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[quote=Anonymous][quote=Anonymous]This is the scenario:

HHI $180K, two relatively stable jobs.

No debt other than mortgage.  We have $100Kish left to pay on it, but are paying very little interest now (and therefore have few tax deductions).  We will be done paying in five years.

We have a HELOC loan for$22K, for two cars.  Until a few months ago we had almost paid off that loan but then DH totalled a car last month and we had to replace unexpectedly.  We went with HELOC rather than paying with emergency fund.

Emergency fund is $45K liquid.

We max out retirement funds and are in good shape there.

College savings $240K in 529s and (conservative) mutual funds.

Kids are 15 and 12.

We don't have much wiggle room for saving more because we max out retirement, save for college each month, and pay on the HELOC each month.  We do save some, however.

Recent inheritance from my mother: $130K cash.
...

We intend to see a financial planner about how to use the money inherited from my mother, which isn't much in DCUM Land but which is a lot for us.  We want to be careful with the money and make smart/considered decisions (and not fritter it away).  I'm thinking it could bolster retirement and college funds.

We need to re-do our front walk area and the original/1960 hall/kids' bath.  The front walk looks terrible and the grading posed problems during Hurricane Sandy, and the bathroom has become non-functional and is very unpleasant to use.  Total amount needed for these two projects is about $20K.

Would you add to the HELOC to pay for these?  We could use the interest deduction, but OTOH a loan is still a loan.

Or would you use the inheritance to pay for these projects?

Or would you use the inheritance to pay for both these projects and the HELOC amount?

My hesitation to use the inheritance is that it seems frivolous to spend that money on these sorts of things.  Am I being too conservative in thinking this way?

WWYD?[/quote]

First and foremost - a front walkway and a working bathroom are smart investments and necessary.  You're not being frivolous.  You're retaining/ensuring the value of your home.  Good use of money.

Some simple strategies:

1) assuming 5% return on an investment - you will repay the $20K in 4 years if you were to invest the $130K.  Therefore pay the $20K (or less...if you shop around for contractors/fix it guys) out of your emergency fund (that makes low/no interest).  Hope that in 4 years you will "repay" it.
2) simply think that you got a $110K inheritance instead (and $20K to fix the property).

Good luck.
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