GRS Home  Forum Home
Bank Rates Center
   Savings Account Rates
   Money Market Rates
   Highest CD Rates
Insurance Rates Center
  Auto           Health
   Life              Home
Mortgage Rates Center
  Mortgage Rates
  Mortgage Quotes

Last visit was:
A place for Get Rich Slowly readers to ask questions
and exchange ideas
It is currently Sat Aug 30, 2014 1:15 am




Post new topic Reply to topic  [ 18 posts ]  Go to page 1, 2  Next
Author Message
 Post subject: what to do with a windfall?
PostPosted: Tue Jul 24, 2012 8:07 pm 

Joined: Sat Oct 22, 2011 8:19 am
Posts: 80
I'm having some trouble figuring out exactly what to do about an unexpected windfall of $2000 from the sale of a timeshare. I know it's not that much but I'm having trouble deciding what to do.

Here are the options:

1) Put it in EF. Right now we have about 4 months expenses saved. it earns 3.5%
2) Put into ROTH IRA, we are currently contributing about 5% into this in addition to 401k match
3) put it toward mortgage
4) put it in our car fund
5) put toward kid's college fund
6) have fun with it
7) We have $5500 in credit card debt right now which is at 0%. It's all money that we used for bonus surfing and we're milking the 0%. Maybe just knock it all toward this just to make the obstacle a little lower.

Which should take priority? Even without this we're set to be on schedule for all our goals for the year.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Tue Jul 24, 2012 8:50 pm 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
I am sorry but you have a DEBT?

Put all of the money towards the credit card debt. EDIT I missed the 4 months emergency bit.

Why are you even carrying this debt when you could just get rid of it?

_________________
Be what you want to attract.


Last edited by fantasma on Wed Jul 25, 2012 6:11 am, edited 1 time in total.

Top
Offline Profile   
 Post subject: Re: what to do with a windfall?
PostPosted: Wed Jul 25, 2012 4:48 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1721
Location: Ottawa, Canada
He mentioned they have a 4 month emergency fund.

If it were me, I'd pay off that credit card. Sure, it's at 0%, but I'd just prefer not to dance with sharks.

Otherwise, it would depend on when you need to replace your car and how much is already set aside to do so. If you have more than enough already, or you don't expect to need to replace your car for at least a year, then I'd put the money into the mortgage. If your car fund is insufficient, and you think you'll need to replace it within the next year, then I'd put the money in the car fund.


Top
Offline Profile   
 Post subject: Re: what to do with a windfall?
PostPosted: Wed Jul 25, 2012 9:31 am 
Moderator

Joined: Wed Sep 23, 2009 9:01 am
Posts: 5344
Anything but #6.

This sentence is just to meet the minimum post length.


Top
Online Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Wed Jul 25, 2012 3:51 pm 

Joined: Sat Oct 22, 2011 8:19 am
Posts: 80
fantasma wrote:
I am sorry but you have a DEBT?

Put all of the money towards the credit card debt. EDIT I missed the 4 months emergency bit.

Why are you even carrying this debt when you could just get rid of it?


Simple. It is at 0% and there is really no bonus to paying off early beyond peace of mind. It's the result of bonus surfing earlier this year. could I knock it out? yes. But it's earning me $16 interest per month. Not a budget breaker but it'll add up to over $150 for the year. This is in addition to the $1100 in cashback/gift cards I got earlier this year.

It's set to expire in March. I am putting $500/month toward it via monthly cash flow until it is gone, which should be beginning of Feb. I pay it literally the day the statement opens. I have it paid before I even get the email that the statement is ready.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 5:00 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1721
Location: Ottawa, Canada
potatoslayer wrote:
there is really no bonus to paying off early beyond peace of mind. [...] It's earning me $16 interest per month.


Are you kidding me?

$16 a month? Do you even notice such an inconsequential amount in your budget? And that's pre-tax, right? Don't you pay income tax on that $16 at your full marginal rate? So what is it really? $12/month? $10/month? And where are you earning 3.5% risk-free, praytell?

For me, the "peace of mind" of not being indebted to a soulless bank to the tune of $5,000 is easily worth such a pittance.


Top
Offline Profile   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 5:05 am 

Joined: Tue Aug 02, 2011 7:39 am
Posts: 57
kombat wrote:
And where are you earning 3.5% risk-free, praytell?


I'm very interested in that particular item, as well.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 6:12 am 

Joined: Sat Oct 22, 2011 8:19 am
Posts: 80
kombat wrote:
potatoslayer wrote:
there is really no bonus to paying off early beyond peace of mind. [...] It's earning me $16 interest per month.


$16 a month? Do you even notice such an inconsequential amount in your budget? And that's pre-tax, right? Don't you pay income tax on that $16 at your full marginal rate? So what is it really? $12/month? $10/month? And where are you earning 3.5% risk-free, praytell?
For me, the "peace of mind" of not being indebted to a soulless bank to the tune of $5,000 is easily worth such a pittance.


I'll take what I can get. It's doing better than my Roth IRA which has sat stagnant or my "high yield" savings account which earns less than 1% now. At least it pays for Netflix :-)

This is in a high yield checking account which I am hoping the terms will continue on with the new lawsuit involving credit card fees. I'm sure you want to tell me I shouldn't keep my EF in the checking account but as it grows I set new 'floors' where I won't let the balance go below a certain amount. There's a limit to how much I can spend on the debit card and a daily ATM limit so if I am really going to make a big purchase I have to plan it out in advance.

Yes it is 3.5% and if I could refi now I would and my checking acct would yield the same as my mortgage. This is on balance up to $15,000. Used to be $25,000 but they cut it down for obvious reasons. I'm hoping it stays at this level for quite some time.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 6:52 am 

Joined: Tue Aug 02, 2011 7:39 am
Posts: 57
Potatoslayer,
What bank/CU is the checking account with? I need to go check them out and perhaps open an account there. :geek:


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 7:31 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
potatoslayer wrote:
kombat wrote:
potatoslayer wrote:
there is really no bonus to paying off early beyond peace of mind. [...] It's earning me $16 interest per month.


$16 a month? Do you even notice such an inconsequential amount in your budget? And that's pre-tax, right? Don't you pay income tax on that $16 at your full marginal rate? So what is it really? $12/month? $10/month? And where are you earning 3.5% risk-free, praytell?
For me, the "peace of mind" of not being indebted to a soulless bank to the tune of $5,000 is easily worth such a pittance.


I'll take what I can get. It's doing better than my Roth IRA which has sat stagnant or my "high yield" savings account which earns less than 1% now. At least it pays for Netflix :-)

This is in a high yield checking account which I am hoping the terms will continue on with the new lawsuit involving credit card fees. I'm sure you want to tell me I shouldn't keep my EF in the checking account but as it grows I set new 'floors' where I won't let the balance go below a certain amount. There's a limit to how much I can spend on the debit card and a daily ATM limit so if I am really going to make a big purchase I have to plan it out in advance.

Yes it is 3.5% and if I could refi now I would and my checking acct would yield the same as my mortgage. This is on balance up to $15,000. Used to be $25,000 but they cut it down for obvious reasons. I'm hoping it stays at this level for quite some time.


This, in my opinion, is the attitude which gets so many in trouble. Oh, let me run up some spending on a credit card, it's ok, as I have the money to pay it off. And/or, 60 months same as cash on this new truck, cha-ching. I'll have the money in 5 years to pay it off. Heaven forbid something doesn't happen to you between now and then. A vehicle accident where you are at fault, the hot water heater breaks, the air conditioner break, your brother in law talks you into a "loan" to save them from being foreclosed on, you have medical emergency etc. This all sets you back, you can't it off by the time you THOUGHT you would and all that retroactive interest hits you at once. then, you're harping on your BIL to give you the money while he gets pissed at you because of his inability to pay it back. So, now you're paying interest and for netflix, and your family won't talk to you b/c you are somehow the a-hole in this whole ordeal.

Life isn't about trying to maximize the return on our money.

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 7:53 am 

Joined: Sat Oct 22, 2011 8:19 am
Posts: 80
Bichon Frise wrote:
This, in my opinion, is the attitude which gets so many in trouble. Oh, let me run up some spending on a credit card, it's ok, as I have the money to pay it off. And/or, 60 months same as cash on this new truck, cha-ching. I'll have the money in 5 years to pay it off. Heaven forbid something doesn't happen to you between now and then. A vehicle accident where you are at fault, the hot water heater breaks, the air conditioner break, your brother in law talks you into a "loan" to save them from being foreclosed on, you have medical emergency etc. This all sets you back, you can't it off by the time you THOUGHT you would and all that retroactive interest hits you at once. then, you're harping on your BIL to give you the money while he gets pissed at you because of his inability to pay it back. So, now you're paying interest and for netflix, and your family won't talk to you b/c you are somehow the a-hole in this whole ordeal.

Life isn't about trying to maximize the return on our money.


Whoa! why the attitude? I was debt free before the bonus surfing I'm just milking it for all I can. I've got the funds in the bank to cover the entire balance I'm just trying to get a little leeway on this since nowhere else has any return attached to it. My stuff is in order.

But I do understand the frustration with the number of people who think 'I'll pay it off later" and then get into trouble. They tell me about the screaming 0% interest deal they got on a car that will be worth half the amount by the time the loan goes through.

I am very tight with my money, which is why I'm content with this small return on a fully liquid investment.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 8:46 am 

Joined: Mon Apr 25, 2011 7:37 am
Posts: 446
This is what I'd do, which I am trying to practice in real life, not with 100% success.
Make a list of money goals, list them a) b) c) d), like emergency fund, house fund, college fund, vacation fund.
So, for example I had a emergency fund goal, which is now crossed off the list. Next is saving money for a potential attic remodel (maybe someday). We also have been putting 500 a year into college saving fund for each kid per year.
However if there is an unexpected expense, debt, etc that trumps the list.

If done right, then you just go down the list.

For myself, I would have paying off debt first, then move to other goals. But then my savings account earns about .85% interest yearly, which I then pay taxes on! Who knows, maybe I would change my mind if I had an account paying 3.5%.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 8:53 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1150
potatoslayer wrote:
Bichon Frise wrote:
This, in my opinion, is the attitude which gets so many in trouble. Oh, let me run up some spending on a credit card, it's ok, as I have the money to pay it off. And/or, 60 months same as cash on this new truck, cha-ching. I'll have the money in 5 years to pay it off. Heaven forbid something doesn't happen to you between now and then. A vehicle accident where you are at fault, the hot water heater breaks, the air conditioner break, your brother in law talks you into a "loan" to save them from being foreclosed on, you have medical emergency etc. This all sets you back, you can't it off by the time you THOUGHT you would and all that retroactive interest hits you at once. then, you're harping on your BIL to give you the money while he gets pissed at you because of his inability to pay it back. So, now you're paying interest and for netflix, and your family won't talk to you b/c you are somehow the a-hole in this whole ordeal.

Life isn't about trying to maximize the return on our money.


Whoa! why the attitude? I was debt free before the bonus surfing I'm just milking it for all I can. I've got the funds in the bank to cover the entire balance I'm just trying to get a little leeway on this since nowhere else has any return attached to it. My stuff is in order.

But I do understand the frustration with the number of people who think 'I'll pay it off later" and then get into trouble. They tell me about the screaming 0% interest deal they got on a car that will be worth half the amount by the time the loan goes through.

I am very tight with my money, which is why I'm content with this small return on a fully liquid investment.

Bichon Frise has a point. That measly amount you are earning won't even buy a couple of happy meals each month.

Did you consider the lost earnings opportunity of this $5500 if it were put in the Roth IRA? Or paid against your mortgage? Or funded to the kid's college education? You know you can buy a decent used car for that amount of money...

Is that few bucks worth the risk with these other obligations on your plate at the same time?


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 10:35 am 

Joined: Sat Oct 22, 2011 8:19 am
Posts: 80
Tightwad wrote:
Bichon Frise has a point. That measly amount you are earning won't even buy a couple of happy meals each month.

Did you consider the lost earnings opportunity of this $5500 if it were put in the Roth IRA? Or paid against your mortgage? Or funded to the kid's college education? You know you can buy a decent used car for that amount of money...

Is that few bucks worth the risk with these other obligations on your plate at the same time?


We're talking about two separate things. I have $2000 from a timeshare sale that's unexpected. I have $5500 in our checking account which is RISK FREE earning a small amount of interest. I have $5500 in CC debt which offsets it at 0%. This isn't because I actually spent $5500, this is due to buying gift certificates at a local casino and cashing them in at the cashier and putting the cash right into the checking account. This got me $1100 worth of cash rebates and I didn't really spend anything.

I thought about just putting the money toward mortgage or Roth IRA when I first did that, but then it would add a significant amount of risk if something were to happen. I chose to just stick it in the EF to earn the interest as a slight bonus. That's also why I am reluctant to put toward mortgage or college fund due to the lack of liquidity. And even though I am aware I can pull money out of a Roth I'd rather not have any money in there I feel I might need.

For the year this will yield me over $150 after taxes for doing next to nothing on top of the $1100 from earlier this year (which is tax free). Does it all make a little more sense?

So I technically could take the $2000 from the timeshare sale and I could put it toward the CC debt and have it down to $3500. But I think I should just put the amount in the EF and boost it a little more and just keep knocking down the CC debt as planned and if something comes up I have the money to cover it. The 0% doesn't expire until March 2013 and I'm set to have it paid off early Feb.

Once the transfer of the timeshare is finalized I am planning on taking the amount of the maintenance fees I was paying and just putting them into the Roth anyway.


Top
Offline Profile E-mail   
 Post subject: Re: what to do with a windfall?
PostPosted: Thu Jul 26, 2012 11:34 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1150
Quote:
I thought about just putting the money toward mortgage or Roth IRA when I first did that, but then it would add a significant amount of risk if something were to happen.


So having $5500 in credit card debt, albeit at 0%, isn't a significant amount of risk eventhough you hand cash on hand to pay it in full? BF already pointed out what could happen & you pretty much ignored it.

But paying down the mortgage on your home or investing that same money is too risky for you? Is that what you're saying?


Top
Offline Profile E-mail   
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 18 posts ]  Moderators: bpgui, JerichoHill Go to page 1, 2  Next


Who is online

Users browsing this forum: DoingHomework and 13 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to:  
Powered by phpBB © 2000, 2002, 2005, 2007 phpBB Group
Theme created StylerBB.net & kodeki