This guest post from Susannah is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
I grew up in an upper-middle class family that sent me into the world with a moderate financial education, no savings, but less than $10,000 in college debt. It was always understood that my parents were neither able nor willing to support me after college, and I didn’t blame them, since my folks had me late in life, and they both retired while I was still in school. But I came away with a good start anyway, for which I’m very appreciative.
My father died suddenly in July of an utterly unexpected heart attack, and it’s been tough. I’m his youngest child and his only daughter, and we were very close.
Sudden inheritance
After his death, I was shocked by how much money my older brothers and I came into. My father never kept track of his money, but repeated the mantra that he “didn’t have the money for anything” over and over. He worried about buying plane tickets to see family, and had piles and piles of unopened bills on his desk when we cleaned out his room. I’ve never been one to anticipate money — I’ve generally assumed that I’d have to work and conserve to make my way, and especially when it came to my dad, I fully expected to be supporting him entirely once my husband and I were settled into our lives and careers.
So, you’ll understand that when the dust cleared, I was astonished to gross over $30,000 — and that’s before his house was sold! I was amazed that my dad had an insurance policy, and at least two IRAs, one of which he apparently forgot about for 20 years. (Not a bad move, apparently.) I don’t think he knew himself how much he was worth financially. It felt utterly surreal: This terrible blow of my father dying, and the universe apparently showering money on me in return. I’m still weirded out by it.
My husband and I have been wondering what to do with this windfall. My oldest brother has been bugging us about it. He and I aren’t very close, and he’s worried that I’m going to buy a yacht, or buy a tour bus, start a rock band, and go on the road. Seriously, these are things he’s cautioned my husband about — only half jokingly!
Spending
I’ll admit that I have been what some would call wasteful: After my father died, my husband got a last-minute job offer, and we moved five states away from the city I grew up in. This fall, I’ve chosen to just be a housewife and focus on supporting my husband through the last year of his Ph.D., as well as cope with the stress of losing my dad (as well as other violent upheavals in my life). That has sucked away a significant amount of money over the past four months, especially since my husband is making zippo as a Ph.D. student. But I’m going to call it a good choice for us. I’ve been very lucky to be able to make this choice, and I’m not forgetting it.
I set aside some inheritance money for “play” and charity. I bought a treadmill and a trekdesk in order to walk while I use the computer, and it’s been great for my health. That was the play. I also just donated $1000 to RAINN (the Rape, Abuse and Incest National Network); I was spurred on by the controversy surrounding the Wikileaks rape case, and although at this point we’re definitely tightening our belts, this cause means that much to me. (Thank God for my husband, one of the best men I’ll ever meet. He has supported this decision fully.)
Although theoretically we could coast on the money from my dad’s estate until my husband graduates and gets a “real” job, I’m planning to go back to work in January. I’m self-employed as a doula; that is, I support women emotionally and physically through labor and childbirth. I don’t make a ton of money, but I love my job, and I anticipate being able to pull enough in to cover the gap.
Saving
Those are the selfish, non-saving choices I’ve made with this windfall. Here are some of the choices I’m prouder of from a financial standpoint:
- We finally have a solid emergency cushion, in a great money-market account. I’ve never invested before, and watching it grow by 1% every month is intoxicating.
- We’ve started IRAs this year, which has been terribly exciting. With the next check we get, I anticipate maxing out both IRAs for my husband and myself, and I’m going to thoroughly enjoy selecting the mix of investments. I’m 26 and my husband is 28. I’m really happy just to set these monies aside for the next 40 years. Go, bling, go!
Hmm…that wasn’t as impressive a list as I’d hoped.
Now, we’re looking forward to having our first child in the next year. I realize that getting pregnant with neither of us having what is commonly termed “good jobs” seems like a foolhardy choice. It’s risky, it’s true. But we have our reasons, and more importantly, we have our priorities; this is something we feel ready for. When my dad’s house is sold, even in this market, I expect we’ll have enough to see us through with a solid savings cushion. Even if we don’t, a baby will still be a great blessing.
We don’t anticipate wanting to buy a house in the foreseeable future; we’ve both been put off by the housing slump. I’ve seen multiple friends buy when they shouldn’t, and wind up with a big money pit on their hands and no flexibility. If we buy a house, then it likely will be much further down the road. When we have a solid 20% to put down, say. We’ll just save and invest for now, and see what the market is like when we have settled somewhere for good.
A final gift
So, that’s a snapshot of our story and how we’re coping with my inheritance. I have to say that I feel like this is my dad’s last gift to me, of the many, many gifts he gave me. Because he managed just well enough to leave us something, I feel that we have a lot more flexibility, and we’re starting off really well.
I know I haven’t made the choices some would make to grow my wealth. But I don’t mind being poor — I just mind being out of control. I feel like that’s what personal finance is about: allowing folks the flexibility to make the right decisions for them.
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Susannah,
Sorry about the loss of your father. Regardless of what the commenters say as the day goes on, remember, people have no problem telling OTHERS how to spend their money. I’ve never been the beneficiary of an inheritance which is fortunate because it means I haven’t lost anyone close to me.
One of the first few posts I read on here was dealing with windfalls. Good luck. http://www.getrichslowly.org/blog/2006/10/19/how-to-manage-a-windfall-successfully/
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Susannah, where on Earth did you track down a money market fund that’s bringing in 1% per month? Do tell!
Don’t let anyone naysay you on this plan of yours. I think it’s great. You recognize the value (peace of mind) that your windfall has granted you; you’re investing in your husband’s (aka… your economic unit’s “social capital”, by supporting him thru the last bit of the PhD), instead of buying the rock and roll tour bus (or whatever! lol!) And I like the gumption and commitment to your own values when you attest that this is the right time for the two of you to have kids, not a house (which at your relatively young age would just tie you down. Way to go!
You’ve got a brilliant future ahead w your man, and lack of debt (and in your twenties, no less!)
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Whenever someone receives an inheritance, there is typically some foolish spending. If it were me, I would rather sit on the money and pretend that I don’t have it for a year (maybe put it in a CD or something). This way I can make sure that when we decide to spend it, we’re doing it with a clear head.
It sounds like you have already spent a chunk of the inheritance, but let’s say you still have $20,000. Do your best not to spend this money right now. Continue to work and live off from your current income. Once your husband earns his Ph.D., then I imagine that you’ll want to settle down in a residence of your own. Guess what will be waiting for you? Your downpayment (your inheritance) on your dream home!
Sorry about your loss. Good luck with your decisions.
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Losing someone in your family is very rough. So sorry.
Where did you find a money market account paying 1% a month?
I don’t quite agree with how you are handling the inheritance. Other than the emergency fund and the IRAs, it appears the money will be used for living expenses. I understand your life choices, but really think you may want to re-evaluate a child until your hub has a paying job.
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Losing someone that you are close to is a terrible way to end up with a windfall and there are a lot of emotional issues you end up dealing with. You are right to take it slowly. You’ve had a lot of major life changing events happen recently. Putting that money into a savings account while you figure out what life will hand you next is a good idea. Be careful about justifying too many splurges. You will be surprised at how quickly you can go through the money. Getting back to work and making new friends in your new town should provide you with some stability. Good luck, Susannah.
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I’m sorry about your losing your father.
As a postdoctoral researcher (~1 y past my PhD) who just received a similar windfall from her parents, I thought I’d pose a few questions you and your husband might want to consider:
1. How certain are your husband’s job prospects? What field is his PhD in, and what does he want to do with it? He needs to be very realistic. If he’s in the humanities or social sciences and looking to stay in academia, he absolutely cannot count on immediate income, unless his advisor is one of the top few people in the field or your husband’s book is published soon and very successful. Academia is absolutely brutal. If he’s in biomedicine or similar, he will not be making much as a postdoc, and he should probably be lining one up (and applying for external funding) in the next few months. Less than 25% of people with PhDs in the sciences wind up with a tenure track position. If he’s in engineering, he might have better luck. I’m saying this only because I was so focused on finishing my dissertation in my last year that I did not completely realize how tough things would be (financially and professionally) after the PhD–my degree is in biology, and though I came from and went to top programs, nothing is remotely stable.
2. Why isn’t your husband earning a stipend now as a TA, RA, or for dissertation writing? It makes me worry about his department (or wonder if he’s in the humanities). He also has the potential to earn substantial income doing academic editing on the side.
3. It seems to me like you might be well poised to charge more for your services as a doula, provided you have time to build a client network. Childbirth is one of those things that most women don’t do often, and any event like that can charge a premium (think funerals, weddings, and mergers and acquisitions)–especially because your services will so often be advertised word-of-mouth. Consider investing in a kick-ass website, networking, and maybe some image consulting. If the thought of charging more doesn’t appeal, remember you can always do pro bono work on the side.
I also invested all of my parents’ gift in mutual funds after having maxed out my 403(b) and Roth. Academia and kids take enormous bites out of lifetime earnings, so I think it’s wise not to splurge.
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It is tough to profit from a sad event and I can understand you feeling ‘wierded out’ by it.
As another poster has already pointed out, you will find no shortage of advice on what you should do with your money. By all means listen to their advice but educate yourself on all of the options (not just the ones that other poeople push) and make the final choice yourself.
All of your choices appear to have been conscious decisions. Personally, I think that makes them the ‘right’ decisions.
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Hi Susannah,
Sorry for you loss, thank you for sharing your experience. I can see from your story that your Dad meant a lot to you. (He sounds a lot like my Dad, by the way.)
Just to give my two cents, it sounds like you are being a good steward of the money you inherited. As for advice, I’ll have to defer to one of J.D.s’ tenets: Do what works for you. Do what you think would be best for your families future. There isn’t a right or wrong way to use an inheritance (it sounds like you’ve got a good mix of long-term savings goals and accounting for immediate needs for this money). And remember you don’t have to make any immediate decisions with the money either.
Good luck
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Sorry to hear about your loss.
Good luck for the future.
And… I second Anonymous #4′s concerns about employment after the PhD. Some fields are more likely to find jobs afterward than others. It is something to look into.
I wish our town had more doula options! The one doula in town moved states when I was pregnant, so I went with a friend who had done the job before even though she had no formal doula training. (Which was great… but she has also since graduated and moved states.) Any pregnant families reading… definitely something to look into! That extra pair of calm and confident hands is worth a LOT.
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Sorry to hear about your father. I can also relate to how frustrated you might be, knowing that he had the money to make his last years more enjoyable but he refused to use it.
My best advice to you is to go on with your life, making plans and developing your careers and figuring out how you want to live, while ignoring totally that $30K in the bank.
Just ignore it, and don’t touch it. Let it grow, and let it be (a hopefully un-used) fund for a dire emergency (for example if someone dies or you or your man or your child have a serious medical emergency). Leave it alone for at least 10 years.
Because $30K is not a lot of money.
It is not enough for a decent down-payment on a house. But it could get you into a home you can’t afford. If you can’t save up a 20% down payment on your current income, you probably don’t have the predictable income stream for the 30 year commitment of not only monthly mortgage payments, but increasing property taxes, insurance, maintenance, and etc.
It’s not enough to support you if you don’t work. It may last 1 year, but you still need a plan to make some money after that. Why not get going on that plan now rather than in 1 year when you’ll be inexactly the same place but without an emergency fund?
It’s not enough to change your life. You and your husband still will need to provide for your child by developing careers or some sort that will bring in enough income for the next 50 years.
Basically, I guess I’m saying that $30K isn’t enough for you to take it into consideration at all when you are trying to make future plans. It gives you a little security if something unanticipated goes wrong, that’s all.
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Seems to me that “coping” is not the right word to describe your situation. You cope with a death, but you don’t cope with an inheritance…especially the way you described. Good luck and I hope we don’t see you back in a few years talking about the mistakes of trying to do too much before you and your husband actually had stably, decent paying jobs.
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Condolences on your loss.
Your choices seem reasonable to me, although there’s always room for more saving.
However, I assume the 1 % per month is a typo or a misunderstanding. Taken literally, it translates to a 12 % annual yield, when the money market yield is less than 1 % per annum. Considering that you say it’s a money market account, I suspect it’s actually 1 % annual return that compounds monthly (making the monthly growth about 0,08 %).
If the account actually does have a 1 % monthly return, my advice is to take the money out of it as fast as you can and put it somewhere sensible. An investment paying 1 % monthly (12 % yearly) has significant risk, and if it is being marketed as a “money market” account, it’s crooked.
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Interesting. When I edited this, I read the 1% money-market account as an annual rate that Susannah was watching grow every month. I still think that’s probably what she means, but I do see now that it’s worded as if it’s a monthly rate. And if it is, I want to know where to get in on that action, too!
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Also sorry for your loss.
Having been a poor PhD student, I can imagine that $30k seems like a lot of money, but I would add to the caution that it isn’t a lot when it’s covering living expenses or child-related things. I understand trying to link the loss of your dad to good things (e.g.,charity and children), but while you can stop giving to the charity, the child will keep needing resources for a long time and well beyong $30k. Thus, I would make sure you have a stable way to get those resources long-term (for example, investing the money to get a nursing education and trying to get a job in OB).
I think those of us in academia react to your husband’s PhD with a lot of concern instead of excitement because so many fields are oversaturated now and higher ed has a lot of struggles right now with funding losses, for-profit competition, adjunctification of faculty lines, etc. You may want to take a “hope for the best, plan for the worst” tact on your husband’s future employment.
Good luck,
Jenn
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Please, please, please take Anonymous #4′s advice to heart.
I have one friend in particular who is barely making it. Katie and her husband both have PhD’s and no job prospects, despite months of intense searching. Fortunately, she was able to get a post-doc job which, combined with his TA barely covered expenses. Did I mention they also have two children under the age of 5?
I also want to echo Karen #10′s comment. $30k is not a lot of money! It may seem so if you’ve been surviving on graduate pay, but in reality, it does not stretch as far as you expect.
Other than that, I really hope this all works out for you. Good luck, and sorry for your loss.
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You can start a 529 college account for an unborn child. List yourself as the beneficiary then change it when the child is born. The tax is deferred then tax-exempt if the money is used toward education. Some plans (like NY) allow a tax deduction if you itemize (maybe you don’t now, but if/when you buy a house). Sorry about your loss and good luck.
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I am sorry for your loss. My father was my guide and mentor and I still miss him terribly four years after he passed.
First, I never saw one of your choices as selfish.
My husband and I are 53/60. We have worked all our lives to provide for our children and our retirement. When my husband received the same inheritance from his parents- he bought a Harley. It is something he had always wanted- but could never justify. I love that he rides it and enjoys the memory of his parents when he does.
For you staying home for six months with inherited money is a good decision. Being a doula is an emotional thing. Being sound is key to that position. I agree with one of the posters that maybe you could use a bit of the money and get more training or advertising so you have an active practice.
I am wondering if any of the money that is left is in his old IRAs. One big mistake people make is cashing out IRAs instead of leaving them in to grow….just a thought.
As far as having your own child- go for it. All the warnings against having children until you are “fully ready” are silly in my book. Most likely you will breastfeed. Cloth diapers are no biggy- I used them and so does my daughter. There is little equipment needed- most of it is “new” to the world of child raising. My daughter’s son slept in their bed with a bumper between him and them. There is the library for books and friends with clothes. We need the intelligent people of the world to have children!
My daughter had my grandson in her early twenties. Something has happened and her chances of having another child is very limited. They were poor when they had him and now her husband brings in a handsome salary. One never knows what the future will bring.
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Of course, in a similar situation everyone would make different choices. For example, I probably would have invested one third of the inheritance in an retirement insurance, one third in a few well diversified stock market funds and spent one third.
There really are not universally best choices, it all depends on your preferences.
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Sorry to hear about your loss.
As another academic, I too am concerned about your optimism re: your husband’s prospects for a job. What does he plan to do afterwards? TT job projects are pretty dismal. Depending on his field, he may be taking a postdoc, a fellowship, or a visiting lecturer/professorship or adjunct until that tenure track position shows. For several years, in some cases. This situation may mean moving every year or two years for a while, which can drain finances.
I admire your optimism, but am concerned that it is misplaced. There are too many “ifs” in your scenario that need to land just right. Given that, I would leave the rest of your money alone for now.
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Putting the $ in a Money Market and doing nothing with it for at least a year is a very good move.
You didn’t mention any debt – that’s great. Many people would have had to use the entire windfall just to put a dent in their debt load.
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@#11,
I feel ‘coping’ is being used creatively to describe the poster’s mixed feelings of having to pair the two events: losing someone dear to her and having gained a small gift in return.
I wish you well! You seem rational and calm about your situation, and with just a little luck and some level-headed thinking, you should have a bright future!
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You and your husband sound like grounded people, wise early in life, who already know what it’s like to endure both emotional and material losses and to save for and spend on the things that matter.
You are, in brief, constitutionally unlikely to go nuts and spend extravagantly or stupidly.
Since that’s the case, it seems to me that you ought to go ahead with your life plans.
It’s practically a truism that “no one can afford a baby,” and yet babies are born. Your little family will be among the more prudent and balanced, it seems to me.
Never postpone joy. Go forward with your dreams — live them now — this is not a dress rehearsal.
From one who knows.
Good luck to you and may all your dreams come true!
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I forget which book it was, maybe Millionaire Next Door, but one book wisely pointed out that you can tell a lot about how in control of their finances someone is by how they treat “found” money (vs earned money). The lesson I took from this is if your goals are to get debt free and fund your retirement and get a one-year emergency fund (see Sierra Blacks recent post, or talk to anyone who went a few months without work to find out why a whole year), and you get $30,000 DON’T do anything different than if you earned that money over 3 years of hard work.
The people that resist the big screen TVs or other “presents to themselves” are the people who find themselves financially secure in all ways and like your dad have plenty for retirement.
You should read the book The Millionare Next Door. Get it from the library. It points out that most people worth at least $1 million don’t spend as much as their peers and worry about money more. N
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I’m so sorry for all the upheaval you’ve experienced. I think a lot of us have been in your position and are worried your making decisions that will affect your financial future in a risky way.
Please read or re-read a good financial book like Dave Ramsey or the automatic millionaire. You’ll remind yourself how a few solid choices with that money you’ve received now can make your life rich for years to come. Most of all, don’t touch the rest of the money until you’ve had time to deal with the grief and think a little clearer.
$30K can be gone in minute with nothing to show if you use it for living expenses now. Think of how long it took your Dad to amass that, you’d be doing his memory a service by growing it into something great for your new family! Good Luck!
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I concur with #17′s last paragraph in particular. That happened to me, only I never did get around to having children, and now I can’t.
The advice to wait wait wait to have children, and to put everything into saving, doesn’t really work with women’s timetables. A lot of the financial advice I followed was aimed at a typical male career and earnings timeline — writers and advisors assume a more or less constantly rising income over a 20- to 30-year time period — which is the exception for about 52% of the population, that is to say, women.
So take all the financial advice that you typically see with that in mind — you’ve got to re-shape it to fit your needs according to your own life pattern, which is a woman’s. Do that for yourself and you’ll see your path.
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Hi —
Thank you for writing this and my sympathies on your loss.
My only suggestion for you is to make sure to wait until one of you has decent insurance from an employer before getting pregnant. My husband and I had our first child less than a year after his grad school completion — but we waited until his job’s insurance started to conceive. If there were any medical issues during the pregnancy or birth, your money woud pretty much be gone instantly. And, after the baby, having well-baby coverage is important. Chances are that you won’t have any big needs…but if you do, it’s the surest way to lose every penny still — though getting better as long there aren’t too many changes made by this congress.
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As long as you “don’t mind being poor,” it’s totally reasonable to take time off and spend some or all of the inheritance on living expenses.
You’ll receive a lot of advice from people who, like myself, do mind being poor. Very little will apply as long as you don’t. As you said, personal finance is about optimizing for your own priorities. As long as you are satisfied being poor, optimize for something else.
I would suggest considering how well a child fits into that. You remembered your parents worrying about money, and with a small income, you’ll have way more expenses to worry about than they did.
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I started learning about personal finance when I came into a windfall when I started my PhD about 2 1/2 years ago. Since then I’ve been able to use the money to build up an emergency account of at least 3 months of living expenses, pay off my student loans (well almost there on that one, I’ll have this done by May at the latest), and have a good start to retirement savings (that I keep in both a TFSA and a RRSP).
Planning is key and keeping spending in line with goals is important. With a baby, you might want to direct any future money coming to your emergency savings account, so that you have at least 6 months of living expenses. And as other posters notes, job prospects for PhDs are tough. Your husband might want to consider job possibilities outside of academia. I’m fortunate that in my field (art history), many PhD grads go on to become museum curators, so I have other options. But I think that people in every field should explore this option with tenure track jobs being so difficult to get. His advisor probably won’t be able to help him, but perhaps the career centre at his university might have some resources.
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$30,000 + profits from a house is a lot of money, but it’s also not a lot of money. Have you REALLY done the math about having enough money to stay at home with child? That money isn’t going to last you very long at 1% interest.
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I’m so sorry for the loss of your father.
The treadmill purchase seems a great decision. Our own good health is one of the best gifts we can give our children (even children yet to be conceived). Just remember to keep using it!
I agree with the previous concerns expressed about the market in academia. If hubby is in the humanities or social sciences (I can’t speak for the sciences), he will need to concentrate on not only finishing the dissertation and getting good teaching evaluations, but also getting a publication or two.
I could have really benefited from a house-husband at that ABD stage of my academic career. But I would very much caution you about having a child while he is on the job market for reasons of insurance, time, expense, and general financial insecurity. It is true what others are saying, $30k doesn’t go that far. And first year TT jobs aren’t that well-paying.
So in my mind, it makes sense to me to continue your doula work and try to conserve what remains of your inheritance for when you have children.
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The lion’s share of my inheritance went into maxing out a large emergency fund (a solid 6 months of salary). When I lost my job in late 2008 and was out of work for 5 months it kept us sane, knowing Dad was watching over us and helping us through. It also helped us realize that we could stretch 6 months salary to support us for 10 months if needed. The first priority with my new job was to pay back Dad – and the fund was filled backup within one year of finding a new job. Thanks Dad.
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Thank you for your courage in sharing the details of your financial life which goes against so many taboos in our society. In doing that, you are helping a lot of other people. I think you are making really wise choices so far and I commend you. When you’ve been living on very little money for a long time, it takes awhile to expand your internal ‘money blueprint’ to match your newfound ‘wealth’. Saving a big chunk of it, as you have, is a great way to do that. Good luck to you and your family!
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I am so sorry about your dad. I too just had a massive loss, my husband passed away three months ago. Yes, there was inheritance, which is now being contested from his grown children from his first marriage. It is unbelievable what happens to people when they believe there is money coming to them. ALL consideration, compassion and mourning seem to be put on the back burner. My plans are to DO NOTHING with the money that was left to me. I plan on living on my own paycheck, and know in my heart that for the first time in my life I have a cushion. A small peace of mind. It is a ridiculous compensation for the loss of my one true soul mate on this journey. My opinion is to leave the money, NEVER make a decision before a year with inheritance. Also, as my grandmother told me, there is NEVER a correct time to have a baby. You will always have other financial responsibilities first. You just have the baby, and make it work. The only suggestion I do have, is perhaps you can find a CONSERVATIVE ETF to invest the money in, where you can see a growth larger than 1%. After a year, leave some in conservative, and some in a moderate risk, and at your age, you are at a good point to put SOME of it in a higher risk ETF, as you are so young, you have plenty of time to weather the ups and downs of the market. Obviously this is all IMHO. Mostly, take the time to heal from the loss of your father. Truly, that is whats most important. All the financial wealth will not be worth anything, if you don’t have emotional health. I wish you many long happy years to enjoy this family that you will create.
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Susannah,
I’m sorry for your loss. Thank you for sharing. I grew up in a funeral home and it was amazing to see how money could tear apart a family after a mother or father’s death. You don’t have to make decisions to please your brother, but make sure you keep the communication open. You don’t want this terrible event to make your relationships with your siblings worse in the future.
I thought Derek at post #3 had a great suggestions! I would also keep in mind these quotes:
“Wealth is the ability to fully experience life.” – Henry David Thoreau
“A man’s true wealth is the good he does in this world.” – Kahlil Gibran
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I too am sorry for your loss. However, I share Anonymous #6′s concern about your husband’s lack of income and future prospects. That first job post-graduation will likely set the stage for the salary he’ll earn for the rest of his life. Make sure it’s a good job with a solid base salary. Remember to negotiate!
slug
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Dear you,
I am so sorry you lost your father so young… especially since you were close!
I have a similar experience but having it behind me for about 15 yrs I thought some words could be useful.
to start with: I still miss him. that will never go away – but it mellows, somehow, and I understand more and more how he tried to leave behind a legacy to be picked one fruit at the time. That can be your way as well.
I asked myself if he wold agree on the investment done with the money he left me. and then I listened very carefully to the reply and took the plunge.
good luck! trust your heart! (and then let your mind work on it a bit before signing any checks or sweeping the card…)((!!
all the best Mariane
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A lot of people are being critical, but I don’t think she’s done bad with her inheritance. Sure, she could have optimized more, but it seems she’s doing pretty decently with it. Whether or not her husband gets a good job after finishing his Ph.D. is a completely separate issue, and to be honest, one that dwarfs $30k in inheritance money by a large margin. $30k is what, 3-9 months of a potential salary that he’ll be earning for the next 30 years? It will make almost no difference except maybe as a cushion to live off while he looks for his first job.
Susannah sounds like she’s doing fine. Yeah her husband has some uncertainty about his employment as he comes out of school, but that’s pretty much true for everyone.
I also say good for you for having kids now. There’s no time like the present and you’re not going to be better off for waiting.
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Susannah – First, I’ll add my condolences to the others. Losing your dad must have been tough – and an inheritance doesn’t do much to ease that pain.
I admire the fact that you are trying to follow your own values, rather than being pushed or pulled in the direction that other (more conservative?) people might send you. I’d suggest you try to stick to whatever major plan(s) you had before you received the windfall. It sounds as though you were already following a thoughtful, if unconventional, path. $30K (which, as others have noted, can disappear so quickly) is not enough to divert you from living a life you value and love.
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Sorry about the loss of your dad. You seem to be sticking to what you believe in and your goals in using the money. And very brave of you to share such private facts on the internet!
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I’m sorry for your loss. Both of my parents are gone and I know how painful it can be.
I have a few thoughts, probably echoing a lot of what is said above.
1 – To have a child or not have a child is, in context of the inheritance, really irrelevant. It’s a personal choice and no one should influence you one way or the other.
2 – As with others who have mentioned the PhD/academia issue, jobs are thin on the ground there and what jobs thre are don’t pay much. Don’t put all your eggs in the post-doctorate-job basket.
3 – You say you don’t mind being poor, but you also mention your dad’s constant mantra of “i can’t afford it” and being unable to scrape together plane fare. Think about if you want to subject your child(ren) to the same mantra? You may not mind being poor, but your children may mind it very very much. And they may resent having to support you in your old age because you were frivolous with your money.
4 – $30k plus half the income from the house is NOT a lot of money, as many others have pointed out. In many medium to large cities, $30k isn’t even a sustainable yearly living wage for one, much less for a family of 3 or 4. It may seem like a lot of money – especially to see it all at one time – but it isn’t. And it can disappear VERY quickly if you don’t keep control. It’s very easy to nickle and dime your way through $30k w/out even realizing it.
5 – You said you’ve GROSSED $30k. Have you talked to an accountant about inheritance taxes? Do you know if you’re going to have to pay capital gains on the sale of the house? That $30k plus could be reduced by nearly half if you don’t get the right advice.
6 – Finally, you say you don’t want to buy a house because too many of your friends bought and have been hurt by the recent bust. That’s not logical or sensible. I’m not saying you have to buy a house, but if you were to think about it, NOW is the time. You’re not going to be hurt by a bust if you buy DURING the bust when housing prices are at their lowest. It’s just silly to say that because someone else bought when housing prices were super high means that you won’t buy now when they’re low and you can get a good deal.
You say that you feel personal finance should be about making the decisions that are right for them and I agree with that to a large extent. But when you’re married and have children (or planning to have children) “them” includes everyone. So it’s something to keep in mind when you think about spending the money that’s left.
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My condolences on the loss of your father.
I agree that your choices should reflect your values rather than necessarily conforming to what others think you should do. And I think you should absolutely go ahead and have a child now if you feel ready.
However…
You say you “don’t mind being poor”. My guess is that by this you mean that you don’t mind living frugally. The truth is, money in the bank gives you options; without this money, for example, you wouldn’t have had the option to forego working for the last few months.
Since it sounds as if you had no savings or investments prior to this inheritance, why not make the very most of this chance to ensure that your future self and your future child also have options? Setting up IRAs is a great start; you & your husband can still contribute $5k each for 2010, and you could have weekly deductions taken out from your savings to fund the additional $5k each for 2011 (to take advantage of dollar-cost averaging). Then put a year’s worth of living expenses in your high-yield MM account and forget about it.
Sock it away out of sight and resist the temptation to “coast” on it…it won’t go as far as you think if you just use it to live off of.
Also…I would rethink the house-buying thing. True, it’s not for everybody, but a slump is the best time to buy a house, since you get so much more for your dollar. If anything, your friends who bought during the bubble are proof that it’s smarter to buy during a downturn than during a competitive market.
Best of luck to you, and thanks for sharing your story.
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I have inherited windfalls twice and am only 25, so I can relate to both the uncertainty of what to do with the money and the pressure from older folks to “not do anything stupid” – not that they would give me advice, though! The first time I inherited money, I was only 20 and the banker advised my mom to lie and tell me I wasn’t allowed to use the money for anything other than school because he thought I’d go buy a convertible!
My recommendation would be to meet a Fee-Only Financial adviser (look on the Garrett Planning Network) – they only charge you a fee (do not get a commission from recommending stocks or funds) and are legally obligated to put your best interests first (google fiduciary). I paid $500 to meet with an adviser one time and get advice and a little follow-up. Pricey, but helpful.
He recommended I allow myself to spend 10%, max out my IRA for the year, and then use the rest to create a balanced portfolio so I can save for a house down payment. He also had me consolidate my money – I had stuff scattered around at 10 different institutions – and create a will (scary for only being 25!). An adviser should come up with a plan that’s specific to your needs and wants.
Another adviser I talked to (for the first windfall) had me set specific goals for what I wanted to do with my money and when – so for me, it was $2K for travel in 2-3 years, $15K for grad school in 3-5 years, $X to buy a house in 5-10 years, $X to retire in 30+ years, etc. I found it a worthwhile exercise, give it a try on your own.
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I and my 3 brothers received a rather large interitance about 10 years ago. The biggest thing that I learned about receiving a huge amount of money is that it changes your financial reality, and your perspective on what you can afford. It is easy to overestimate what you are spending and can afford, not just with the inheritance money but with your entire income. Suddenly that new car or latte doesn’t seem so expensive. Because of this change in perspective, it is easy to overspend, and make to mistakes that you will regret later. It takes time to adjust and integrate the financial new reality into your life and be comfortable with it. So take some time to let it sit safe and sound and adjust.
I am very fortunate because I still have my most of inheritance, although it has not grown as much as it could have because I over spent for a while. I made decisions that I now regret. As for my brothers, one spent his entire intheritance immediately, and is as poor as ever, one brother immediately bought a new car, and spent a big chunk, and one brother still has most of his left.
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I’m with the others to be careful what you expect for job opportunities coming out with a PhD. I’m not against them (I’m working towards mine right now) but I am being realistic in that it’s quite likely I won’t be any farther ahead financially with this decision vs going to work after I got my MSc.
Also, I do wonder what’s going on that you’re husband is not getting any pay as PhD student – that seems very odd. Part of his CV will be stating that he got x scholarships or ta’d y classes (both which are evidence that he was funded).
My grandma died almost 2 years ago now, and my sisters and I have been willed her house. It’s been almost 2 years, and this still hasn’t been sorted out – so don’t expect the money to come quickly. Of course, my situation is a bit different, in that we’re “selling” it to our parents and have been trying to figure out the best way to do that without making it possible for other family members to try and go after it.
When it’s all over and done, I don’t know what I’ll be doing with the money I’ll receive. Yes, my parents are actually going to pay us – however we don’t have any time limit on this, and I know at the end of the day, none of us would be in financial ruin or have any major problems if this money doesn’t come through. However, most likely at some point, each of us will use our portion towards a house. But, as we’re all pretty unsettled (two of us are grad students), that’s unlikely in the near future.
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Wow. That could’ve been my story. My dad died in 2009. I am executor of his estate, and he left me all his cash, as I was joint owner of all his bank accounts. It gave my husband and I a windfall, provided me with some financial backing to start my own business which would have taken a lot more time to start without the windfall.
I understand the mixed blessing of an inheritance. I am very grateful for the material weath left to me, and the opportunity to be a steward of his belongings, yet I miss him terribly every day.
My dad was born blind, he worked hard all his life, became a massage therapist and saved his money, first toward retirement, and then, in retirement, made sure he remained debt free, paying cash for a smaller home when he decided to downsize 10 years ago. If he hadn’t died as suddenly as he had, he would have been able to live another 10 years or more in his own home, even with a 24 hour caregiver if he had needed one. When he spent his money he did so on things he loved, stero equipment and a big screen TV so he could watch in his limited way his favorite sports team and movies.
Sorry about your dad. Congratulations on the windfall. And blessings and peace as you walk through your grief.
C
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I recently received a smaller inheritance from my great-grandmother, though still sad, at 97 it wasn’t unexpected. I struggled with how to best use the money and not “waste” it. I often felt the desire to buy something, really almost anything with it. For some reason I wanted something physical to show for the money. Instead I chose to start an emergency fund, set aside some for irregular expenses (car insurance/car tax, holiday travel, etc & have now budgeted for these monthly), pay for a local move, and pay off debt (over half of the money went there). The “sentimental” thing I did with the money was to open a 529 account for my daughter who was born a month before her great-great grandmother passed away and who was named after her. Unfortunately they were never able to meet. It was a struggle though. And it’s hard not to judge how my siblings and parents are choosing to spend their portion (they’re all buying stuff, some before money is in hand!).
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#40 & 41: With respect, I don’t think your advice re: buying a house makes any sense given the whole picture of the OP‘s situation.
Her husband is about to go on the market in academia (or a related field). This in my mind suggests strongly that they may be moving yet again – not a great time to tie themselves down to a house that may or may not be sellable when the perfect job comes along.
Susannah, you have my condolences for your loss. As many have said, it sounds like you are handling things thoughtfully. I wish you and your husband the best as he goes on the market soon.
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Thanks for sharing your story Susannah, and my condolences to you. No one can blame you for a couple of personal purchases, and good luck to you as you get back to work. My only comment would be to hold off on having your first child until you have insurance through your husband’s job. A pregnancy could easily burn through the last of your inheritance without insurance, and after that the baby will need insurance. Good luck with your future decisions!
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I would like to applaud you for your donation to RAINN. It is such a worthy cause.
I would ask everyone to take a look at donating to them or, if they can commit seriously, becoming a volunteer crisis intervention hotline volunteer.
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I enjoyed your post. As with others, I am sorry for your loss. I inherited some money I wasn’t expecting last year and handled it similarly. I have a fairly stable job and no debt, but I still used part of it to bump up my emergency fund so that I have 10% of my yearly salary in that account. I increased the amount that I am putting in my Roth 401K and used some of the money to fund a couple of music business projects that are definitely more about love than money. I still have a good chunk of the money, and just knowing that I could splurge and buy a guitar I don’t need but really want has kept me from doing it.
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