What to do with 80K

**disneysteve** · 12-21-2013, 05:36 PM

You've tossed out a lot of different information but I think the most important point is that your job is ending sometime next year. Are you actively seeking other employment? I think that should be your primary focus.

As for the 80K, I would absolutely park that money in a liquid account until you are settled in a new job. I think buying a house would be a colossal mistake. You are mistaken about not being able to lose a paid for house even if you aren't employed. What if you can't afford the property taxes? What if you can't afford the insurance? What if you simply can't afford utilities and upkeep? Owning a house is expensive. And what good is a paid for house anyway if you can't afford anything else because you are unemployed?

What about that 27K car? How much do you currently earn? Can you really afford such an expensive car?

**Retired To Win** · 12-21-2013, 05:38 PM

Originally posted by foggybayonet View Post

There is a good chance I will gain 70-100K in the next year on top of my normal pay, but will then no longer have my job. I'm 29, married and a father of three. I've been counting on a military retirement, but other options have arisen. My main question is would it be better to buy a home with the money out right or to invest it all in several different mutual funds? Right now I owe 27K on a car and have no other debt. I have a total of 3k invested. My main concern is getting back in the workforce. I realize that by having the home outright I can't lose that even if I can't get employed, but then having 80k in a mutual fund doesn't do me much good immediately. Now tossing around the idea of keeping 20K for emergencies atleast until I feel I have a secure career. Then financing half the house and paying off the car and putting the rest into the house.

In your position, I would stay as liquid as possible at least until I had my employment situation settled positively. So, in the short term, I would keep that $70-100K in high-yield savings accounts and/or short-duration CDs until I had paychecks coming in and knew what my cash flow would be.

The only twist I would put on that has to do with the purchase of a house. If you are going to lose your present job in a year, the time for you to get yourself qualified for a mortgage is NOW, while you can still show you are and have been employed. If I were going to buy a house under your circumstances, I would be frugal about my house choice, I would put 20% down on the house, and I would keep the rest of the money liquid as I explained above. (You can always pay off the house later.)

As for the car... please don't get me started on what a bad idea it is to go $27,000 into debt just to have something to drive around. (Sorry, but there it is.)

Good luck!

Retired To Win

making the most of my time and my money

**foggybayonet** · 12-21-2013, 05:47 PM

Currently making 60K, job is not at a definite end. I basically got the option to walk away with the money or risk making it to retirement. I agree a hundred percent with the car, I was completely debt free and had car trouble, I am a mechanic by trade, started doing research and it was an ongoing problem even after the initial fix. So I decided it was time to replace, should have gone with used, but I went to Honda and bought a new minivan. I am in the process of searching the job market. As of right now nothing is concrete, so I haven't started sending in resumes. Trying to finish bachelors and decide what I am going to do. Good point about the taxes etc with the house.

**snafu** · 12-21-2013, 09:48 PM

Over and above what has already been mentioned, buying a house + moving has huge closing, realtor and legal costs over and above the negotiated buying price. Would you consider moving to another location for an important job offer? I suggest you start seriously researching employment opportunities/possibilities that encompass your skill sets, right after the holidays/New Year. You need to know what employment opportunities are available locally or even nationally in your field.

It's unfortunate you've a huge car loan. What interest over how many months? What is the KBB? Is selling it and buying something more affordable an option you'd consider? The depreciation in the 1st three years makes a new car a depreciating asset.

**Gailete** · 12-22-2013, 07:46 AM

My biggest thought in all this was, what is the point of buying a house if you don't know where you would be living in a year. If you have to get a new job, it could be 5 states away and selling a house within months or a year of buying it is a money losing proposition.

You say you have $27K car loan and only $3K invested while you are maintaining a family of 5. You need to really pump up your emergency fund as that $3K isn't going to go far if you have more than one 'emergency' in a month.

I take it you are in the military. That means health benefits? While you are still in a covered, all family members need to have eyes checked, teeth checked and fixed and a visit to the local GP. No point finding out after you lose your benefits that little Johnnie needs glasses that you will have to pay for.

I wouldn't be looking at that $80K as a windfall that you can go spend as you please (such as on a house), but as a way to get caught up with things that have fallen behind due to the cost of raising your family which sounds like it is barely enough, or there are some leaks in your budget that needs patched. Granted if you would be getting this money and are assured of staying in the same town, I would use some for a down payment after bulking up the EF.

What other bills will be coming due this year that you need to budget for? Don't forget to set money aside for them.

What to do with 80K