Inherit $350k, pay off $290k mortgage and $28k car, best use?

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  • #93238 Reply

      I’m inheriting about 350k from an extremely tragic death. It was not something we ever anticipated happening. We have no debt besides our mortgage (290k left) and car payment (28k left). I’m pregnant with our second child. I’m 28 and an RN making 100k but choose to stay home right now and probably the next 5 years or so. Husband makes 100k.

      Our Roth has 30k and our brokerage has 104k. We have 10k in a college fund for our first and will for our second as well. We currently contribute $500 monthly to our Roth IRA and $100 to our son’s.

      Anyways, what would you do with that money?

      Due to the nature of how we’re getting the money, we would like to do something with it to bring peace to our lives now. We’re leaning toward paying our house and car off. I would love all opinions and advice you have to offer!

      Thank you.

      #93239 Reply

        I would sit on it for a year or so in a HYSA and reflect on what the person would have wanted me to do with the money.

        #93240 Reply

          So sorry for your loss ♥️

          What’s the rate on your mortgage and car? Would it be worth paying off? If it’s over ~5%, I’d probably do it.

          Otherwise I’d take a very nice vacation and find something you’re passionate about, whether it’s rentals or investing, learning a new skill, taking some time off work. It sounds like you’re already in a good place monetarily!

          #93241 Reply

            Read “The Simple Path to Wealth”.

            Are you able to find a remote job so you can stay home and still contribute financially. It will be difficult for you to return to the workforce after a 5 yr break.

            #93242 Reply

              Had a similar situation. 1/3 went to debt, 1/3 went to long term savings, 1/3 to ‘memory investments.’

              Memory Investments = experiences and liabilities that my family loves doing. Travel, buy a boat, etc. it’s ’throwing away money’ but experiences we will cherish for a long time.

              Have not spent that latter 1/3 all at once.

              A boat is a terrible monetary investment, but I’ll be damned if it’s not the best family fun investment.

              Don’t miss: What would be your exact steps if you inherited a million dollars at 23?

              #93243 Reply

                Sorry for your loss. It would be tough for me not to just put that (or maybe 80-90% of it) into the market. At a 10% return, it will double every 7.2 years. That would be doubling 5 times by the time you are 65. That’s $11.2M by the time you’re 65

                #93244 Reply

                  My condolences for your loss. You may want to save the money in a HYSA or your brokerage account while you continue to grieve. Give yourself time to think about what you really want.

                  If your house and car have low interest rates, nearly everyone would advise against paying them off, but I understand how mentally freeing it is to not have them. Best wishes to you.

                  #93245 Reply

                    Pay off the house and car as that seems what you are leaning to. Then continue to “pay” your mortgage and car payment into a brokerage account.

                    #93246 Reply

                      What earned income does your son have to be able to contribute to a Roth IRA?

                      It could be something totally legit, but you’ll typically see this question asked when parents are contributing to a child’s Roth IRA.

                      Lots of people overlook that the child must have legitimate, earned income.

                      #93247 Reply

                        I’m sorry for your loss. Honestly I’d wait for a few months before doing anything other than keeping it in a HYSA to let some of the emotions surrounding everything subside. After that you’ll likely be able to approach the money with a better mindset.

                        Depending on your mortgage interest rate it might make sense to not pay your mortgage down.

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