What to do with annuity money?

[immuhguy10]

So I will just lay out my situation right now so you have an idea where I am coming from.

My wife and I are in our mid-20s, expecting our first child this summer. She is a half-time ECEAP teacher making about 15,000 a year and I am a substitute teacher/coach looking for a full-time job, only making about 20,000 a year. So we bring in about 35,000. We just bought a house because the market the way it is, is cheaper then renting a house in the town we are in. Mortgage/taxes/insurance we pay $900 a month.

Regardless, combined we have about $25,000 in student loans, a $10,000 personal loan that needs to be paid, but other than that no other debts (other than our house). The only other expense I WANT to have is buy a new car, as mine is old, and I want something with high safety ratings for my child...and I have never really bought myself anything...I can be stingy ha.

I am coming into an annuity where I am receiving about 35,000 cash right off the bat and then will get 1/4 of each of the two houses that need to be sold as well. All in all, I will be getting roughly $100,000 (easy number to play with here too for the sake of this).

I have talked to a couple financial people but all they want me to do is invest with them. I am not saying investing may not be a great path to follow, but I want to hear from un-biased people on this.

So, I was thinking:
Starting Money: $100,000
Pay off student loans: -25,000
Pay off personal loan: -10,000
New Car: -20,000
House Upgrades: -10,000
________________________
Leftover money: $35,000

With this route, the only debt we would have is our home loan. Look to make an extra payment or 2 a year to shorten the life of the loan. Start a roth, maybe put some money in a CD, and maybe look into some sort of mutual funds or something involving the stock market...

I know there will be significant taxes involved here too, but still just trying to get an idea.

Just looking for anyone elses opinion here. Thanks in advance.

[bjl584]

Why buy a new car? Buy something 2 or 3 years old for half the money that you are planning on spending. You have too much house for your income, so I would eliminate your other debts as you are planning. With the rest I would keep part of it in a EF. With the rest, Roths are a good place to start.

What is the term on the annuity? You may not see all of that 100K for quite some time. Keep that in mind when figuring your budget.

[immuhguy10]

When I said new car, I meant new to me. I just put a solid figure of 20,000...not expecting to actually spend that much. My house loan is only 120,000, as we put a solid chunk down because we did not qualify for that much (also where the 10,000 personal loan came into play).

Also, what is an EF? I do not know a whole lot about this stuff. I have already received 20,000 in cash up front and I have 5 years to take another annuity check of 15,000 out...which I can do in one lump sum, or monthly, or bi-monthly...a lot of options there. The rest will come once the 2 houses sell.

That is my understanding at least.

[cypher1]

Also, what is an EF? I do not know a whole lot about this stuff.

EF is a simply an Emergency Fund you'll see mentioned a lot on this forum. Depending on your lifestyle/expenses, a good rule of thumb is 4-6 months worth of monthly expenses saved up, readily available for any unknown surprises in life . This would be excluded from other investment/retirement savings options.