I spoke to my family earlier today, the usual Thanksgiving phone call. Except when my dad got on the phone, he said he's giving me $13,000.
I was so stunned that I couldn't really ask him much about it or thank him. His only explanation was that his savings account wasn't earning any real interest, so he'd researched what the maximum amount was that he could give as a gift to his kids tax-free, and now he's going to give us each that amount. Then he said he'd get my bank details later and wire me the money. And then he passed the phone to my mom, who was more interested in gushing over the videos of AA that my nieces were showing from my Facebook profile.
So, huh. I've been chewing over it for a couple hours (in between stuffing my face and socializing) and I've come up with a few thoughts, but no decision, about what to do with the money when I get it.
The first is, my parents live very frugally. As in worn-down house, thrift-store furniture, cheap old clothes, etc. But they always take care of family. So whatever I do with the money, I want it to reflect their values of thrift and family.
So then, I came up with three things I could do with the money: Pay off the rest of AS's highest-interest student loan, and then make sure I use the freed-up monthly money to invest or pay down even more debt. Or, throw the money into the Roth IRAs I was planning to start in January. Or, set money aside to make sure I have enough for the estate-planning/third-parent adoption legal fees.
There's $9,072 left on AS's student loan. In the 2011 budget, I have $700 allocated to education, whether paying down extra debt or taking on NT's loans if he goes to less than half-time class load and his loans come due. AS's monthly loan payment is $147.47 per month. The interest rate is 6.5%.
I'm just throwing out the figures. I don't know what it all means. I know we don't have enough saved for retirement, and I know we have too much debt. I don't know if one problem is more serious than the other.
As for the third idea, lawyer money, well AS has already earned about half of what we'll probably need, and the freelance jobs she's been getting are still coming fast and furious. Plus, NT is getting a holiday bonus that we can probably put toward the lawyer stuff as well. So I'm really leaning toward debt payoff or IRA.
Two more reasons to be thankful today, besides this big windfall: I'm so glad we've already splurged on ourselves several times this year, because I feel almost no temptation to spend this money. And I'm SOOOOO thankful this money didn't come to me before my financial come-to-Jesus, because I would've piddled it away and probably managed to not improve my financial situation one iota. This is an optimal time in my life for me to put it toward our future well-being; I really don't think it could have come at a better time, and for that I am truly thankful.
Unexpected windfall; kind of flummoxed
November 26th, 2010 at 05:54 am
November 26th, 2010 at 06:32 am 1290753154
Happy Thanksgiving!
November 26th, 2010 at 01:32 pm 1290778356
November 26th, 2010 at 02:31 pm 1290781889
November 26th, 2010 at 03:27 pm 1290785263
I think starting the ROTHs is a good idea, since you were just asking about not having the VG minimums. (Retirement before kids!). But, no matter what you do with it will be fine! Honestly, just pick with darts - LOL. If you pay the student loans, you will have more to save for the lawyer, etc., etc. It will all work out.
I had a similar experience. My dh and I have always been uber conservative, but I found this site and have became MUCH more efficient with managing our money - much more learned about investing, etc. Meanwhile, my parents have never handed me much cash, in my entire life. One day my parents came over and hand me a $5k check. It was beyond unexpected - I don't know if they ever gave me $100+ before that day. But I couldn't help but feel that it was a better gift at that time than it ever would be earlier. I just think it's funny how that works out sometimes. In that case, they had received a VERY unexpected inheritance ("poor" relative) and knew my sister and I could use a little money more than they did.
November 26th, 2010 at 06:54 pm 1290797682
November 26th, 2010 at 10:40 pm 1290811210
November 27th, 2010 at 03:42 am 1290829354