I need some input. My dad passed away in December after a year long battle with cancer. We recently found that he left us kids a small insurance policy- everything else went to my step-mom. That is fine with us, she is a wonderful person and took great care of him during his last year. It was very thoughtful of him to leave us what he did. Anyways- now I am torn with what is appropriate to do with the money. Its sitting in savings right now. We are working hard to pay off our debts and buy a house at the end of summer. This money would put a great dent in the debt, but I dont know if I should use it for that?? I really dont have anything else I need right now, maybe I should let it set in the bank for now. I dont want to feel guilty about how I spent it. I thought about saving it for a downpayment for the house, but it would also be very helpful now to get these monthly payments down. We are trying to rid ourselves completely of credit card debt before purchasing a house.
What would you do?? I know my dad would be ok with anything I did with the money, (other than blowing it) especially if it was to benefit our family in the long run. He knew of our plans to buy a home soon- and he was ready for us to get there.
Thanks for any advice or suggestions moms!
I would get rid of the credit card debt. On the other hand you might consult a mortgage person ahead of time who could combine the credit card debt with a mortgage and then you could use the money as a down payment and get a better house. Call the bank and find out.
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Uh, all of these answers (save one) are great, but please don't take Gailski B.'s advice.
hi~
some of the questions you want to think about are:
1) do you have an emergency fund saved? (you should have ~ 8 months worth of money saved).
2) do you have a retirement savings (you need more than 1 million dollars to retire on)
If the answer is no than I would consider putting aside money for an emergency fund and then talking to a financial advisor about a retirement plan (e.g. you may want to consider investing in a roth IRA depending on your current salary – they are great b/c all the money is tax free when you retire)
If the answer is yes and it is a significant amount (which it sounds like) then you may want to consider finding a good/trusted financial advisor to suggest what would be right for you and your financial situation.
here is an article with other tips http://articles.moneycentral.msn.com/RetirementandWills/E...
good luck!
If it was me, I would take a little to have some fun with, you know depending on how much it is. Maybe take a weekend getaway with the family or something like that. Then I would put the rest on debt. If you need some direction Dave Ramsey has great ideas about getting out of debt and staying out. You can check out his website daveramsey.com and even call in or email in a question about anything you like. We are debt free except our house and love it, so I vote for knocking out debt and enjoying a more freed up life in general. When my grandmother passed away that is what my mom did and she never regretted it and never got back in debt. Best wishes and so sorry for your loss. Take care:)
Look into DAVE RAMSEY's advice.....I would follow the steps and reduce your stress....what a gift that is. The feeling of having NO debt is wonderful. Look at his site and realize that although paying of debt is no fun....it is the best thing you will ever do. The Ramsey program will help you learn to not go back into debt......
Sorry for your loss.
I understand wanting to be debt free before buying a house, but I would talk to someone before you pay off a large about of debt right before buying a house. I was told that if I was to do it - it could lower my credit score & raise my "risk" factor - thus making it harder to get a home loan. This was a few years ago & the market has changed... so if you are hoping to buy a house start talking to the banks now & get some credit advice.
I think both ways you are looking at using the money would be a smart choose. Paying off debt is always nice & so is owning your own home, but I don't want to give you the wrong advice that might hurt you in the end. If you talk to someone & they tell you to hold off on paying down the debt, I would follow the advice, but once the papers are signed & the keys are in your hands you can pay it off. So, if you are able to save the money & have some extra funds you don't put down on the house - you can then pay down the debt you are concerned about.
It is also, always a good idea to have "rainy day money" when you own a home. Reason being - the water heater ususally goes out the week the house payment is due & you are strapped for cash and when you own a home you have to pay to fix it - not the landlords. Guess that is the only real down fall of owning vs renting a place - the up keep.
I'm sorry you came into the money the way you did... I hope your dad didn't suffer. But I feel he would be proud that you are putting so much thought behind what to do with what he left you.
Depends on the interest rate on your debts. If it's pretty low (most of my debt was at 0%), then don't pay it off right away. Otherwise, you could be throwing away hundreds of dollars a month in interest every month.
My mother recently gave me a chunk of money because it is unlikely there will be anything when she passes. My husband thought that it should be spent wisely - schooling or savings - rather than a "toy" (I really wanted a new stereo). For the time being it is in a savings account. I think that if I were you I would set it aside and pay off your debt with your regular money. If it's "painful" to pay off your debt it might prevent you from running up your credit card again. Good-luck.
Get rid of debt. Whatever your HIGHEST interest debt is, start there. You will be making a great step toward you goal of buying a house!!! Check on Suze Orman's web site, this is her typical advice for monies received, including income tax returns!
Sorry to hear about the loss of your dad.
It sounds like your making good choices about how to spend the money. Since one of the first steps in buying a house is qualifying for a loan, using a large portion of the money to pay down those credit card bills would be a good choice. Keep 10 to 20% of it in savings for the downpayment.
First of all never make big financial decisions for 1 yr. This gives you time to think and evaluate what you need to do.
If you don't already (which you should).....I would begin by funding my children's education.
We are big planners, no debt, fully funded retirement and college for daughter........ we believe it is our obligation as parents to get our daughter through school and out of the nest debt free.
I am sorry about the loss of your dad and that is a nice surprise gift he left you. A lot depends on how much you inherited. also, it sounds like you are on track to pay off your debts and buy a house at the end of summer, just do to your own hard work and frugality. That is to be applauded! I think I would continue on the debt reduction myself and use the money for a down payment on a house, provided you will be in a financial position to maintain the housing expenses without having to go back to credit cards.
Look, I am convinced that the dollar is going to get devalued and we are going to have the same problems Greece is facing right now. America's debt is much more larger than Greece and Greece is already falling apart. Get yourself educated on what is currently happening with our financial system right now. It doesn't look pretty. Traditional avenues for saving money WILL end you up broke if the dollar devalues completely.
Here is what I would do:
Watch Glenn Beck on Fox news nightly.
Read "Aftershock" by david Weimer ...eye opening is an under statement.
Go online and look at the posts and articles on goldandsilverexchange.com
Go to any search engine and type in "the devaluing of the dollar".
I wouldn't leave any money in a bank right now. Last thing I would do is go out and blow money during a depression with a gov't on the brink of insolvancy. Get your pantry stocked up with food. I mean a lot of food, in case this happens. One 42 oz container of old fashioned oatmeal will feed one person bkfst every day for one month. Have enough storage for 3 months minimum. Buy dried milk powder and other dehydrated long term storage foods.
Housing is going to continue to go down, and it will do so drastically in the next 1-4 years. When its all said and done,probably an 80% or more reduction from the highth of the bubble of 06. If you can, hold out a bit before you purchase, but make sure your money is in a place where it doesn't devalue- like certain commodities. You can track the devaluation of the dollar bill very simply- by watching spot gold prices. For every dollar gold goes up- the dollar looses equal value.
split it half and half for what you want to do. Put half in the bank and put hlaf to the bank to sit. Thats what I would do. Anything to goes towards debt is wonderful. I'm sure you will do what is best! Good luck :)
I also got some money when my dad passed and I used one amount on a down payment for our house it has been 9 years now I say take half of it and split that towards your credit card debit save the other half for your down payment I know it can all be overwhelming but I had to put the other amount in an roth ira and my mom had to pay taxes on all of that money so I would look into if you have to pay taxes or not first. Good Luck and I'm sorry for your loss!
www.daveramsey.com has great suggestions. if you have no emergency fund, ie. $1k, or 3-6mths of savings...just keep it! but put it into a money market fund where it is actually getting substantial interest but you can write a check if you need something. if you have the savings saved up then put it toward your debt and get rid of your debt. he says you need to have 20% cash to put down on a house but only AFTER you do $1k E.R. fund, then pay debts. he has a radio show in texas on am 570 from 1pm-4pm CST. you will learn a lot! and OPEN THE WINDOWS of Heavan for yoU!
How much interest are you paying on your debt? If it is more than you are earning in interest on your savings account, PAY OFF YOUR DEBT. That is by far the best use of your money.
I understand the advice to save some of it toward your down payment so you don't have to pay mortgage insurance, but the improvement in your credit scores after you pay off your debt will qualify you for a much lower interest rate on your mortgage.
