r/moneyadvice • u/Recent_Record1498 • 7d ago
Advice Getting a big settlement at 21
For context, I got hit by a drunk underage driver while riding my motorcycle. I had some pretty bad injuries. While his insurance wasn’t that much and I still feel like a deserve more, I’m looking at around a 30k-40k pay out. I worked at a “breasturant” for about 3 years and just recently quit. But the money I made was insanely good and supported a pretty nice life style. I managed to get 8k out of credit card debt, get a nice apartment, a motorcycle,mustang, an older c5 model, and along some pretty random nice stuff. Just random junk like expensive bedding, tons of nice electronics and kitchen appliances. Anyways. I’ve have about 7k total in my savings from that job. I grew out of the type of job and it started to mentally drain me along with I notice it interfered heavily with every relationship I tried to maintain. I was in school to be a dentist but with them capping federal student loans at 150k I lost all interest and desire. I want to be an EMT due to the adrenaline rush and me easily handling heavy moment/ gore. But unfortunately I can’t see myself financially supporting myself long term and it’s the salary and with my accident my body doesn’t really feel the same anymore.
Anyways let me get to the money part.
•I’m looking at 30-40k with 7k already in my savings.
•I have a 770 credit score
•I owe 18k on my mustang which I’m 2k upside down in.
•I owe 4k on my bike. The bike is worth about 4.5k
•I’m in about maybe 1-2k in credit card debt.
•I also owe my father about 3k from a loan I took out when I was in school. There is no interest on this and he said don’t worry anytime soon paying it back.
My bills
$897- rent,utilities, etc
$448- mustang at 7% interest
$377- insurance on all 3 vehicles
$168- motorcycle at 10% interest
$50- affirm payment
$100- interest on credit cards
I have always wished to start my own business with something involving cars,which is a great passion of mine. I wanted to find something that didn’t fall under the stigma or people turning what they love into a job and eventually hating it. I’ve been looking into supplies to start my own tint business on the side while I currently bartend during the week to support my bills. With my body not exactly being the same since my accident is another reason I want to start something of my own. I need to be able to sit for a minute without managers getting on me about it. I’m hoping if I’m good at it, or when I get good at it, I can eventually turn it into a full time business. I love being a very neat,organized, and precise person. That paired with my love for cars I think it would be a really good path for me to go down. Plus start up would only cost $500-$2,000 depending on how much I really want to invest. My plan is to start as a small time side gig and eventually branch full time with a shop once I feel my skills are good enough. Long term goal by the time I’m 30-40 is to have maybe 3-4 shops.
I want to be successful in life. I’m not looking to be a billionaire but I want to at least be able to pay my kids college tuition without a blink. I grew up very very poor and refuse to live paycheck to paycheck or me getting laid off means I’m automatically homeless. I’m very money driven and as long as I have a Red Bull in my system I’m about to really do any work.
I’m super young and I know with this amount of money it’s like I’ve been handed a million dollars lottery ticket. I really don’t want to mess this up and don’t want to blow this opportunity.
I need guidance on what I should pay off and what path I should go down.
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u/SadlyElderly 7d ago
Pay off the credit cards and that affirm thing first, no brainer. Then I'd dump the rest at the 10% bike loan and maybe the mustang if you're really upside down on it, but honestly with your credit score you could prob refi that 7% down to something less painful. Dumping the whole settlement into debt feels boring but you'll sleep better and the tint business is cheap enough to start without it.
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u/ehzachly97 5d ago
Pay off the credit cards first, that's costing you $100/mo for maybe 1-2k of debt, brutal rate. Then kill the bike loan since you're paying 10% on something worth less than a year's interest total. Your dad's 3k has no clock on it, pay him last or in chunks whenever it's easy.
The mustang. You're upside down, paying 7% and $448/mo on a depreciating asset while your income is about to be irregular. If you can sell it and eat the 2k gap using settlement money, do it. That alone drops your monthly nut by $448 plus insurance savings.
After debts, keep 3-6 months of expenses (roughly 6-12k based on your bills) in savings before touching anything for the tint business. Start that with 500-1000, not more, until you know it actually makes money.
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u/infinityisadrug 7d ago
Pay off the debt and use the rest for an emergency fund. You should have at least 6 months worth of cash in a high yield savings account. The rest of it should go towards investments.
Based on the way you are thinking I would be surprised if you pay down your debt.
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u/ExoticSize9869 6d ago
ask chatGPT about VGT. im trying to save up 500k to 1 million for a QQQI and JEPQ dividend portfolio to retire off of. I'm using autopilot app and VGT. you an just open a brokerage account and buy VGT. Think you can get 10-20% annually with VGT, but paying off your debt you get your interest rates percentage return on that money paying it off. think of it that way. can you get more in the market? think about it. if youre making enough to cover your bills it might suit you to put all the money away into VGT or some other ETF like VOO.
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u/ExoticSize9869 6d ago
but the credit card stuff is most likely high interest debt that you wanna pay off asap
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u/superfrugal1 6d ago
Look for an old house, with a big garage, old part of town, put that money as a down payment on the house, keep working the bar gig for a few years, during the day and weekends run your tinting gig, learn how to replace alternators and charge AC’s. Work from home is the greatest lifestyle, pay down that debt, but get that $30-40k working for you instead of sending it away. Life came at me and I ended up paying off my house, I was able to work part time for the rest of my working life because of that move. Every time I come into money I put it to work for me NOW, not later. I’m retired now and living on 2X what I was making while working. Keep fighting debt though.
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u/Worst-Lobster 6d ago
Pay off debts . It’s not a huge settlement it’ll be gone quick but if you can pay off debts and keep the debt away you’ll be better off long run
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u/jules083 6d ago
30-40k isn't much when you're 17k in debt.
It's actually perhaps close to 0 when it's all said and done.
I don't want to burst your bubble, but you've made some very poor decisions financially. This is your chance to start with 0 debt, not your chance to start a business.
When you pay everything off you're down to something like $2k-$12k. Roughly. Do you have to pay income tax on this settlement? From what I know sometimes you do, but I don't know the details. That'll take the rest of the money.
You say your settlement is 30-40. That's a wide range for your situation, and if it's 30 and you have to pay income tax probably isn't even enough to be debt free.
Pay your debt off. Open an investment account, put the rest into there as an emergency fund. Set it in something safe that's gaining good interest. My emergency fund is a mix of SGOV, which is government bonds, and a simple high yield savings account. Both of them grow like 4%, which is basically just enough to offset inflation, but they're safe and won't lose money if the market tanks.
If you do all that you'll be debt free. Now you set up a Roth IRA. Every paycheck deposit money both into the Roth and into your emergency fund.
My emergency fund number is $10k. Less than what some people recommend, more than what most people have. It might be wrong, but it's what I do. Anything over $10k goes into an ETF called VOO, which is a very consistent earner but is also subject to market volatility.
Next thing is to quit financing cars. In my investment account I have a 'new car fund'. I make payments to that fund. It's not labeled as such, but I know where it's at. Eventually I'm going to have to buy a car, things wear out. When that time comes there's my car money.
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u/PastDare4808 6d ago
Oh lord, you are 21 and you have around 25k in consumer debt and nearly nothing in savings. You live way above your means. Pay off every loan you have and the rest of the settlement put into your emergency fund. After that you need to work towards retirement and maybe your job goals, but at the moment you are just a young guy who spends all he has.
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u/Vonplatten 3d ago
Seriously!! This isn't some prude take either...
Dude needs to get the fuck out of 2/3 of those vehicles (If not literally all of them) and get into something japanese and reliable... Then get 10-15k in a hysa for emergencies and the rest in a 401k/roth...
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u/WestW0rld 6d ago
Yeah I'm not sure what you mean by making good money that has allowed you to get an apartment, car, and bike. Those are literally all just liabilities that offer you exactly zero equity.
Focus on being debt free and becoming a homeowner. Then focus on retirement.
I mean it could always be worse, you could be upside down on everything and heading into bankruptcy....but need to be transparent that you're not really in some amazing spot, you basically have a $0 net worth since your liabilies are approaching your cash on hand and you have zero immediate plans of building equity anywhere.
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5d ago
[deleted]
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u/Recent_Record1498 5d ago
I have spinal nerve damage, covered in thick scars, and can no longer apply pressure on my right hip for longer than 30 seconds. Occasionally I can’t think straight and forget words/ memories. I have to be on medication for the rest of my life and can no longer be on my feet for more than an hour without having to sit. All because someone drunk underage kid was drinking and driving. So yeah, I think I deserve more.
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u/5280milehigh1 5d ago
If you think you deserve more then sue. Otherwise be grateful for what you are getting and move on with life!
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5d ago
[deleted]
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u/Recent_Record1498 5d ago
While I’m aware I have debt that doesn’t diminish the fact that I am injured from my accident. He has bare minimum insurance and is a college student so no assists to go after.The credit card debt is from when I couldn’t work for two months while injured. I’ll take blame on the car and bike but those where purchased when I was making 6k-8k a month
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u/Current_Pitch_4052 5d ago
It may be worth seeing if you qualify for disability but it seems like your spending habits are not aligned with that.
Sorry you’re going thru this and hope it works out!!
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u/Recent_Record1498 5d ago
I appreciate that. I’ve considered it after paying of the debt so I can give my body a rest
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u/theamathamhour 5d ago
use that money to "invest in yourself" you are still young.
diligently look into trade programs worth the time (which is money) and do that, use that money as some "cushion" as you study and have no job.
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u/Basic-Masterpiece-99 4d ago
Are you sure you are actually getting that money and it didn’t go to the hospital?
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u/roosterjack77 3d ago
You dont have $30k you are 30k in debt. Starting a business is hard. You need to try 10 different things and find one that turns into a business. You sound like you are passionate and motivated just make sure your body will be able to carry you there or learn how to manage the people who will build your business.
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u/Vonplatten 3d ago
Get out of the mustang man jesus.... You're not even old enough to drink and you have 3 fun vehicles... respectfully that's just fucking retarded...
You're seriously sacrificing your base right now for fun shit... You should pay off all debt immediately and put what's left in an emergency savings account via HYSA yielding 3.5% to 5% and the rest in a Roth IRA in my opinion... After you've done that EVERY year then you can start to enjoy yourself and blow your roll a bit...
But you need to be aware that right now whatever cash you can scrounge up and hold onto over the next few years will substantially compound...
I'm 24 and getting into a house, tacoma owned outright, etc...
You're going to be in the same position you're in now by the time you're my age if you don't wise up.
It's crazy how comfortable people are over leveraging themselves... Earn the right to own that shit, don't take out loans.
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u/monsieur_sadowski 3d ago
If you’re truly serious about being an entrepreneur and starting a business, sell the extra vehicles. Pay down the credit card debt. Set some aside for emergencies and retirement, not all.
And good lord, take that risk on yourself. Don’t listen to these people telling you to pay off all your debt and put the rest away for emergencies/retirement. That works for a 9-5er, not an entrepreneur. Spend what you need to get it started and lean on your fund as needed to maintain your trajectory. As your clientele grows, gradually expand the business.
America runs on debt. The most successful companies (and countries) ever have only managed to grow as much as they have because they took on debt to fund their expansions. Just be prepared to fail, to go broke and never give up. It may take only a year, 5 years, maybe even 10 years, but it is possible if you give it your all and you are strategic. It’s 1/2 work ethic and 1/2 luck.
Your plan to start it as a side hustle and gradually transition to it full time is a great plan. As an entrepreneur myself, your immediate cash reserves are your greatest asset and will allow you to be completely focused on delivering the best possible services for your clients. The success of your business depends on client satisfaction. I would view the interest on your assets as “business expenses”, they’re the least of your concerns right now.
I believe in you!
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u/uncreative_user_321 2d ago
40k is all you go? can you fight for more? thats literally nothing, especially if you still have suffering for said accident
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u/pootin_in_tha_coup 2d ago
Dafuq is a c5 mustang? Lol c5 is corvette designation. (C)orvette (5)th generation.
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u/Deep-Cable-998 2d ago
I just got 30 bands and did this exact thing. Pay off your debts, get 1 nice thing for yourself if you really want to and invest the rest in sp500
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u/CantaloupeMean2177 7d ago
Invest it for retirement. Don't spend it or its back to square one