Hi all,
I (25m) have a friend (40m) who is self-described as financially illiterate. He has just happened to come into a large-ish sun of money, about $50,000, and is turning to me for guidance on what to do with it.
I’m not a financial advisor and I’m worried I’ll lead him astray. I’ve just been parroting advice I’ve been given since he sort of put me on the spot.
Anyway, his debt totals about $39,000. He owes $9,000 on a car loan at 10% APR, $25,000 in credit cards with rates varrying from 15-29% and a personal loan for $5,000.
My first advice to him was pretty much a lecture about reframing his mindset around his credit cards and to consider shredding the cards but keeping the accounts open. Then, I told him he should pay down his credit cards in full, since his minimum monthly payment is over $1,000. Then, I told him he should take that $1,000 and start putting that into his car loan each month and have it paid off by early next year. Then, do the same thing for the personal loan.
My reasoning was to help him keep at least $25,000 of this money since he has no savings account or retirement plan, then it’s up to him to figure out what he wants to do with it.
He was saying he wants to use that money as collateral on a loan to start a sports cards business with a store front in our town, I told him that would be the quickest way to bankruptcy but I’m not sure I can talk him out of that. (sports cards are what got him into this much debt in the first place)
All that being said, am I saying the right things here? What are some other ways I could help him?
Submitted July 29, 2023 at 12:52AM by NoahPKR https://ift.tt/CtXPiTJ
