Just inherited $50G. How to manage this?

No no no wrote:

Scorpion_runner wrote:

Don't you dare put all of that money towards your debt. Rich people don't do that. Have you money make money for you.

Take 25,000 and put it towards your debt.

put 7,000 towards credit card number 1, leaving you with 11,000 in balance

put 5000 towards credit card number 2, leaving you with 3000 in balance

put 3000 towards credit card number 3, leaving with a zero balance - paid off.

put 5,000 towards your home loan, leaving you with a balance of 9000

put 5000 towards your car loan, leaving you with a balance of 9000

Now take the other 25,000 and spread it across mutual funds and ETFs, where you can generate 8 to 15 percent profit annually over the next 10 years ( depending on the fund that you invest in. ). Let's say 10 percent just to be in the middle, that's 2500.00 a year in gains, which is another 20,000- 25,000 in 10 years. All while still paying your remaining debt monthly.

Hell, you could even take out some profit withing 5 years to put towards your remaining debt and knock it out.

The bottom line is to have that money make money for you without losing it all. If you use the entire amount to pay off everything, you would basically be throwing money away. Have that money make money for you, and use some of the profit to pay off everything, but your money would still be making money for you.

He is not rich. This is a totally different circumstance, with way different cash flow scenarios. Economies of scale applies here. He needs to pay off all credit card debt. Right there, he's generating positive cash flow and earning back that 10ish percent.

He can afford to milk the HELOC and car payment, not the credit card debt.

Not sure what fund you are getting annual 15% return in, most be a very risky emerging global market fund, which is usually dicey. In fact, i'd like a link to research on a fund that has earned 15% annually over a long period. Sounds like Bernie Madoff to me. It also depends on how old he is and how long he has to play the market. If he's 25, sure, go riskier. If he's 45-50, not so much.

This is a simple problem. Pay off all credit card debt. Take the remaining and fix windows (can't have water damaging house and leading to more costly repairs). Remaining money gets put to rainy day fund and save some for when the market really corrects (which it hasn't yet) to buy funds at cheap prices. We are six months or a year from the real full on bear run. Multiple experts agree on this.

Scorpion_runner wrote:

No no no wrote:

He is not rich. This is a totally different circumstance, with way different cash flow scenarios. Economies of scale applies here. He needs to pay off all credit card debt. Right there, he's generating positive cash flow and earning back that 10ish percent.

He can afford to milk the HELOC and car payment, not the credit card debt.

Not sure what fund you are getting annual 15% return in, most be a very risky emerging global market fund, which is usually dicey. In fact, i'd like a link to research on a fund that has earned 15% annually over a long period. Sounds like Bernie Madoff to me. It also depends on how old he is and how long he has to play the market. If he's 25, sure, go riskier. If he's 45-50, not so much.

This is a simple problem. Pay off all credit card debt. Take the remaining and fix windows (can't have water damaging house and leading to more costly repairs). Remaining money gets put to rainy day fund and save some for when the market really corrects (which it hasn't yet) to buy funds at cheap prices. We are six months or a year from the real full on bear run. Multiple experts agree on this.

I said anywhere from 8-15% (Possibly) over time. Not just a straight 15% year after year. The avg annual return during a three year period for an S & P 500 ETF was 13% !

And yes, he should pay off his credit card debt, but still put a good sum of that money in a taxable account so that it can earn money, especially while the market is in a bear run right now.

And investing in ETFs or Mutual Funds is not risky. It's smart investing.

If a person had have invested 10000 into Vanguard's S & P 500 ETF in 2008, it would be worth close to 30,000 right now. So he would be foolish not to take some of that money and invest it.

Racket wrote:

Scorpion_runner wrote:

I said anywhere from 8-15% (Possibly) over time. Not just a straight 15% year after year. The avg annual return during a three year period for an S & P 500 ETF was 13% !

And yes, he should pay off his credit card debt, but still put a good sum of that money in a taxable account so that it can earn money, especially while the market is in a bear run right now.

And investing in ETFs or Mutual Funds is not risky. It's smart investing.

If a person had have invested 10000 into Vanguard's S & P 500 ETF in 2008, it would be worth close to 30,000 right now. So he would be foolish not to take some of that money and invest it.

Just wanna go ahead and point out that if he had YOLO'd the whole thing this morning on FAANG options like I said then he could sell and buy more throughout the day and he'd be stupid rich right now.

UsedToBeKnowItAll wrote:

Scorpion_runner wrote:

I said anywhere from 8-15% (Possibly) over time. Not just a straight 15% year after year. The avg annual return during a three year period for an S & P 500 ETF was 13% !

And yes, he should pay off his credit card debt, but still put a good sum of that money in a taxable account so that it can earn money, especially while the market is in a bear run right now.

And investing in ETFs or Mutual Funds is not risky. It's smart investing.

If a person had have invested 10000 into Vanguard's S & P 500 ETF in 2008, it would be worth close to 30,000 right now. So he would be foolish not to take some of that money and invest it.

My recommendation is to pay off the credit cards and put the other $21k in a liquid emergency savings account. Then, when that account gets to $30k, you can start saving for other things. That proves you are able to save $9k. It means you're on the path to prosperity. Until you get to a point where you can save $9k within a year or two, you're on the edge of poverty.

Scorpion_runner wrote:

No no no wrote:

He is not rich. This is a totally different circumstance, with way different cash flow scenarios. Economies of scale applies here. He needs to pay off all credit card debt. Right there, he's generating positive cash flow and earning back that 10ish percent.

He can afford to milk the HELOC and car payment, not the credit card debt.

Not sure what fund you are getting annual 15% return in, most be a very risky emerging global market fund, which is usually dicey. In fact, i'd like a link to research on a fund that has earned 15% annually over a long period. Sounds like Bernie Madoff to me. It also depends on how old he is and how long he has to play the market. If he's 25, sure, go riskier. If he's 45-50, not so much.

This is a simple problem. Pay off all credit card debt. Take the remaining and fix windows (can't have water damaging house and leading to more costly repairs). Remaining money gets put to rainy day fund and save some for when the market really corrects (which it hasn't yet) to buy funds at cheap prices. We are six months or a year from the real full on bear run. Multiple experts agree on this.

I said anywhere from 8-15% (Possibly) over time. Not just a straight 15% year after year. The avg annual return during a three year period for an S & P 500 ETF was 13% !

And yes, he should pay off his credit card debt, but still put a good sum of that money in a taxable account so that it can earn money, especially while the market is in a bear run right now.

And investing in ETFs or Mutual Funds is not risky. It's smart investing.

If a person had have invested 10000 into Vanguard's S & P 500 ETF in 2008, it would be worth close to 30,000 right now. So he would be foolish not to take some of that money and invest it.

Scorpion_runner wrote:

Don't you dare put all of that money towards your debt. Rich people don't do that. Have you money make money for you.

Take 25,000 and put it towards your debt.

put 7,000 towards credit card number 1, leaving you with 11,000 in balance

put 5000 towards credit card number 2, leaving you with 3000 in balance

put 3000 towards credit card number 3, leaving with a zero balance - paid off.

put 5,000 towards your home loan, leaving you with a balance of 9000

put 5000 towards your car loan, leaving you with a balance of 9000

Now take the other 25,000 and spread it across mutual funds and ETFs, where you can generate 8 to 15 percent profit annually over the next 10 years ( depending on the fund that you invest in. ). Let's say 10 percent just to be in the middle, that's 2500.00 a year in gains, which is another 20,000- 25,000 in 10 years. All while still paying your remaining debt monthly.

Hell, you could even take out some profit withing 5 years to put towards your remaining debt and knock it out.

The bottom line is to have that money make money for you without losing it all. If you use the entire amount to pay off everything, you would basically be throwing money away. Have that money make money for you, and use some of the profit to pay off everything, but your money would still be making money for you.

UsedToBeKnowItAll wrote:

inthepdx wrote:

I call BS...11.5% on a credit card, 1.75% on a car loan. I have 830 credit score, I pay off my credit cards every month and my interest is still 23-28% should I choose not to pay them off in full.

I just double checked my cards that I pay off every month, and if I carried a balance, the interest would be 15% on both of them. Car loans generally come with some promotional interest rate that is very low. Just this month alone, several car makers are offering 0% interest for 72 months on new purchases. Also, if you've been a loyal customer with a card company for years, it is pretty easy to call and get them to lower your interest rates. I'm pretty certain I could call either of my card companies today and get them to drop my rates from 15% to 11% for 6 months or more. And you could definitely get a lower rate on balance transfers. Sometimes they offer close to 0% for 6-12 months on balance transfers.

OP - I ran some numbers, and your minimum payments on your cards alone would be at least $600 a month. Pay those off, and that should help you get cash-flow positive. I still recommend putting off the windows and paint for 6-12 months until you have proven you are cash-flow positive over that period of time, and are also contributing at least $200 a month to an emergency savings fund. I'd actually aim higher for your emergency savings fund, but I don't know what your situation is. I do $1000 a month into emergency savings each month. And then when that balance gets over well over $40k, I'll transfer $10k into an investment account. That way, I always have at least $30k in emergency savings.