what do we do with 92K?

[markio26]

Re: what do we do with 92K?

i agree with imasaver... best wishes... sometimes it is better just to wait and then decide later.. life has a way of working itself out.... try hsbc savings online for now to hold the money and make a lil interest...

[Ima saver]

Re: what do we do with 92K?

Oh and remember to pay away the amount you will have to pay in taxes, into your emergency acccount for next April.
Please think long and hard about a rental house. I thought the same way you do, rent out a house and let the tennants make the payments. I bought a small house for $21,000 (in 1979) spent $14,000 to fix it up and rented it out. By the time they tore it up and i finally got them out (it took months) I sold the house for $14,000, for a $21,000 loss and a big attorney bill.

[vsjhoc]

Re: what do we do with 92K?

Thanks for the advise but if you read the qualifications for Roth IRA's you have to make below 95k as a single to make full contributions to your Roth or make below 150k if its a joint account.

Right, so if you and your wife together make more than $58k, you will be over the limit as the $92k probably counts as annual income.

[creditcardfree]

Re: what do we do with 92K?

My opinion...waiting awhile is good. No need to make a hasty decision. Do one thing at a time.
I wouldn't own real estate in another state for the same reasons others mentioned.

I would max out the roths for this year and save some for next year to put in in January. That gets you close to the 20K you were thinking about.

I would start an account for your child. I have ESA's for my girls...max is only $2000 per year per child. It is tax free earnings and withdrawals for education, tuition, ect. There is a penalty if it is not used for that, but I'm risking it and telling them that college or other higher education is what happens after high school. They won't realize they have a choice. They can pay the penalty if it come to it.

I would pay off all debt. Pay off your car, sell the suv and pay cash for a reasonable vehicle for your wife. Whatever you buy will depreciate.

I would make sure to have a very big emergency fund. Actually I would probably do this first.

I might pay extra on my mortgage, but I would invest the rest into good growth mutual funds...Vanguard is a great one.

So, I picture large emergency fund, debt free (except house?) with two paid for vehicles, tax free investments started for retirement and college, taxable investments or a smaller mortgage balance.

I'm thinking too that the debt payments could now be applied to the college fund, future tax free retirement investments, paying down your mortgage and or investing in mutual funds.

There are REIT's out there if your are really interesting in investing in real estate...without the hassle. REIT...Real Estate Investment Trusts...Vanguard has a least one. I'm not endorsing it nor do I currently have one...just an idea.

Love the topic...thanks for letting us weigh in on it!!

[puppypal]

Re: what do we do with 92K?

baby at finanical situations but I haven't heard anyone mention Bonds. I understand that they are not paying but 4 to 5 % but
The way I figure it is like school bonds are wonderful. No taxes period!
If another investment is paying 6% and you have to pay taxes on the earning why not just invest in a bond. My dad just bought 40,000 worth of Conway school bonds and wish he had bought more. Now I am a baby when it comes to saving and IRAs exc. But it seems to me If I had that kind of dough came in unexpected like I would pay off all the debt, then I would feel as if I had extra money in the first place every time I didn't make this payment or that payment. Then I would go for tax free school bonds!

[creditcardfree]

Re: what do we do with 92K?

Would those school bonds be tax free for federal too?

I would have assumed school bonds would be only state and local tax free.

[puppypal]

Re: what do we do with 92K?

http://www.bankrate.com/brm/news/DrDon/20020201a.asp

Here is a link. Dad invests mainly in School re-building bonds. Like example Conway, Arkansas just put out a bond paying almost 5% that will actually help build a bigger building......
Here is some information on Bonds that I was chatting about earlier

[JBinKC]

Re: what do we do with 92K?

I am not sure of your goals but I would always first look at expenditures that yield the highest net returns ie replacing incandescent bulbs with CFLs or insulating a house, then pay off your highest interest debt if you have it and so on. Once you have done those things where your rate of return on an expenditure is equal to the risk free rate of a treasury bill then I would consider investment options.

[Ima saver]

Re: what do we do with 92K?

Let's have a party!!!!!!!!!!

[boefixepa]

Re: what do we do with 92K?

Ima, It would be one hell of party to blow 92K! But I'm sure it would be fun! Your house?

[vsjhoc]

Re: what do we do with 92K?

I am not sure of your goals but I would always first look at expenditures that yield the highest net returns ie replacing incandescent bulbs with CFLs or insulating a house, then pay off your highest interest debt if you have it and so on. Once you have done those things where your rate of return on an expenditure is equal to the risk free rate of a treasury bill then I would consider investment options.

Hey Sailor,

Interesting approach. Although are you suggesting that they go shopping at Home Depot for light bulbs and roof insulation while the car debt ($42,000?) accrues another month's interest before they pay it off?

[Ima saver]

Re: what do we do with 92K?

No, let's pay off the car and then have a party![Automated by GetSmile]

[sweeps]

Re: what do we do with 92K?

Although are you suggesting that they go shopping at Home Depot for light bulbs and roof insulation while the car debt ($42,000?) accrues another month's interest before they pay it off?

Actually JB may be onto something. If for example, you can spend $1,000 on home improvements and that gives you $500 a year in energy savings, that's a 50% return on your investment. On the other hand, if the interest rate on your car is, say, 8%, paying extra on that only gives you an 8% return. (Note: actually the numbers aren't quite this simple, but it illustrates the point.)

Of course it doesn't have to be an either-or thing. If you can make high-return home improvements AND pay off debt, that's a good thing.

[JoyJoy]

Re: what do we do with 92K?

We will be inheriting also and was advised to layer some CDs, put money in our money market account and some in our checking for current bills and money that we wanted to spend now. No quick decisions about buying a home, future plans, etc. for awhile. Haste makes waste. This brings to mind something the minister Charles Stanley said about rushing to quick decisions: He summed it up as follows using the word ash:

A: Don't Be Anxious
S: Don't Strive
H: Don't Hurry

Congratulations to you and your wife and enjoy!

[JBinKC]

Re: what do we do with 92K?

My motto always look for the highest risk free return first and it doesn't have to be a traditional investment vehicle.

Examples: I bought a chainsaw for $220 and cut down a some limbs from an ice storm I was quoted $250 for its removal a ROI 114%. Now, I had some seasoned wood so I bought a wood stove installed last year for 3K and I have saved $1300 in energy costs last year. So my payback there is a little over 2 years for a close to a 44% ROI. I have noticed I can get firewood fairly easy for free and my time. Now since I am somewhat active splitting wood I can quit a gym membership because I am getting decent exercise for nothing.

Another example is I made a $20,000 improvement to my secondary homestead which increased my appraised value of my home by $50,000. Since I had the $20,000 available I was able to make the improvement.

Unless your salary has grown faster than inflation you have to look at these things to keep ahead of the game and cut costs much like a corporation. What is nice about having 92K you are able to make that expenditure that may yield you big savings because you have the cash to do so.