Advice with small inheritance

[Mistee]

I have credit card debt that I am paying off so I don't want to tie up a lot of money in investments. I should receive around $35K as it stands right now, but there is another investment that we learned of recently that will probably add another $5K to the mix.

Anyway, I heard Suze Orman say last Saturday during her Debtor Revolt Show, to utilize credit unions more. I belong to one and only have the standard savings and checking accounts. I was thinking about opening a money market account with them; minimum is $1K to open this account. Should I put 10K in there or $5K in there and $5K with my local bank or in my small accounts with Emigrant and Ing ? Suze Omran advised this past summer to build an emergency fund in lieu of adding more than the minimum to credit card debt because of all the tricks they are playing.

So my plan is to take $35K and put $20K in my checking account and pay off a couple of my credit cards, fix all plumbing leaks (not major), add electrical outlets and fans, carpet upstairs, etc. just small things and share $5K with my church, husband, sons and myself. Remaining money would go into a money market account like I said above.

Any suggestions along this line would be helpful as I am a senior citizen and don't expect a lot of inheritances coming my way. God is good!!

[KTP]

IMO, pay off ALL your credit card debt before paying any money to church or family. I don't think you can come up with a better investment than paying off something that is costing you 10% to 25% per year, guaranteed.

If you have a moral problem paying off cc before donating money to church, think about it like this...would the church expect you to tithe on a credit card? (I haven't been to a service in a long time, but I don't *think* they have progressed into having Visa machines on the offering plate, have they?)

[disneysteve]

I agree with KTP. First priority is the CCs. Charity should only come once your own personal finances are taken care of. You can't be giving to others while you are in debt because the money in your hand doesn't really belong to you. It belongs to your creditors.

[ktmarvels]

If you have a moral problem paying off cc before donating money to church, think about it like this...would the church expect you to tithe on a credit card? (I haven't been to a service in a long time, but I don't *think* they have progressed into having Visa machines on the offering plate, have they?)

I actually just read a blog post about this...some churches are beginning to accept credit cards!

Should you be able to give your tithe on a credit card? | Mighty Bargain Hunter

[KTP]

OMG (pun intended)

I was being very tongue in cheek when I remarked that about the credit card on offering plate.

That is a truely horrible thing for a church to do/teach to its congregation.

[disneysteve]

That is a truely horrible thing for a church to do/teach to its congregation.

Why? I would love to be able to charge the thousands each year that we give to our synagogue and get reward points for it. Of course, I realize that if they accepted credit cards, they would lose a percentage of each payment to the fees, which is why they don't accept credit cards.

[sammythesm]

Yes, Suze has been advocating saving an emergency fund over paying credit cards. Why? Because if people don't have an emergency fund and lose their jobs, they need money (not available credit) to live off of. If they end up having to declare bankruptcy, the credit card debt is unsecured and can be easily discharged or settled.

But this is advocacy for people who have to decide BETWEEN saving an emergency fund and paying off debt. With a windfall like this, you can do much better. I'd:

1- Consult a tax professional to make sure I save enough for the taxes
2- Set aside a 6 month emergency fund (for me, that's 17k)
3- Use the rest to pay off the highest interest rate card first (and so on down the line)

The interest on your cards is growing MUCH faster than the interest in any Money Market account. So if you just pay the minimums, it will take you a LONG time to pay off your balances.

[sammythesm]

P.S. on the whole giving to church thing - my wife and I tithe exactly 10% of everything we make. We find that we feel more of the sacrifice when we have to write the check out every month and hand it to our Bishop.

Sure, it would be more convenient if we had automatic withdrawal from our checking, but then it would quickly turn into a bill rather than an offering.

I'm not sure if we would tithe an inheritance. We are asked to tithe our "increase", which we interpret to mean our gross income. Typically we do not tithe gifts. (If someone gives us a pair of shoes, we don't cut off the heel and give it to the Bishop ) I see an inheritance as a gift and not earned income -- so perhaps we wouldn't even tithe it?... hmmm... I'll have to ask about that one...

I hope I don't have that problem, though. I've told my parents to spend every cent they have enjoying life, rather than misering every cent so we can have a small inheritance when they die.

[lovcom]

For all you Judeo-Christian folks out there, I just wanted to add a comment in regard to tithing:

Tithing is a biblical recommendation and never a commandment made by Jesus, nor anyone in the old or new testiments. In other words, if you give what you feel like, be it 10% or more or less or nothing, then you're not in danger of losing your salvation...again, it is not a commandment, nor a requirement to get into heaven. So I suggest you give what your heart tells you.

Your first ministry is not the church. It is your family, and to tithe at the durress of your family needs would be wrong, and I dare say, a sin.

[AtlantaLife&Health]

Money Market Accounts are cool but don't forget that you will need to pay interest on the interest earned each year and report it on your tax returns. So here you are trying to make some extra bucks but then you have to give some of it back come tax season. I suggest you call a Financial Adviser in your area and ask them how you should handle the situation. Give your church some money but take care of your personal finances first.

[Mistee]

I really want to thank everyone for their input. I know I was blessed to receive this inheritance and I wanted to share it with my church and family. My husband says it is not an inheritance for the family, but to get out of debt and enjoy whatever time we have left. He supports me 100% as to my decision to use it wherever I please and I do know he means that. He also said the Bible says I am a slave to the lender and God doesn't want that for me and evidently my relative didn't want that for me either as she left the others smaller inheritances and wanted me to take care of myself.

I have decided to seek the help of a financial advisor in our area who can direct me as to where to place the money so it will be of the greatest use.

It's truly wonderful to be a part of this forum.

Thank you!

[KTP]

...And the Lord sayeth "render unto Capital One what is Capital One's"

What you could do, is after paying off all your credit card debt, give 10% of the credit card interest you *would* have paid each month as an extra gift to the church. A win win situation!

[disneysteve]

I have decided to seek the help of a financial advisor in our area

Be sure it is a fee-only certified financial planner (CFP). Ignore any other initials after his/her name. You want someone who gives advice, not someone who sells load mutual funds, insurance policies or any other nonsense. You don't want someone who has a financial interest in what investments you choose.

[Alex_Adviser]

Money Market Accounts are cool but don't forget that you will need to pay interest on the interest earned each year and report it on your tax returns. So here you are trying to make some extra bucks but then you have to give some of it back come tax season. I suggest you call a Financial Adviser in your area and ask them how you should handle the situation. Give your church some money but take care of your personal finances first.

When you put your money into a money market savings account it earns interest just like in a regular savings account. Interest is money the bank pays you so that they can use your money to fund loans to other people. That doesn't mean you can't have your money whenever you want it, though. That's just how banks make money -- by selling money! Basically, it works like this:

* You open a money market account at the bank.
* The bank pays you interest on the money that you deposit and leave in that account.
* The bank then loans that money out to other people, only they charge a slightly higher interest for the loan than what they pay you for your account.

[snafu]

As seniors, I presume you and DH are on fixed income. Before taking any action, I suggest you get 3, written estimates of the repair work needed for plumbing, electrical and flooring.

I suggest you set a modest amount aside for Emergencies, I doubt your fixed income would suddenly disappear. Credit card debt is dangerous for anyone on fixed income since they [the lender] can change the terms and conditions. Recently they lowered credit limits putting many people in financial jeopardy. Now they are raising interest rates as high as 25% when the Fed is the lowest in generations.

Don't invest in anything you don't understand. Anything you can add to savings whether a regular a/c or Money Market or Muni Bond can provide a financial cushion, should you need it.