Anonymous
06/23/2018 20:15
Subject: Re:What would you if you inherited $100k?
1) $32k catch up contributions for kids' 529s
2) ~$36K to rent a full house for 3 years. (We would likely need less than $1k a month more than our current rent to do this, so $36K over 3 years should be more than sufficient. DH refuses to buy, thinks he wants to move outside of DC, but that's another story. Hopefully in 2-3 years he'd figure out whether he's actually going to do anything about moving elsewhere. He's talked about it for 4 years but done nothing.)
3) $22K prepay 529s and carry forward the tax deductions (I think you can do this an unlimited number of years in VA)
4) $10K add to downpayment fund which is already very healthy . I know this seems low, but since this would pre-pay the 529s for a little less than 3 years, I'd redirect funding we would have put into 529s to increase the down payment fund. We won't be using this for a few years anyway so I'd rather have the growth in the college funds.
2) ~$36K to rent a full house for 3 years. (We would likely need less than $1k a month more than our current rent to do this, so $36K over 3 years should be more than sufficient. DH refuses to buy, thinks he wants to move outside of DC, but that's another story. Hopefully in 2-3 years he'd figure out whether he's actually going to do anything about moving elsewhere. He's talked about it for 4 years but done nothing.)
3) $22K prepay 529s and carry forward the tax deductions (I think you can do this an unlimited number of years in VA)
4) $10K add to downpayment fund which is already very healthy . I know this seems low, but since this would pre-pay the 529s for a little less than 3 years, I'd redirect funding we would have put into 529s to increase the down payment fund. We won't be using this for a few years anyway so I'd rather have the growth in the college funds.
Anonymous
06/23/2018 11:42
Subject: What would you if you inherited $100k?
Anonymous wrote:A 10k/year vacation fund to last the next 10 years.
Yes!!
I would pay for 5k first class ticket for my mom to fly here from Asia to visit us every 6 months. She is elderly and the 20 hour flight does a number on her in economy class. I am well aware that she can only visit me for a finite number of years.
Anonymous
06/23/2018 11:36
Subject: Re:What would you if you inherited $100k?
$10k in each 529 = 20k
30k market
50k mortgage
30k market
50k mortgage
Anonymous
06/23/2018 10:00
Subject: What would you if you inherited $100k?
Put it in 529 plans for my kids.
Anonymous
06/23/2018 09:20
Subject: Re:What would you if you inherited $100k?
Anonymous wrote:I'd split it up.
Pay off car.
$10k extra in each 529.
$5k home renovation project.
Balance straight into the stock market.
If too risky to dump it all in stocks, I'd rather pay mortgage early than dive into bonds. (Bonds are low yielding but can still decline. Paying off debt is truly a guaranteed return.) So if you decide you want to do 70/30 stock/bond, personally I'd take that $30k and toss it into the mortgage.
Plus the Roth IRA as a prior pp mentioned.
Anonymous
06/23/2018 09:19
Subject: Re:What would you if you inherited $100k?
I'd split it up.
Pay off car.
$10k extra in each 529.
$5k home renovation project.
Balance straight into the stock market.
If too risky to dump it all in stocks, I'd rather pay mortgage early than dive into bonds. (Bonds are low yielding but can still decline. Paying off debt is truly a guaranteed return.) So if you decide you want to do 70/30 stock/bond, personally I'd take that $30k and toss it into the mortgage.
Pay off car.
$10k extra in each 529.
$5k home renovation project.
Balance straight into the stock market.
If too risky to dump it all in stocks, I'd rather pay mortgage early than dive into bonds. (Bonds are low yielding but can still decline. Paying off debt is truly a guaranteed return.) So if you decide you want to do 70/30 stock/bond, personally I'd take that $30k and toss it into the mortgage.
Anonymous
06/22/2018 16:10
Subject: What would you if you inherited $100k?
Mine would go to retire debt. There would be no leftover.
Anonymous
06/22/2018 12:43
Subject: What would you if you inherited $100k?
OP, maxing out your 401Ks should bring your AGI below the cap for Roth IRA contributions. So, in your case, I would put $11K into Roth IRAs for 2018 and set aside $11K for Roth IRAs in 2019 (you can lump in the $11K on January 1st).
I'd also put money into your child's 529 up to the state tax benefit but cast it forward for 5 years. For example, if you lived in NYS, you would put $25K in 2018 (5 years X $5K) and take the tax benefit over five years.
I'd take the remaining money and open a DAF (so that I could make charitable contributions in the future and possibly itemize my taxes this year) and set aside some for a memorable vacation (say, $15K).
Enjoy, OP!
I'd also put money into your child's 529 up to the state tax benefit but cast it forward for 5 years. For example, if you lived in NYS, you would put $25K in 2018 (5 years X $5K) and take the tax benefit over five years.
I'd take the remaining money and open a DAF (so that I could make charitable contributions in the future and possibly itemize my taxes this year) and set aside some for a memorable vacation (say, $15K).
Enjoy, OP!
Anonymous
06/22/2018 11:12
Subject: What would you if you inherited $100k?
Anonymous wrote:Anonymous wrote:I recently inherited $100k in cash from the sale of a family property. DH and I both work HHI approx $200k. We don’t have any debt outside of a monthly car payment which is no interest and our mortgage (school loans, cc all paid off). We contribute the max to 401k and contribute $8k per year to our DS 529. We are not super wealthy but feel like we can afford what we need / want within reason. We have some additional investments besides retirement and enough $ in an emergency fund. So...the question is what would you do with extra money? Invest? Pay off car? Pay down mortgage?
We just inherited 120k. Similar situation. Mortgage is our only debt. We bought a hot tub for 10k and dumped the rest of it into our kids 529. That eliminated the 1k/mo we were putting into 529. Our kids now have VA prepaid done and 200k to split in the invest. Hopefully that will grow some.
I just inherited $100k last month. Very similar to you, no debt. Paid off our DC's college fund, b/c it just made me so happy to have it done. He's 9, and it's all his and he can go to college now debt free.
I also bought us new phones and iPads (for me and DH) just as a treat. Any remainder went to our emergency fund, etc.
Anonymous
06/22/2018 10:50
Subject: What would you if you inherited $100k?
I’d put $25k into a home project. For us, that would be the basement remodel we’ve been putting off. I’d put $40k, ($20 k each) into our kids’ 529s. The other $35k I’d put into our investment account.
When this actually happened to us many years ago, we paid off our car (was not 0%) and our home equity line and put the remaining $25k into our paltry at the time emergency fund. This was pre kids.
When this actually happened to us many years ago, we paid off our car (was not 0%) and our home equity line and put the remaining $25k into our paltry at the time emergency fund. This was pre kids.
Anonymous
06/22/2018 09:55
Subject: Re:What would you if you inherited $100k?
I have two teens. I'd probably use some to take a nice vacation, finally do a small bathroom renovation project I've been putting off, and the rest would be set aside for college.
Anonymous
06/22/2018 09:06
Subject: Re:What would you if you inherited $100k?
I inherited $135K at 28 yo before I was married. Bought a soft top Jeep (second car), put a deck on my TH, got lasik vision correction, took a long vacation, paid off the first car, invested some. In the end, I wish I had been more disciplined and simply put the $ in mutual funds. That's what my 10 year old brother did. If I had done that, then 10 years later (last year) when I needed $ for our SFH downpayment I would have had well over $260K to put down in addition to the $150K I had. The lasik was awesome though, have no regrets about that.
Anonymous
06/22/2018 09:01
Subject: Re:What would you if you inherited $100k?
^ The main reason your advisor is suggesting this is to give you more flexibility should you need some of that money for retirement or some other reason than your kids college. In the end, you have to make sure your retirement savings is adequate first, then worry about college savings. While a 529 is the most tax advantaged option - you are taking a risk given the penalty for non-qualified withdrawal. So I agree with PP that its a bit of a balancing act. People think they will never need the money, then that bigger house in McLean starts looking nice....
Anonymous
06/22/2018 08:56
Subject: What would you if you inherited $100k?
Anonymous wrote:10k to charity;
25k home stuff (ranging from furniture to flooring to window treatments)
10k landscaping
10k vacation
45k park in a fund for kids for future (could be grad school help as undergrad is already funded, could be weddings, could be future down payment on a home)
Perfect. I'd put the $45K in a 529. Everybody goes to grad school these days, and only engineering is paid by employer.
Anonymous
06/22/2018 08:52
Subject: Re:What would you if you inherited $100k?
Anonymous wrote:Anonymous wrote:Regarding your kids college savings. Don't dump $40K or some big amount into the 529. Your state tax benefit from 529 investments has a cap/carryover restrictions. So once you've put enough in to max out the state tax benefit (which it sounds like you are already doing even without this $) there is no reason to put more into that investment vehicle. Plus you can't pull the $ out without penalty should you decide you need it for some unplanned or large unforeseen expense - or your child gets a college scholarship etc. You want to maximize your tax benefit, but keep some flexibility with how the fund could be accessed if need be. What our advisor told us is to open VA 529 accounts for your kids and max out the tax benefit, but then set up separate mutual fund account(s) for additional college savings. You can probably get better returns on the $ in mutual funds (given the higher number of brokerages/funds to choose from) than the 529 offers anyway. So yeah, get the state tax credit, but everything over the top goes into mutual funds.
Yea, but the 529 invest grows tax free. I got 22% returns off mine in 2017.
NP. It's a balancing act. I agree with PP that you don't want to over invest in a 529 unless you are 100% certain you will never need that money.