Advice on Investing Large Injury Settlement

[snafu]

Sorry about accident and hope you've fully recovered. What interest rates are you paying on mortgage, SL & truck? Are you and wife able to access any matching retirement funds from employers? It's important to quickly capture any free money. You will need to learn *if and what* is offered. It's important to know fees, Management Expense Ratio [MER]. 2nd look at opening Roth accounts for both you and wife to allowed parameters. Your holdings will need to mesh with holdings in 401K.[retirement]

3rd. Your truck is a depreciating asset and paying interest makes it worse. Get it paid off but make a plan for how you'll use $$$ freed up. Your SLs have provided you with your work credentials but getting them paid off and avoiding any more interest puts you way ahead.

4th: Did you buy your home with a 20% DP? Are you paying Mortgage Insurance? If you are paying mortgage insurance, read the documentation carefully to verify what is required to stop that expense. I suggest you increase your house payments so the extra sum is applied directly to the principal. During the first several years, nearly all the payment goes to interest and only a few dollars are applied to principal. You are in a position to circumvent that problem.

You will have money left to invest but for the moment you can leave it in savings or laddered CDs coming due ea. 3 months. It's important to give priority to the earlier comments.

[cardtrick]

Doesn't have anything to do with the media, but the fact that I am closing in on 60 soon and would love to have that mortgage paid off long before 'retirement'. My husband is younger than me and I for sure want that mortgage paid off before he hits 65. I'm stunned at how many retires seem to be taking out mortgages for 'dream' homes at that point in their lives so that their retirement money has to subsidize a mortgage as well as medical expenses, food, utilities, clothing, etc. Perhaps my thinking about this got warped when I was literally cut off at the knees (both replaced 2x each now) in my 40's and having to go on disability in my mid 40's. I want that feeling of security!

It has everything to do with the media. That's the American Dream. Owning your house. That's what you hear over and over again. That somehow it is supposed to make you feel better about your financial situation. I'm not saying that's your reason. All I'm saying is that people are generally influenced by this sort of thinking. For some folks, it might make sense to pay off the mortgage, but I can't really think of examples. I for one wouldn't do it even in your case. It's only a false sense of security. The numbers don't lie. If you can borrow money for 30 years at 3.5%, no reason to pay those debts off early. If you have that kind of cash, why not stick it in an investment account and every month remove what you need to cover the mortgage expense? History shows us that you will be better off over the long run. And besides, I like the security of having a large sum of money in a liquid account. You never know what expenses might come up. It's not very easy to get cash out of a home. At that point, rates could be much higher.

It especially makes sense if you don't have enough saved up for retirement. Why pay off the mortgage when you might need the money for medical bills? I'd rather have a nice life and quality medical care and let the bank get my house after my death than pay off my mortgage and suffer because I can't pay my medical bills.

Just my opinion. My apologies if I'm coming off as rude. That's not my intention.

[JoeP]

If you accident left you with some sort of disability or recurring pain, I'd consider setting some money aside to cover costs associated with those.

[Gailete]

It especially makes sense if you don't have enough saved up for retirement

Our mortgage is a 15 year one, that unfortunately we don't have cash to pay it off in full. We do have to make those payments each month. Once it is paid off we will have what would have been the mortgage payment to either save or spend as needed in our retirement. We definitely don't have enough saved up for retirement so we have had to look at different ways to finance that part of our lives.

Even so, if we got enough cash to pay off the mortgage now, we would do it rather than put the money into an investment as our home is an investment that supports our income. Besides living here, we run two businesses out of our home so we can't take a chance of losing the house and then not having the space to do our work. My hubby restores pianos which takes up a huge amount of room as does the 20,000 sewing patterns that we have for sale on line!

Thinking of the possibility of getting a sudden windfall of money, I have always thought first and foremost of paying off the house. I think at least for me it is because I have moved something like 30 times in my lifetime. I want to grow roots. I want to watch my maple tree that I planted when it was about 6 inches tall our first year here, grow to be a huge tree (it is around 10 feet at this point). Yes I know all that can be done while paying off a mortgage, but it would feel even better to know the land I walk on is absolutely mine and not the banks. We all have our reasons for what we do. I know us as well, if we got the mortgage paid off, we wouldn't be foolish with what had been mortgage payments but would invest or spend responsibly.

[LivingAlmostLarge]

But how do you know if you pay off your house all that mortgage payment would be directed to savings and not spent?

[Gailete]

But how do you know if you pay off your house all that mortgage payment would be directed to savings and not spent?

For me, I know myself and how I handle money. When there is money to squirrel away, it is put away. One of the lesser joys of having chronic illness is, going out and doing things, taking vacations, etc. don't tempt us in the least as just getting to the doctor appointments is generally all I can do for the day as a 40 mile round trip wipes me out. Even something as simple as going to the movies is too much for me.

For sure you have to know yourself and what kind of self-discipline you have. But what would stop a person that got a huge payment due to an accident to not go and spend all the money on a fancy new race car, or an exotic vacation instead of saving/investing it? Not putting it into paying off your mortgage is no guarantee that you won't use it foolishly. At least if you pay off the mortgage and other debts, those are gone and paying off the house you have something to show for the money you got. And the amounts you have each month that would have gone into bills and mortgage payment are smaller so they may not tempt you into poor spending issues as the years go on. Even if you blow it one month, doesn't mean you will do it every month. I think too many are making the assumption that a windfall will be invested wisely if it isn't used to pay off bills, but that isn't necessarily the case. Especially if the person receiving it doesn't have a good financial grounding of the best way to handle a large sum of money.

[tulog]

.....