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mo money mo problems
Jars
Registered User regular
Registered User regular
this year both of my grandparents died and now that everything has been taken care of the process of settling the estate has started. now I don't know exactly how much money is coming from it but I have been told that I should expect some. a lot, really. possibly six figures, enough to be life changing. so for the next few months I have to think about what do do with it. this is going to be quite a bit of an information dump over what my circumstances are. right now I:
am 32, and do not have my own place yet. no one is dependent on me besides myself
I have a steady job as an aide in special education but it pays very little. I make around $13,000 a year. but I'm a state employee of new york, I have full health care, full dental, paid vacations, and a pension. all totalled up my compensation is closer to $17-18,000.
as far as jobs go I think it's pretty good. but ways to advance are kind of limited and involve things that do not appeal to me(such as becoming a teacher). this is important for a reason I will mention be low. I have a 4 year degree but no post graduate or any cirtifications.
I have no debts. no college loans, no car payment, or anything. I do have some savings, and a few investments.
my car has about 2-3 more years left on it, but I think even without the money I've planned enough to take care of that.
now, for the money. my family(in other words the people giving me the money) have encouraged me to either go back to school, or buy a house. of the two I do not like the idea of going back to school. I do not like school, I'm not good at school. I also don't want to become a teacher anyway, which would be the obvious progression from my current position.
buying a house is much more appealing to me but the big thing on my mind is tied with my career. to me buying a house is pretty much saying this is where I will be. Right now I have no attatchments, I can effectively pick up and go to the other side of the world if I had a job there. buying a house would be advantageous in several ways, especially by cutting my commute way down since it's currently a little over 30 minutes and I could be much closer to work. but essentially committing myself both to the area and my job for the forseeable future is scary. I'm afraid of doing it because maybe 3 years from now I won't want to be here, or worse- I can't be here because I don't make enough money. having to face both my career future and my living conditions at the same time makes me very nervous.
maybe I should just spend it all on hookers and blow
am 32, and do not have my own place yet. no one is dependent on me besides myself
I have a steady job as an aide in special education but it pays very little. I make around $13,000 a year. but I'm a state employee of new york, I have full health care, full dental, paid vacations, and a pension. all totalled up my compensation is closer to $17-18,000.
as far as jobs go I think it's pretty good. but ways to advance are kind of limited and involve things that do not appeal to me(such as becoming a teacher). this is important for a reason I will mention be low. I have a 4 year degree but no post graduate or any cirtifications.
I have no debts. no college loans, no car payment, or anything. I do have some savings, and a few investments.
my car has about 2-3 more years left on it, but I think even without the money I've planned enough to take care of that.
now, for the money. my family(in other words the people giving me the money) have encouraged me to either go back to school, or buy a house. of the two I do not like the idea of going back to school. I do not like school, I'm not good at school. I also don't want to become a teacher anyway, which would be the obvious progression from my current position.
buying a house is much more appealing to me but the big thing on my mind is tied with my career. to me buying a house is pretty much saying this is where I will be. Right now I have no attatchments, I can effectively pick up and go to the other side of the world if I had a job there. buying a house would be advantageous in several ways, especially by cutting my commute way down since it's currently a little over 30 minutes and I could be much closer to work. but essentially committing myself both to the area and my job for the forseeable future is scary. I'm afraid of doing it because maybe 3 years from now I won't want to be here, or worse- I can't be here because I don't make enough money. having to face both my career future and my living conditions at the same time makes me very nervous.
maybe I should just spend it all on hookers and blow
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One thing to do, since you have substantial assets, make your own will so that if something does happen to you then at least your beneficiaries lives are easier for not having to fight over who gets what and dying without a will is a legal nightmare if you have to try and get money out of banks and such.
Also, if anyone comes asking you for a loan so they can start up their own business it is time to stop talking to that person.
If you don't want to go back to school and don't want to buy a house, then don't. Seriously, don't let anybody pressure you into it.
That being said... Try to avoid frittering it away. If that's a serious temptation to you, maybe try an income generating type of investment, and restrict your hooker (or whatever) expenditures to your interest but not your principle.
If it were me, I'd pay off any debts then put the rest in savings. If you don't feel now is the right time for you to have a house then don't buy one. Definitely do not go to school just because your family thinks you should. The hard part is going to be, I think, that that money is just sitting there available and you'll suddenly see things you couldn't afford before becoming very tempting. That's where the whole human nature thing comes in. If possible, try setting aside at least part of it in something like a 401k or a CD - something you can't easily retrieve it from when thoughts of a Maserati become to strong (not that you're thinking of that, it's just an example).
But fuck you — no, fuck y'all, that's as blunt as it gets"
- Kendrick Lamar, "The Blacker the Berry"
1) Talk to a CPA. Make sure you're not going to lose a substantial chunk of the inheritance because you jump about 4-5 tax brackets.
2) Talk to a financial planner. They can give you more information about what your options can be as far as where to put the money.
I recommend you put all or most into a Roth IRA. You can withdraw the principle at any time without penalty, but you're making additional retirement savings interest in the meantime.
I am interested in buying one. I can't stay here forever.
I am not spending it on hookers and blow, juuuuuust to make that clear.
I'm fairly up on all the inheritance taxes and what not, that stuff has pretty much been settled. I just haven't been told exactly how much it is. our lawyer is the same one that settled my great grandfather's esate and has been our lawyer for decades on account of being on the high school swimming team with my father.
They can set you up with accounts that will keep you from blowing the big wad; as Pyrian said.
Other advice is people will suddenly be your best friend. Resist the impulse to help them, because there is always another car repair, or student loan, or dance recital. If that is against your nature, have the CPA set up a certain amount each year to go charity/family.
It sounds like you're currently unsure of where you want to go with your future/if your current situation is sustainable in the long run, so I would look at the money as something to give you some financial breathing room while you figure that out.
I dunno if I have much to contribute as to how to go about figuring that out- surely there's career advisers or something out there? (I'm totally ignorant on this because my career's always been a pretty straight path, personally.)
I would resist being pressured into spending it on something that just locks you in further to a life path you're not interested in in the long run. It may be exactly what those people would do with the money in that position, and it might be the right decision for them- but you're not them, and you're the one that has to live with the decisions you make- so make sure it's the right call for you before plunking down the cash.
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If that is the case you don't need to find one large expenditure to use the money on, you can just start investing smaller amounts in different ways.
From a purely investment point of view, buying a house is typically a good idea, but there are some big downsides. Realestate is a long term investment (think 10-30 years). You can obviously sell whenever if you have too, but if you are doing less than a 5 year turn around chances are you will break even or lose money. It's also a very involved investment. If you or someone else is living in it it will require work to maintain. That severely eats into your return if you pay someone to do all the work, or it requires a fair amount of your time. I'm way over simplifying, but as an investment I probably wouldn't do it unless you have spare time to work on it and are pretty sure you will stay there for at least 5-10 years.
And yeah, it may be worth setting up a will of your own, if you're going to have that size of investment portfolio.
Pretty sure that roth deposits are limited to 5.5k a year. 6.5k if one is older than 50.
after that, max out a Roth and if you don't want to buy a house or go to school, stick it in some sort of large cap index fund
ed: that said a good alternative to buying an actual house would be a condo; it has similar benefits to housebuying in terms of building equity and reducing monthly rent and such as major maintenance is usually handled through an HOA. Also they're comparatively easy to move on from if you decide you need to do that in 5-10 years.
that's why we call it the struggle, you're supposed to sweat
One other thing to keep in mind if you decide to buy a house/condo is the property taxes. With your low income, you'll definitely want to keep the house value reasonable and put a good chunk of the inheritance money into an income-producing stream so you can afford those (and maintenance) every year. At least if you're rural you probably don't have to worry too much about your property value skyrocketing and making the taxes unaffordable (and in that case I guess you could always sell anyway), so that's cool.
Also, this isn't what you asked about, but have you considered becoming a special needs therapist? I hear it pays well and can be done contractually/part time. My wife is strongly considering it. Not sure if you would need to go back to school for it though.
I think this is true, but I also think that if you haven't maxed out the 5.5k in the past (3? 5?) years, you can also contribute that past amount to get it up to 5.5k per year.
I wish, but no, I don't think this is true, I've never heard of it before. Wouldn't hurt to throw $5500/year for a few years going forward, though.
The main exception is if you inherit a tax deferred plan like an IRA, in which case you have to pay tax as you make withdrawals. But I wouldn't expect you to owe any tax as a result of the inheritance itself.
All the advice so far has been good, I just wanted to throw that out there.
I would hold off making any major changes (such as buying/renting your own place) until everything is settled and you have a better idea what you want to do moving forward, whether that be sticking it out until you get full pension, going to school, getting certs, buying a place, or moving out of city/state.
You have been afforded an opportunity many do not get, which is that you are living within your means, but now you have some time and resources to determine if you want to make a major change in profession/occupation. I too would have suggested using a chunk of it for education, as that will likely increase your earning power. If you don't want to study education you could develop things you wanted to try, but wasn't pragmatic at the time, or didn't have time or resources for like the arts: drawing, painting, music, writing, etc. But that might not be what you're interested in.
I would ignore the feeling that you had to do anything with the money soon after you receive it. Even if you stick it in a savings account for a bit, it'll still be there to use later once you have something like a plan for what you want to do.
Huh. My girlfriend had told me that and she deals with most of this financial stuff, but looking it up, I didn't see anything. Sorry to mislead!
Pay off any debts.
Savings account
- Use savings to max a Roth IRA for the next few years
- Use savings to supplement my income and max the 401k matching from my employer. While you can't directly deposit with matching from an employer, if you're not currently at the maximum amount they will match, it's a good step to get what is essentially free money.
- Invest in a reliable vehicle. I'm not going to run out and buy a new BMW, but a reliable vehicle is very important (to me) and would allow me to eventually purchase a home that has a modest commute, or switch apartments/visit family and friends.
- Don't touch the money except for the above IRA and 401k budget.
In my situation, if I were out of debt and had a reliable vehicle my employer actually has a very good tuition reimbursement plan, I just can't afford to go to school because of the time investment and lack of transportation right now. Were that not the case, if there were some associates or bachelors degree that would improve my pay or job security I would definitely consider that as a kind of "only you know if school is a good idea" type of advice.
There's no rule that says if you have money, you need to spend it. It doesn't really expire and many housing markets (basically all of the coastal states) are in a weird bubble / boom that makes buying a home a pretty difficult task even for someone with cash on hand. I also suggest you not tell anyone about the money who doesn't need to know. I do think you should go out to a decent dinner and actually enjoy what your family has left you while you think about stuff.
Not to get too in the weeds with this, but the extra $1k deposit allowed when one is 50 or older is also referred to as a "catch-up" contribution, which might be what you're thinking about.
Those with interest in the Financial Independence, Retire Early (FIRE) "movement," eventually move into a new home and rent out both halves for additional income.
if you only make $15k a year, most of your take-home salary will be spent just on house upkeep and taxes for your home, forcing you to dip into your finite savings to live (unless you live in a very low cost of living area)
Since you have low income, you might want to talk to a retirement advisor about how having this money might impact your access to social security (if any), because that seems like it would be quite relevant to you.
Don't rush into anything. I think a CPA might be a little extreme (remember, these people cost money), but definitely talk to a retirement planner.
we also talk about other random shit and clown upon each other
Don't leap into education yet, either, until you know what you really want to do, which you don't right now.
Take a look at this website about "Early retirement." Take everything with a pinch of salt, because the community is a leeeetle bit nuts, but you can do what they are scrimping and saving to do without the suffering. Particularly look at their "Investments" forum because they are a community of people looking to live on the return from investments.
http://www.mrmoneymustache.com/
If you can get your big lump sum of money set up to provide regular income via investments, you can basically do what you like, without worrying about wages. You can exist on a special ed assistant's income if you have an extra $20k a year coming in to boost your wages from "starvation" to "comfortable."
Also read this wiki and forum:
https://www.bogleheads.org/wiki/Main_Page
A little reading on boring investments now could have you sitting pretty for life. And if your money is tied up in investments you won't be tempted to fritter it away on hookers and blow
Edit: Keep 6 months of expenses in a liquid savings account, save/invest the rest and/or build more tiny houses and rent them out for income.
If you're getting this money in I would do as other have suggested and either stash it away or start investing. You can talk to financial advisors, they're generally pretty good at finding you a good course that would suit your lifestyle.
As far as your family giving you stipulations....screw that. Your inheritance goes to you. Period.
And if you must go the hooker route might I suggest going to the Bunny Ranch in Nevada....at least they get tested so you wont get a disease XD