What should I do with $14k?

[henry450]

Hi,

This is my first time posting in the forum. I'm going to lay it all out there. Not looking for a lecture; just some honest advice about what I should do with the money.

I'm about to inherit $14K tax-free. I'm married and my wife goes through money like there's no tomorrow. Because of this, I'm not planning on telling her about the inheritance. To be honest, I'm not sure how much longer we're going to be together. I wouldn't be surprised if we end up separating in the next year.

Now, onto the money. We have about $4K in cash, $18K in credit card debt, $18k on her auto loan, $170k on our mortgage, as well as a basement renovation project that will cost about another $15K. I have about $23K in retirement; she has less than $1000. We're both 30. I would say there are an additional $10K in renovations that need to be done around the house.

My question is, what should I do with the $14K? More specifically, what "could" be done with it so she doesn't get any of it in the divorce? i.e. The house is in my name; if I put it all towards the mortgage, would it be untouchable? I'm assuming no, but just curious.

I know the most obvious advice would be to pay down the credit card debt, which most people in my shoes would do. But since there are other issues complicating the matter, I'm asking what I should do with $14K if I'm not sure the marriage is gonna make it another year? Please help!! I'll be receiving the money in a couple weeks and want to spend it wisely.

[james.hendrickson]

Divorce will RUIN your finances. The statistics are abundantly clear on that point.

Get counseling, take a break, get help, do what you need to to keep your love and your marriage intact - that's the main issue, not the 14k.

[henry450]

That was NOT what I was asking. I'm not looking for a lecture or marriage counseling. Thank you.

[james.hendrickson]

Henry,

Really sorry about that - I sometimes tend to be a bit more blunt than I should be.

Okay, to answer your question specifically. If had an inheritance and wanted to effectively put it to good use in a way that my spouse has less of a claim on the funds, I would be sure to get it into an account that was in my name, preferably one that I had BEFORE I got married. I wouldn't put it in a joint account or asset you guys have together.

Here are a few more things to consider:

1. Consider opening up a bank account in your name only. This will help maintain your privacy in the event you guys do split up. If not, you'll have your own account.

2. Consider tracking down and documenting your accounts/money. So, pretty much all your assets held jointly and individually. Organize everything in a file cabinet:

Money market accounts
Tax returns
401(k) statements
Insurance policies
House appraisals
Brokerage accounts
Real estate purchases
Mortgages and refinances

Be sure you've got photocopies, passwords and logins.

3. Updating your will and beneficiaries would also be a good idea.

Good luck!

[henry450]

James, that's fine. It's just that I've heard it all before. Believe me -- I'd still be open to a way around divorce, but I'm being realistic and covering my you-know-what if it does happen.

I don't have any accounts in my name that I had before marriage. But, I do have a couple accounts that are just in my name that I've acquired since getting married.

I've heard to stockpile it all in cash. I really don't wanna do that. Lol.

As for your suggestions:

1. Yes, 2 accounts just in my name. One is joint.

2. I can start documenting. The house is in my name and was acquired before marriage.

Now, back to the $14K. Savings account? Investment? Increase my 401K contribution? Pay down credit cards? Home repairs/updates? Mortgage payment? I'm just trying to figure out the best way to spend it.

[Fishindude77]

Divorce or no divorce matters little. You have a negative net worth and should use the $$ to pay down whatever debt has the highest interest rate, likely the credit card. If you won't blow it, wouldn't be a bad idea to beef up that $4,000 cash savings with some of it also.

If you've not already started and committed, I'd cancel the remodeling project if possible, till you are in a better position financially and with your marriage.

[henry450]

I'm not doing any remodeling after the bathroom's finished. It's ended up costing a lot more than I was originally told (was lied to), but live and learn. Won't make that mistake again. The highest interest debt is the credit card debt -- should I just put it all towards that?

[Jluke]

do you qualify for a Roth? If so, you can put 5500 for 2016 and in a few days another 5500 for 2017. poof - there goes 11k.

or if the mortgage/deed/house is ONLY in your name put all 14k there where she can't get to it.

this is assuming that the credit card debt is shared.

[Spiffster]

1. Max out your Roth IRA.
2. Establish emergency fund
3. Pay off YOUR high interest debt (if any)
4. Look into bitcoin (*)
5. Look into Peer to Peer lending (*)

*Im probably the only one here that would suggest these options, but I have done well with both.

[bigdaddybus]

Get a safety deposit box at a bank you dont currently use. Pay cash for the safety deposit box and use you work address or a relatives address for the bank you open the safety deposit box with.

Dont worry about making 1% interest with a CD. As it sounds to me like you are looking for straight wealth preservation.

[henry450]

Jluke, some of the credit card debt is in my name. Some of it is on cards where she's an authorized user (but it's literally all her debt ... LOL). Does that make a difference?

I do qualify for a ROTH. Never thought about opening one because I don't know much about investing. Any advice where to open it? And what to invest in? I know nada about investing -- just that my 401k is in a 2060 target date fund.

[henry450]

Spiffster, ROTH before credit card debt? How come?

(Not arguing. Just trying to understand better.)

[henry450]

My 401K is a ROTH 401K. But, the employer match is before taxes. So, 6% of my income is in an after-tax ROTH and 5% of my income is in a before-tax 401k, if it makes any difference.

[Jluke]

Jluke, some of the credit card debt is in my name. Some of it is on cards where she's an authorized user (but it's literally all her debt ... LOL). Does that make a difference?

I do qualify for a ROTH. Never thought about opening one because I don't know much about investing. Any advice where to open it? And what to invest in? I know nada about investing -- just that my 401k is in a 2060 target date fund.

If you have HIGH credit card debt that belongs only to you, then you might want to get rid of that.

the Roth can be opened at Vanguard and I'd suggest VTI (Total Stock Market ETF) or another Target Date Fund.

If you're curious about more financial sites - bogleheads (vanguard), mr money mustache, dave ramsey (debt only; don't take investment advice).

[henry450]

I like your thinking Jluke. It's tempting to put $11K in a ROTH, but I'm thinking I should limit myself. Maybe $5K in a ROTH, and $9K towards the credit card debt? Would that make sense? I'd like to get some of this BS payed off, but also invest a bit more towards retirement.