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What to do with a $20k windfall?

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    What to do with a $20k windfall?

    I recently had a windfall of about $20k. I have a few options for what I could do with it and would like some advice from the forum on which makes the most sense:

    1. Pay down the mortgage on my primary residence (current balance ~$340k, fixed rate @3.375%)
    2. Pay down the mortgage on my investment property (current balance ~$100k, 1-year ARM @4.45%)
    3. Prepay 2018 property taxes before the new tax law kneecaps my ability to deduct them (would be about $10k)
    4. Invest it in taxable mutual funds (401k, IRA, HSA contributions already maxed for 2017, 7 month emergency fund in high-interest savings)
    5. Something else I haven't thought of?

    Thanks!

    #2
    I'd go with the pre-payment of taxes to capture that deduction. That's going to give you a much better return than prepaying the mortgages.

    If you have a good EF and no high interest debt, I think that's a smart choice right now to lessen the impact of the new tax policy.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #3
      Originally posted by disneysteve View Post
      I'd go with the pre-payment of taxes to capture that deduction. That's going to give you a much better return than prepaying the mortgages.

      If you have a good EF and no high interest debt, I think that's a smart choice right now to lessen the impact of the new tax policy.
      Thanks! I can prepay about $10k, so do you have any recommendation on what the next priority would be for the remaining $10K? Or just stash it in my EF?

      Really appreciate the input.

      Comment


        #4
        2018 is a few days away.

        Why not contribute to/max out your 2018 IRA...

        Comment


          #5
          Keep in mind the restriction on prepaying your state taxes, as the IRS explained in the last day or two... The tax assessment has to actually be levied in 2017 to be deductible this year. So you can't just overpay this year in anticipation of next year's tax.

          Personally, I would either invest it (next year's IRAs are a great option) or pay down the investment home... Likely some of both.
          "Praestantia per minutus" ... "Acta non verba"

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            #6
            Nutria's All-Encompassing Guaranteed 20% Return Every Year Investment Company is now accepting bank wires. Minimum amount: $20,000.

            So... send it on over, and I'll send you a statement every year showing how fast your account is growing!

            Comment


              #7
              Have you thought about taking a vacation? Does your spouse, or others near to you have anything they have been wanting for a long time that saving has pushed out of the way.

              My personal retirement plans wouldn't look down on some deposits to them as well.

              Years ago, my brother got a big bonus at work. He gave my mom and each of his siblings $10K each! Wow what a surprise for sure. I was just coming out of getting divorced from Mr. Big Bucks who thought the more credit cards the better and if not charged to the max something was wrong. After the divorce and selling our house, I paid off credit cards and was left with $1K so getting that money was great. I used it for a down payment on a house Plus some fun sewing stuff for me. If nothing else a windfall like that in my family means a trip to Red Lobster Which is where we go to celebrate the BIG things in life! We may get there every year or two or three.
              Gailete
              http://www.MoonwishesSewingandCrafts.com

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