My (25) grandmother passed away and put me in her will. My aunt just accepted an offer on the estate ($425k) so I get 1/5 from that and 1/5 of what was in her bank account (roughly 70k). My grandmother bought me a 1991 Honda Civic years ago that I want to fix and I'd like to see an eye doctor. I have $1,200 in credit card debt and a $12k car loan.
I grew up poor and only recently have been able to live financially comfortable. I can pay my rent and usually pay a bit more for my bills but I have no clue what to do with a large sum of money. Should I invest in something? The only thing I really need to spend money on is my Civic and get my eyes checked, and pay off my debts.
Coming into money for the first time
byu/Total-Boss-4434 inpersonalfinance
Posted by Total-Boss-4434
10 Comments
Pay off the debt. See the doc.
Do you have an emergency fund? Some savings in case anything happens? If not, start there. 3-6months expenses worth is a good place to be.
After that, if there’s still money, open a Roth IRA and contribute.
Then if there’s still left, you can invest in a regular brokerage.
Both that and the IRA should be a total market index fund (like VTI).
And don’t forget to keep a little for any smaller things for fun. Don’t want to save everything and never enjoy life.
I’d probably look into paying off all that debt and seeing the eye doctor
Next be real with yourself in regards to your job. If you plan to stay with it long term and don’t see yourself leaving the area I’d look into buying yourself a home
Don’t go putting 100k down, but shop around and try to find a place that’d be cheaper than your rent
1. Read the section in this sub’s wiki on “windfalls.”
2. Do the basics mentioned – pay the debt and go to the doc.
3. Don’t talk to anyone about it.
4. Don’t do anything g for at least 6 months but more like a year. Make your plans. Be SURE about what you want to do with the money without rushing.
Sorry for your loss. But yeah. The first thing I would do if I woke up in your shoes is to pay off the debt and see the doctor. I’m unsure if the 12K loan is on a 30+ year car. I hope not. But I would fix that transportation situation such that you have 1 inexpensive reliable vehicle. Do NOT buy a new car. You don’t need a new car at 25. It’s one of the worst financial purchases you can make at 25 and not having a lot of money. (I get 70K is a lot to you right now, but it won’t be later on). Carve some of it out as your emergency fund if you don’t have one already. At minimum 3mo of expenses. No more than 6mo right now. You do NOT touch that money under any circumstances unless there’s an actual emergency. Think broken arm, blown engine, or needing to buy a new refrigerator because yours died or job loss.
With whatever is left over. Put it in a high yield savings account and sit with it for a bit. Your right that you should do something with it. And it’s not going to sit in that account very long. Just take some time to do research into what you want to invest in. IDK how close you were with your relative. But just make sure you deal with those feelings first before you make a move. Now is not the time to panic and just go buy something because you can. Or go buy something something while your mourning. You need a financial goal for this money. Are you wanting to start a retirement fund? Are you wanting to buy a house? You need a plan. Putting in an HYSA buys you a little bit of that time. I don’t know what your situation is exactly so I don’t know what’s right for you. But again. Waking up in your shoes and assuming I have nothing saved for either. I would start with focusing on my retirement. Because….
At 25, your wealth multiplier is around 52x. Meaning that in principal.. it would be reasonable to expect that whatever you end up investing in so long as it tracks the market. Should go up ~52x. So 1K becomes 52K by the time your around ~67. More or less. It’s not a guarantee. But it’s a reasonable expectation. So you don’t need a lot of that right now to positively improve your future. But there’s a serious potential here to mess this up by buying the wrong things in a panic or emotional driven buy. Your young enough it’s recoverable. But this could really positively impact your life. The recommendations here are to consider low cost index funds for long term investing. Either in a brokerage, especially if you want to access this money sooner. Or an IRA. Or something of that sort. IRA would be for retirement. There’s a ton of different options here, but you need to decide how this money is best utilized to help your future. And NEVER buy what anybody tells you to buy until you understand what your getting into and why.
Just don’t blow it on sour patch kids and cars. Ok.
I’m sorry for your loss. Use it for the important things but try not to touch the money. Open am account in a place like Fidelity, put it in an ETF fund, and let it grow. Don’t just go through it.
Pay off debt. Go to doctor. High yield savings account. Long term cd’s investing. And start to put some into a retirement account. Legit sit down with someone at a Wells Fargo. Or any independent accountant or financial advisor. Growing up is weird but you will get through. It sorry for your loss. Amazing you got something from your grandma . Bless her spirit.
Betterment app is a good money app to do everything in one spot
Buy Voo and forget about it. Go about your day to day living exactly how you are now.
Let the money sit in your bank account for 6 months and don’t do anything with it. Think long and hard about every financial choice you want to make with that money, and you’ll make the best decisions just by thinking and waiting. Hope this helps.
Dump the Civic, waisting money you can get a 2022-2023 car for 10-15k
dont tell a soul you are getting any money….