Should I spend my $10,000 inheritance to pay off my jeep, pay on home equity, save, or pay off 401k loan?

We are going to sale our house (50,000 profit) to buy a 143,000 house. What should I do with my $10,000 inheritance in the next few weeks to most benefit our finances? We owe no credit cards and our credit score is excellent. I was leaning toward paying off the jeep because the loan balance is 11,100 and I would have an additional $450 per month, but that interest rate is low. The other options I could pay on, but not pay in full, which would leave our monthly debts close to the same, just a lower total debt. Thanks

invest invest invest......i wouldnt pay the jeep off for the jeep will depreciate and in time the money will be gone...invest it to where the money will work for you,,,,with that money pay your jeep off, but keep the main money working for you at all times

Pay off the jeep.

Paying off the Jeep is the obvious thing. Before you do that though check your contracts to make sure there is no early pay off penalty. The other thing I suggest is investing the money.

Invest if you know what to invest in. I don't. So my second rate advice is to pay the money into the loan with the most expensive interest rate. That will leave you with the most money in your pocket at the end of the day.

Paying off debt is always a good idea.

However in this situation I would encourage you to invest the funds for a long-term goal such as retirement. The reason is that the small debt fee you pay now will not stack up to the benefit of that 10k compounding over time. Essentially you will make more money if the the investment is allowed to grow and earn interest longer than the debt.

There is a 40-year investment calculator at the URL below. it shows you what investments can grow into and also the effects of inflation.

Good luck!

You didn't mention where you live, and tax conditions there matter.

You should put the money where it creates the best after tax return, given the risk levels you're willing to take.

You don't appear to have any high-interest debts, which are a no-brainer to payoff (for someone with credit card debt, they might be paying 20% a year on it ... after tax. Paying down credit card debt is 'as good' as an investment with a guaranteed _after tax_ return of 20% ... good luck finding an investment like that!).

For me, I'd probably pay down my home equity, but my understanding is that in the US you can claim interest on a mortgage as a tax deduction? Given that, it may make that less appealing.

Is there any tax deduction for the interest on the 401k loan? In canada, I can claim interest on debt used to finance investment against those investment gains, but on tax sheltered retirement savings, I don't think you can ... so that might be the best thing to pay off first? I don't know. Look at the interest rates, and take into account tax impacts.

The interest rate on car financing is often so low that you'd be better off investing the money - at this point. When you originally purchased, you probably could have gotten cash back instead of a good financing rate, given you took the rate, you might as well use it.

There is not enough information to answer your question.

What are the interest rates in each one of your loans?

Sounds like you have already paid off your high interest debt (credit cards). Whether you should pay off the jeep depends on the interest rate. If it is below 5% you shouldn't pay it off because you can earn 5% in a good savings account. If it is above 5% you may want to put some money towards paying it off. Good luck!