off the amount owing every month if you must use it.You have now freed up $6,000.00 or more to reinvest. What the stocks you have will do in the future is uncertain and we all know how wrong the so called experts have been. Stocks will not recover all their losses immediately and it will probably be a slow process. Research the stocks that you have and their performance as which ones to sell and which ones to keep or sell them proportionately.I would build up my cash each month for at least the first few months to see if you have the discipline to save and not to spend this excess,then start making a regular reinvestment. Yahoo Finance is a good place to do a lot of research on how your existing stocks are doing. Hopefully they are all paying regular dividends and this can be reinvested as well. Become your own financial expert so that down the road when you talk to one of these so called experts start recommending stocks you will have a good handle on things and will be better able to pick an adviser if you think you should have one. .My dad used to say if the stock broker is so smart how come he still has to work.

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