What to do with an extra $750K?

[Anonymous]

HS is at lease double that of elementary school. I would plan for that if you have not already.

I would get rid of H student loan, then get the new van.

I am not big into vacations either but I would do 1 trip you normally would not do.

You will eventually want your teen to have a car so they can drive the younger ones and give you a break.

Since you are working on the house I would look around and see what else needs to be done... roof, floors, furniture. Might as well get the house in order for the next 15 years.

[Anonymous]

I get a large chunk of my pay in an annual bonus so I spend a lot of time figuring out what to do with windfalls. I always max out the tax advantaged savings accounts first--IRAs, 529s, etc. There may be a day where we don't need to do that, but I'd rather over save than under save. I'm 34 and I think it's smart to save as much as possible for college/retirement early because you don't know what the future holds. You can always cut back on savings if you feel you have more than enough.

If I were you, assuming you're maxing out your 401ks already, I'd put $11k into IRAs for you and your DH. Then, I'd do max $14k per child into a 529. It's a lot, but this is a one-time windfall. It may be the only time you set aside a significant amount of money in savings for them. Even though you're not worried about college funding, this is still a good use of money since the savings are tax advantaged. If you want to save more aggressively, you could each put $14k in a 529 for $28k per child. That's what we do with my annual bonuses right now.

After that, I'd pay off your DH's student loans. I wouldn't bother with yours since the interest rate is so low. Might as well take your time paying off that one. Then, get the car with $20k cash.

Assuming the net amount is $400k, you still have ~$330k (or $275k if you put $28k into the 529s) left. Shore up your cash savings first and then do the addition. If you have to finance a part of the addition, I'd go that route rather than blowing all the cash on a project that could be financed through a HELOC or construction loan at a low rate.

Regardless, if this comes through, it sounds like you'll have plenty for the addition you want and savings. Good luck!

[Anonymous]

at least not at lease

[Anonymous]

Absolutely NO to home addition.

4 kids need to go to college. And you haven't paid yours off yet!

[Anonymous]

Anonymous wrote:I get a large chunk of my pay in an annual bonus so I spend a lot of time figuring out what to do with windfalls. I always max out the tax advantaged savings accounts first--IRAs, 529s, etc. There may be a day where we don't need to do that, but I'd rather over save than under save. I'm 34 and I think it's smart to save as much as possible for college/retirement early because you don't know what the future holds. You can always cut back on savings if you feel you have more than enough.

If I were you, assuming you're maxing out your 401ks already, I'd put $11k into IRAs for you and your DH. Then, I'd do max $14k per child into a 529. It's a lot, but this is a one-time windfall. It may be the only time you set aside a significant amount of money in savings for them. Even though you're not worried about college funding, this is still a good use of money since the savings are tax advantaged. If you want to save more aggressively, you could each put $14k in a 529 for $28k per child. That's what we do with my annual bonuses right now.

After that, I'd pay off your DH's student loans. I wouldn't bother with yours since the interest rate is so low. Might as well take your time paying off that one. Then, get the car with $20k cash.

Assuming the net amount is $400k, you still have ~$330k (or $275k if you put $28k into the 529s) left. Shore up your cash savings first and then do the addition. If you have to finance a part of the addition, I'd go that route rather than blowing all the cash on a project that could be financed through a HELOC or construction loan at a low rate.

Regardless, if this comes through, it sounds like you'll have plenty for the addition you want and savings. Good luck!

^ great advice!

[Anonymous]

I would use it to move and buy a larger home in a good public school district. You will save a lot of money, have a better return on your home and live in a better community.

[Anonymous]

Anonymous wrote:I would use it to move and buy a larger home in a good public school district. You will save a lot of money, have a better return on your home and live in a better community.

Thanks, but we dont want to move. We could move to a larger house in our own community, but we really love our current house and location, just wish it had a tiny bit of extra room. Current house value is approx $500K+ and we bought it at $460. Others in the neighborhood go up to $700K, so even if we put $150K into it, I dont think we'll be pricing it our of the area and we really dont intend to move for the next 20+ years anyway.

[Anonymous]

Anonymous wrote:I would use it to move and buy a larger home in a good public school district. You will save a lot of money, have a better return on your home and live in a better community.

I was wondering this as well. If you need more space and plan to keep four kids in costly schools for 12 years each BEFORE college - can you use this money to move somewhere where you don't have to do that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would use it to move and buy a larger home in a good public school district. You will save a lot of money, have a better return on your home and live in a better community.

I was wondering this as well. If you need more space and plan to keep four kids in costly schools for 12 years each BEFORE college - can you use this money to move somewhere where you don't have to do that?

We chose parochial school bc we want the kids to have a religious education and because we absolutely love the school and the surrounding community, not bc we dont like the local public school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would use it to move and buy a larger home in a good public school district. You will save a lot of money, have a better return on your home and live in a better community.

I was wondering this as well. If you need more space and plan to keep four kids in costly schools for 12 years each BEFORE college - can you use this money to move somewhere where you don't have to do that?

We chose parochial school bc we want the kids to have a religious education and because we absolutely love the school and the surrounding community, not bc we dont like the local public school.

Aha, got it. Then 9:36's advice is good.

[Anonymous]

Anonymous wrote: I always max out the tax advantaged savings accounts first--IRAs, 529s, etc.

NP. Would it make sense to contribute to a traditional IRA if it is non-deductible? As opposed to putting extra $ in a brokerage account? Last year, one spouse did a backdoor Roth IRA, but the other spouse did not contribute to an IRA because that spouse had pre-tax money in other IRA accounts.

[Anonymous]

I would do the addition first (and plan for it to cost more than you estimate). There's no use making this kind of money if you aren't doing something to enjoy it, and the addition provides both enjoyment for your family on a daily basis and supports practical concerns like having more space.

I wouldn't pay off my loans with the remainder; you already have a good interest rate and if you are already getting by with the monthly payments, why not leave them for the time being.

Instead, I would put $10K in each kids college account, put 75% of the remainder in low risk mutual funds, and put the 25% in an emergency fund.

BTW, this is morbid, but if you or your husband die, your respective student loans are absolved. Wouldn't it be awful if you or he paid $50K to get it paid off early, then one of you died in 10-15 years and you could have had that money go to your kids? You will make more putting the money into investments than paying off the loans.

[Anonymous]

You will make more putting the money into investments than paying off the loans.

Much more true for her loans than his. Get rid of those.

[Anonymous]

Anonymous wrote:

Anonymous wrote: I always max out the tax advantaged savings accounts first--IRAs, 529s, etc.

NP. Would it make sense to contribute to a traditional IRA if it is non-deductible? As opposed to putting extra $ in a brokerage account? Last year, one spouse did a backdoor Roth IRA, but the other spouse did not contribute to an IRA because that spouse had pre-tax money in other IRA accounts.

The benefit of the traditional IRA is that the money grows tax-free. So yes, it still makes sense to max those out each year before putting extra money in a taxable brokerage account. Of course, if you need to access the money quickly, then you'd have to look at other options besides an IRA and all of those are taxable. But with a windfall like this, there's plenty of money to put aside for retirement and still have money left for short-term expenses.

[Anonymous]

Anonymous wrote:HS is at lease double that of elementary school. I would plan for that if you have not already.

I would get rid of H student loan, then get the new van.

I am not big into vacations either but I would do 1 trip you normally would not do.

You will eventually want your teen to have a car so they can drive the younger ones and give you a break.

Since you are working on the house I would look around and see what else needs to be done... roof, floors, furniture. Might as well get the house in order for the next 15 years.

My oldest is 7, I am not going to buy her a car just yet