Anonymous wrote:

Anonymous wrote:"This is the the worst advice ever. The OP is coming into a windfall, and you guys are giving her advice that keeps her in debt or worse, puts her in MORE debt"

I'm the pp who wrote this and would like to add - instead of these options,
1) pay off your student loans, all of them
2) pay off your mortgage

You are now debt free in DC with a comfortable HH income. Congratulations! Now, take the money you were putting towards your student loans and mortgage and start aggressively saving for your addition, your new car, and your children's tuition.

And hope and pray that all that money you just plowed into loans and now is illiquid doesn't suddenly become horribly necessary to you in that time you are building reserves back up.

That's quite a bit of anxiety, IMO. Why would OP suddenly need hundreds of thousands, if the family is financially stable, insured etc? I've seen people's money turn to dust overnight, literally. So having tangible assets seems like a much more prudent way to preserve wealth at this time. It is astonishing how much trust you have in banks and markets... I'm all for playing with money some, but not all of it, with kids and all...

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Pay the 6% student loan.

Sell your current house and with the extra cash from the windfall just move to a "W" school feeding district.

Pull out kids from private schools.

Make do with older car and less bathrooms if need be. You will be saving $40 K on schools alone.

My $0.02 cents.

OP is too Catholic to do this. I already suggested it.

Why do people still have faith in religion in this day and age? Boggles the mind. Uneducated masses living in poverty, I understand; politicians who have to appeal to their constituents, I understand. Contemporary well educated person living in a major metropolitan area, how can this be?

Same way you are still an asshole in this day and age, I guess.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have a similar windfall and this is what we are doing:

$400K for renovating our house.
$30K to replace our 10+ yr old car.
$18K for a trip to Asia in the summer for 3 wks for 4 people including our nanny.

The rest is going into savings.

College is fully funded, no student loans or any other debt and we don't have a mortgage.

spending 400k to renovate a house is a big waste

Houses in our neighborhood are selling for nearly double of what we will pay for cost of house + renovation. It's a full gut renovation of a 100+ yr old house with outdated systems including all new electrical, plumbing, walls, ceilings, etc. - basically a whole new house.

That doesn't make sense

Anonymous wrote:

Anonymous wrote:We have a similar windfall and this is what we are doing:

$400K for renovating our house.
$30K to replace our 10+ yr old car.
$18K for a trip to Asia in the summer for 3 wks for 4 people including our nanny.

The rest is going into savings.

College is fully funded, no student loans or any other debt and we don't have a mortgage.

spending 400k to renovate a house is a big waste

Houses in our neighborhood are selling for nearly double of what we will pay for cost of house + renovation. It's a full gut renovation of a 100+ yr old house with outdated systems including all new electrical, plumbing, walls, ceilings, etc. - basically a whole new house.

Anonymous wrote:I am the pp who advocates paying off the mortgage and the student loans. I disagree with the statement above that paying off cheap debt is an emotional decision. Her interest rate is awesome at 3.5. But if she pays it off and saves the money she would have been paying towards her mortgage, her effective return on investment is 3.5 plus whatever her bank is paying in interest, and virtually risk free.

But how long does it take to save that back up again after you've plowed it all into places where it's hard to get at it easily (if at all?). That's a whole lot of compounded interest lost, because it's going to take quite a few years to save up a couple hundred thousand again, even with no loan payments.

I would not spend the money on an addition. It won't be long and your oldest child will be moving out of the house. And not long after that all the kids will be moved out. Then you'll be stuck with way more house than you need. Assuming you have a basement, I would add a bedroom/bath there. This will be much less expensive than an addition while maintaining your yard size. Secondly, your children will appreciate the money more later in their lives for schooling, house down payment, weddings, etc. Lastly, having to share a bedroom with a sibling is a valuable life lesson. Most likely they will have roommates once moving out and will be better prepared for all that entails.

I would pay off the 6% loan.
Fix up basement if you have one.
Save the rest and use that money to fund your children's college funds. Some funds like a 529 have yearly maximums per child based on gift taxes which is current 14k per year per child.
Whatever is left after college you can decide at that time what to do with it.

Anonymous wrote:We have a similar windfall and this is what we are doing:

$400K for renovating our house.
$30K to replace our 10+ yr old car.
$18K for a trip to Asia in the summer for 3 wks for 4 people including our nanny.

The rest is going into savings.

College is fully funded, no student loans or any other debt and we don't have a mortgage.

spending 400k to renovate a house is a big waste

I am the pp who advocates paying off the mortgage and the student loans. I disagree with the statement above that paying off cheap debt is an emotional decision. Her interest rate is awesome at 3.5. But if she pays it off and saves the money she would have been paying towards her mortgage, her effective return on investment is 3.5 plus whatever her bank is paying in interest, and virtually risk free.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:"This is the the worst advice ever. The OP is coming into a windfall, and you guys are giving her advice that keeps her in debt or worse, puts her in MORE debt"

I'm the pp who wrote this and would like to add - instead of these options,
1) pay off your student loans, all of them
2) pay off your mortgage

You are now debt free in DC with a comfortable HH income. Congratulations! Now, take the money you were putting towards your student loans and mortgage and start aggressively saving for your addition, your new car, and your children's tuition.

I'm 9:36. I think your advice might be good for someone in their 50s or someone nearing retirement, but for someone in their mid-30s with 4 small children at home, having liquid investments and cash is more important than a paid off mortgage. Plus, OP said her mortgage rate is 3.5%. With the interest deduction, the rate is effectively 2.5%. That is a really, really low interest rate. Over time, inflation will eat away at the payments and it will be miniscule compared to their income. There's a time for paying off every single debt, but that's generally not good advice for people in their 30s (like me). Better to sock away the money for the future and slow pay the low interest debts. The only exception to this would be if they're in a situation where there's a lot of job insecurity, but that doesn't sound like their situation.

+1, though on DCUM it's heresy to not pay off your mortgage. Which is sad for a lot of people.

1. Paying cheap dept is an emotional decision (peace of mind)
2. Not paying cheap dept is a financial decision (leverage to build wealth)

There is no wrong answer here but you can not have both. OP chooses 1 or 2 based on what is more important to her and her family. What I do not understand is why some DCUMer feel so strongly about other people's choices.

Anonymous wrote:

Anonymous wrote:"This is the the worst advice ever. The OP is coming into a windfall, and you guys are giving her advice that keeps her in debt or worse, puts her in MORE debt"

I'm the pp who wrote this and would like to add - instead of these options,
1) pay off your student loans, all of them
2) pay off your mortgage

You are now debt free in DC with a comfortable HH income. Congratulations! Now, take the money you were putting towards your student loans and mortgage and start aggressively saving for your addition, your new car, and your children's tuition.

I'm 9:36. I think your advice might be good for someone in their 50s or someone nearing retirement, but for someone in their mid-30s with 4 small children at home, having liquid investments and cash is more important than a paid off mortgage. Plus, OP said her mortgage rate is 3.5%. With the interest deduction, the rate is effectively 2.5%. That is a really, really low interest rate. Over time, inflation will eat away at the payments and it will be miniscule compared to their income. There's a time for paying off every single debt, but that's generally not good advice for people in their 30s (like me). Better to sock away the money for the future and slow pay the low interest debts. The only exception to this would be if they're in a situation where there's a lot of job insecurity, but that doesn't sound like their situation.

+1, though on DCUM it's heresy to not pay off your mortgage. Which is sad for a lot of people.

We have a similar windfall and this is what we are doing:

$400K for renovating our house.
$30K to replace our 10+ yr old car.
$18K for a trip to Asia in the summer for 3 wks for 4 people including our nanny.

The rest is going into savings.

College is fully funded, no student loans or any other debt and we don't have a mortgage.

Anonymous wrote:"This is the the worst advice ever. The OP is coming into a windfall, and you guys are giving her advice that keeps her in debt or worse, puts her in MORE debt"

I'm the pp who wrote this and would like to add - instead of these options,
1) pay off your student loans, all of them
2) pay off your mortgage

You are now debt free in DC with a comfortable HH income. Congratulations! Now, take the money you were putting towards your student loans and mortgage and start aggressively saving for your addition, your new car, and your children's tuition.

I'm 9:36. I think your advice might be good for someone in their 50s or someone nearing retirement, but for someone in their mid-30s with 4 small children at home, having liquid investments and cash is more important than a paid off mortgage. Plus, OP said her mortgage rate is 3.5%. With the interest deduction, the rate is effectively 2.5%. That is a really, really low interest rate. Over time, inflation will eat away at the payments and it will be miniscule compared to their income. There's a time for paying off every single debt, but that's generally not good advice for people in their 30s (like me). Better to sock away the money for the future and slow pay the low interest debts. The only exception to this would be if they're in a situation where there's a lot of job insecurity, but that doesn't sound like their situation.

Anonymous wrote:

Anonymous wrote:Pay the 6% student loan.

Sell your current house and with the extra cash from the windfall just move to a "W" school feeding district.

Pull out kids from private schools.

Make do with older car and less bathrooms if need be. You will be saving $40 K on schools alone.

My $0.02 cents.

OP is too Catholic to do this. I already suggested it.

Why do people still have faith in religion in this day and age? Boggles the mind. Uneducated masses living in poverty, I understand; politicians who have to appeal to their constituents, I understand. Contemporary well educated person living in a major metropolitan area, how can this be?

Anonymous wrote:

Anonymous wrote:Pay the 6% student loan.

Sell your current house and with the extra cash from the windfall just move to a "W" school feeding district.

Pull out kids from private schools.

Make do with older car and less bathrooms if need be. You will be saving $40 K on schools alone.

My $0.02 cents.

OP is too Catholic to do this. I already suggested it.

Actually, its Jewish private school, but yes, we have no plans to move neighborhoods or school. Its (clearly) not a financial decision, but where we feel is right for our family..

Anonymous wrote:Pay the 6% student loan.

Sell your current house and with the extra cash from the windfall just move to a "W" school feeding district.

Pull out kids from private schools.

Make do with older car and less bathrooms if need be. You will be saving $40 K on schools alone.

My $0.02 cents.

OP is too Catholic to do this. I already suggested it.