what to do with a windfall?

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potatoslayer
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Re: what to do with a windfall?

Postby potatoslayer » Thu Jul 26, 2012 12:08 pm

Tightwad wrote:
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.



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


I'm keeping things liquid. If something happens I can pay the CC in full and be done with it as one less thing to worry about and that's where I am at. If I took that $5500 from my checking and put it toward mortgage yeah overall that numbers would play out favorably, but if something does happen I wouldn't have the option of just wiping out the CC. It's not like I'm really neglecting anything, the EF is growing, we have Roth IRA which we add to weekly, we prepay our mortgage, our 401ks are maxed out to the match, our son has a college fund, and we have a savings account to cover the cost of a vehicle purchase. I'm seeing if I can knock this thing out with monthly cash flow.

Tightwad
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Re: what to do with a windfall?

Postby Tightwad » Thu Jul 26, 2012 12:48 pm

potatoslayer wrote:
Tightwad wrote:
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.



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


I'm keeping things liquid. If something happens I can pay the CC in full and be done with it as one less thing to worry about and that's where I am at. If I took that $5500 from my checking and put it toward mortgage yeah overall that numbers would play out favorably, but if something does happen I wouldn't have the option of just wiping out the CC. It's not like I'm really neglecting anything, the EF is growing, we have Roth IRA which we add to weekly, we prepay our mortgage, our 401ks are maxed out to the match, our son has a college fund, and we have a savings account to cover the cost of a vehicle purchase. I'm seeing if I can knock this thing out with monthly cash flow.

Well, to each his own. If this works for you then go with it.

Back to the original question of what to do with the $2K...anything but blow it. Figure out your most immediate need & use it for that.

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spentbetter
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Re: what to do with a windfall?

Postby spentbetter » Wed Aug 08, 2012 9:47 am

$16/mo or $150/year after taxes is still free money, if it comes from charging a credit card at 0% and putting the money in an investment.

Even if that bonus rate only lasts a year, that $150 can be put anywhere in a few clicks. A Roth IRA, for example. I don't know how long OP has left before he intends to retire, but if I guessed 30 years then that $150 would have grown to around $670 on a 5% return.

I also don't personally agree that debt is always bad; having debt can be very smart when the interest rate is right, and 0% is as good as it gets. Yes, he might have an emergency expense, but if he were to reverse the "bonus surfing" the same day he'd be back to the same place he was before, except a few months at 3.5% richer.

My suggestion for the windfall? Put it into retirement. Going with that "30 years at 5%" guesstimate, it'll turn into $8,935.

Also, schedule an automatic payment now that'll eliminate the debt a week before the bonus term expires.


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