Im trying to get on my feet finacially. Tell me if this is the best course of action.?

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Jansen Y

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I will be buying a house in the next 10 months and need to know whats the best course of action. The first obstacle I am running into is my debt/income ratio of 47%.
To try and fix this I am moving back home for 6 months to save up money. I currently have about $2000 in my savings. Should I put this $2000 towards my remaining principal on my car which is $14000 at 18% interest(dont laugh) or do I put that towards a down payment on a house. If i understand correctly paying down a balance doesnt lower your debt/income ratio because even though u pay it down, you still have occuring debt each month? If this doesnt solve it, is the only way to lower my debt/income ratio is to get a raise?
Finally when I save up about $4000 living at home, should I put that towards a down payment on a house or pay off the vehicle? I also have student loans of about $2000 a month and no credit card debt. I would like to know where my money could be used to the greatest effect. Thanks!
 
Moving back home is a wise thing. Don't take the $2000 and put it towards debt...you need to have a savings cushion in case of an emergency. Instead, take the money that you are saving and put it towards a monthly debt. Why is your interest rate so high on the car??? Do you have credit issues? Do you have no credit? If you have credit issues, you need to clear those up before you even think about buying a house. Do you have no credit? Work on getting cards with low credit limits like $500 and establish a history with them. Once you get your credit situation straight, then you work on saving for downpayment and closing costs. You have a better chance of obtaining a mortgage with the best interest rate if you put money down AND you pay for closing costs. If you are planning on zero down and the seller paying the closing costs, those loans end up being harder to do. Plus keep in mind if you do it that way, you may end up in a negative equity situation very soon after you buy the house.
 
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