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Opinion: Americans tend to blow inheritance — Here’s how to be cautious and have fun:

Dear Ms. Money Peace:

I received unexpected money from my uncle’s property, but it wasn’t enough to celebrate and plan for early retirement. I have a safe job, retirement money, a nice condo, and a decent car. My sister plans to boost her child’s college funding with her storm. She keeps saying that I should invest.

My brother intends to buy a boat for $ 24,000. He suggested that we “invest” and share in larger boats. This wasn’t one of my dreams, so it’s not fascinating.

Am I a party pooper? I don’t want to make a mistake because when he saw his friend spend $ 22,000 on a Harley-Davidson bike and his father died, he immediately regretted it. When I got tired, I sold it at half price.

Is there anything that can bring me money relief?

Frozen in Florida

Dear Frozen:

It’s hard to get peace of mind, but just asking a question is enough. Think of your hesitation as a thoughtful reflection rather than as a “freeze.”

Be careful with inheritance. You don’t say how close you were to your uncle, but your emotions must be tied to this financial decision. There is sadness, surprise, and regret. When money is tied to loss, impulsive decisions are often made from slippery and unstable places. Therefore, widows and widows are advised not to do big things for a year. You don’t have to hurry because it’s easy to avoid mistakes.

Many people think they have to do something all Of inheritance or storm. Then, weeks or months later, they forget where it went or regret it as your friends did. Or they get something that leaves them in an economically bad place. This is all about the fiscal balance.

Divide the lump sum into three purposes: past, present and future. It facilitates your decision.

Here’s a strategy to get you started:

past

What kind of debt do you have, such as credit cards, personal loans, student loans, and car loans?If you are one of 39% of Americans Loan to buy a car, $ 8,000 (one-third of $ 24,000) helps a lot.

When buying a car, it’s not about how low your monthly payments are, but how fast you own the car completely. Even with low interest rates, you still have to pay monthly. Reducing debt and payments is the best way to improve your financial position.

When you repay your loan, you’ll save half of your monthly payments before your next car, even 10 years away. The other half will be extra cash for fun.The· Average monthly car payment It’s $ 550.

Current

Make a better plan today. Let’s be practical and fun. This is a two-part distribution for your money. It doesn’t say if you have a secure account.If you are one of 59% of US adults who do not have cash to cover an emergency, this is your opportunity Build your savings..

Consider adding $ 4,000 to your safety account today and then making a small donation each month to develop good savings habits.

I think it’s purely fun because the practice is covered! Spend money on your hobbies — you may want a new circular saw or gas grill. Set aside a bit for your vacation after Covid-19, but enjoy planning your trip now. Enjoy a new reclining chair or a great set of cooking pots. This play money is for you to enjoy.

future

This third is long-term: retirement or college funding. You are already retiring — good for you! Focus on retirement as you haven’t mentioned children.

This is an opportunity to think about your future by paying off a portion of your mortgage principal. This is easy. No need to refinance. When paying, please fill in as the principal. By paying $ 8,000 today, you can achieve three things:

  • Save money for long-term profits.

  • I will repay the mortgage early.

  • Increase the flexibility of retirement planning.

Why would you consider paying off your mortgage? The investment is not guaranteed. But you are paying interest on your mortgage. Since it’s a known amount, you can save money by paying off your mortgage.Join the ranks of 37% of Americans you have Repayment of their mortgage earlier..

If you really want to invest this money, put it in your Roth IRA, traditional IRA, or brokerage account. Traditional IRA is the only way to reduce income tax today. Unless you are over 50, the IRA has a $ 6,000 donation limit (in which case you can donate $ 7,000). Be sure to check with your accountant or investment adviser. get a qualification, Because you have a plan at work.

For example, Schwab, Vanguard and Fidelity are low-cost investment providers that can open an account with an IRA or brokerage firm. They have a range of mutual funds for your $ 8,000-bond funds, equity index funds or target date funds designed to be more conservative as you get older.

Finally, you will receive 10% (or some if you have too much blood) and donate more than usual to the charity in honor of your uncle. This money was unexpected. Keeping the flow of money moving is good for everyone. Yes, you may not get a tax credit, but this is a pleasant move. Or think thank you for the gift.

When it comes to inheritance, it’s important to have a strategy. The “divide and rule” strategy works whether inheritance is $ 1,000 or $ 100,000. Good financial behavior is based on a thousand small decisions. Commonly used inheritance is an opportunity for a stronger financial place and a more peaceful future.

Peace and prosperity to you,

Money Peace

CD Moriarty, CFP, is a MarketWatch columnist, personal finance speaker, writer, and coach.She is blogging at Money piece..Click to ask questions that may be published here..

Opinion: Americans tend to blow inheritance — Here’s how to be cautious and have fun:

http://www.marketwatch.com/news/story.asp?guid=%7B21004575-02D4-D4B5-4572-DA03871B3304%7D&siteid=rss&rss=1 Opinion: Americans tend to blow inheritance — Here’s how to be cautious and have fun:

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