windfall - what to do with it?

**disneysteve** · 03-25-2007, 07:56 AM

I think you could go a few ways. Are you positive that you will have the CC paid off before the 0% expires? If there is any chance that you won't, then I would use the $1,000 to reduce that debt because I'm sure the rate will skyrocket.

What is the rate on the student loans? It is probably relatively low and you can probably outperform it in your Roth accounts. Even with your refund, you only plan to fund 50% of the 2006 Roth. This $1,000 would bring it up to 75% funded. From a strictly financial standpoint, that may be the biggest bank for your buck.

**Ima saver** · 03-25-2007, 09:02 AM

I would put it in the roth ira, so it will have all these years of compounding.

**jodi** · 03-25-2007, 10:17 AM

Yes, I am positive we will have the cc paid off before the rate expires. We have paid off $1500 in the past few weeks alone. We should be able to retire it in another two months or so.
One thing I forgot to mention - since DH is a teacher, no income all summer. That's why I mentioned the EF, although I feel we probably still have enough in it for now. We made it through a year and a half of him not working and only decreased the EF by $3k, so I think we can get through the summer okay.
One more development - DH mentioned using the cash to start renovating our bathroom. It desperately needs it. I was going to put it off until this summer, when our cc debt was gone. But...seeing as our shower stall has developed yet another crack in the floor...the bathroom idea is also very tempting!
Love to hear these opinions...

**jIM_Ohio** · 03-25-2007, 10:23 AM

pay down CC, not even a choice

**Aleta** · 03-25-2007, 10:43 AM

Congratulations on your windfall. You said that you received it last night. I think that you don't have to do anything right now. You could put that money into a high paying money market or savings account right now and let it collect interest. One never knows what can happen and though you feel like you could pay off the loan faster, you never know. If you don't pay it off on time the interest will get you then.

It's much like a person receiving an insurance policy from the death of a spouse and not being able to deal with it at that time. Sometimes it is just best to wait and really consider your choices. If you are afraid that you will spend it, put it in a 3 month CD. Take your time. As for your 2007 contributions, you can make those monthly.

Also, it depends on how much your student loan interest rate is and the monthly payment on that. Take your time.

**jodi** · 03-25-2007, 10:59 AM

Originally posted by jIM_Ohio View Post

pay down CC, not even a choice

Hmm, that was my last choice. IF (and it's a big IF) I don't have it paid off by August, then I will just take the cash out of EF and pay it then. I would never pay interest on it. I knew that when I applied for the cc to pay DH's last semester of tuition. I got $50 for opening the account, $50 back in rewards, and a 0% loan for almost a year. I guess I don't see the benefit of paying more on it now, when I only have less than a month left to make the IRA contribution for 2006.

Interest rate on the student loans is about 3.75%, between the two loans. Payments are about $100/month on each, although we are going to start paying more now that DH is working regularly.
I guess I am leaning toward the IRA. This discussion helps to clarify the thought process

**kv968** · 03-25-2007, 11:50 AM

I'd say put it into DH's Roth for 2006.

**kealina** · 03-25-2007, 12:19 PM

i agree on funding the IRAs because you only have a month to fund the 2006 IRAs and then you've lost that opportunity... everything else has a bit more flexibility and time...

**creditcardfree** · 03-26-2007, 08:49 AM

I think I would also fund your husbands roth for 2006. You are making great headway towards the debt, you have a great emergency fund considering you have low expenses. Your husband can always find a part time job during the summer if cash gets low.

**disneysteve** · 03-26-2007, 10:11 AM

Originally posted by creditcardfree View Post

Your husband can always find a part time job during the summer if cash gets low.

I was wondering about that. I have lots of friends who are teachers and they all have summer jobs. Camp counselors, summer school, tutoring, etc. An extra 2 months of income would really help with debt reduction.

**jodi** · 03-26-2007, 05:40 PM

Actually, he's signed up to direct the summer rec program for our town. He sorta gets to "make" his own salary, but he's working with a total budget of $4k for a 6 week program for up to 60 kids. I don't think he will be taking much money home from it!

**bigsaver** · 03-26-2007, 07:19 PM

Go for the roth ira.

**jmjj215** · 03-27-2007, 04:04 AM

My vote is for the Roth IRA as well. Once that opportunity is gone, it's gone forever.

windfall - what to do with it?