Inheritance
- Thread starter CuzzinOlaf
- Start date
Short term long term.
If you already are into rental properties, maybe take the money and buy yet another property out right to rent, and then take that revenue and put it toward your other properties.
Given the higher interested on your rental property, I'd have a bias to pay that off first.
If you already are into rental properties, maybe take the money and buy yet another property out right to rent, and then take that revenue and put it toward your other properties.
Given the higher interested on your rental property, I'd have a bias to pay that off first.
So there are two thought processes.
No matter what.
1. Pay off credit cards
2. Have a rainy day fund of at least 6-12 months if you lose your job.
Option A
Keep your mortgages, you are getting that interest written off in a certain percentage for taxes and can make more money if you put this into a vanguard money market account with the risk level defined by your age and how close you are to retirement. That mortgage money is cheap. The more money you can get into your retirement funds the more it can gain compound interest and you just gave yourself a nice nest egg. Max out a Roth IRA if you don't have one and keep on doing that every year as it gives you more flexibility when you retire to balance your yearly taxes etc.
Option B
The one you listed to pay everything off early. It will feel nicer and then you don't have to pay a mortgage.
No matter what.
1. Pay off credit cards
2. Have a rainy day fund of at least 6-12 months if you lose your job.
Option A
Keep your mortgages, you are getting that interest written off in a certain percentage for taxes and can make more money if you put this into a vanguard money market account with the risk level defined by your age and how close you are to retirement. That mortgage money is cheap. The more money you can get into your retirement funds the more it can gain compound interest and you just gave yourself a nice nest egg. Max out a Roth IRA if you don't have one and keep on doing that every year as it gives you more flexibility when you retire to balance your yearly taxes etc.
Option B
The one you listed to pay everything off early. It will feel nicer and then you don't have to pay a mortgage.
I thought about a Roth IRA as well. Aren't there salary requirements for them? Is that amount based on your actual salary or adjusted gross income? I'm almost maxing out my 401k right now and have some stocks as well.
The remaining interest on both mortgages is over $70k on each property if paid for the remaining term. That's a lot of coin to throw away and I'd rather pay it off, at least I think.
The remaining interest on both mortgages is over $70k on each property if paid for the remaining term. That's a lot of coin to throw away and I'd rather pay it off, at least I think.
I inherited a small amount of money when my mother passed away, this was a few years ago and it wasn't anything more than thousand.
I thought I took a hit on taxes that year as it was considered income, I'll have to go pull my tax forms to be sure. But talk with someone to make sure you've paid uncle sam their take before going to spend it all!
I thought I took a hit on taxes that year as it was considered income, I'll have to go pull my tax forms to be sure. But talk with someone to make sure you've paid uncle sam their take before going to spend it all!
2017 roth max is 5500 for anyone under 49.
how much you can fund tapers off based on income;
Single filers: Up to $116,000 (to qualify for a full contribution); $116,000–$131,000 (to be eligible for a partial contribution)
Joint filers: Up to $183,000 (to qualify for a full contribution); $183,000–$193,000 (to be eligible for a partial contribution)
your mortgages are low and fixed? i might pay down some more too but i think you'll probably come out better ahead investing in something boring and reasonably steady long term, like the SPY ETF (SP500 ETF)
if there's ever a bout of decent inflation over these future years you come out ahead if you hold debt rather than not as well (paying debt back with cheaper dollars)
how much you can fund tapers off based on income;
Single filers: Up to $116,000 (to qualify for a full contribution); $116,000–$131,000 (to be eligible for a partial contribution)
Joint filers: Up to $183,000 (to qualify for a full contribution); $183,000–$193,000 (to be eligible for a partial contribution)
your mortgages are low and fixed? i might pay down some more too but i think you'll probably come out better ahead investing in something boring and reasonably steady long term, like the SPY ETF (SP500 ETF)
if there's ever a bout of decent inflation over these future years you come out ahead if you hold debt rather than not as well (paying debt back with cheaper dollars)
Up to $116k adjusted?
Both mortgages are fixed. It is tempting to pay one off because of the interest, but I understand your point with something long term.
To your point about a decent period of inflation, that can also turn against me too I would think. I could always pay off the rental and then invest the rest.
If it were me, I would pay off high interest, revolving debt and if not something I used regularly, close the account. Any cash left over I would put away.
I would actually keep a mortgage(s) as they are long term annuity payments and show long term credit worthiness. If ANY of these types I have, I might consider paying off a car. But I would leave mortgage(s).
I inherited property/home. In the next 12 - 18 months, Wife and I have decided to sell our Elgin home and move into the old house in WeGo. Why? As much as having a mortgage for the reasons I stated above, it, along with utilities and other incidentals will save $2,500 $2,600 per month and the proceeds from the Elgin house (we're nicely right side up on the mortgage), will give us ample money to start doing the rehab things we want to do to the WeGo house. Wife already has floorplans picked...
Other ancilliary reasons we're doing this;
1) Her sister now lives around the corner (they bought a house there about a year ago)
2) She's much closer to work in Wheaton or St. Charles (where they have offices)
3) We're much closer to the kids school (private through 8th grade), but once out, they WON'T be in U-46
I would actually keep a mortgage(s) as they are long term annuity payments and show long term credit worthiness. If ANY of these types I have, I might consider paying off a car. But I would leave mortgage(s).
I inherited property/home. In the next 12 - 18 months, Wife and I have decided to sell our Elgin home and move into the old house in WeGo. Why? As much as having a mortgage for the reasons I stated above, it, along with utilities and other incidentals will save $2,500 $2,600 per month and the proceeds from the Elgin house (we're nicely right side up on the mortgage), will give us ample money to start doing the rehab things we want to do to the WeGo house. Wife already has floorplans picked...
Other ancilliary reasons we're doing this;
1) Her sister now lives around the corner (they bought a house there about a year ago)
2) She's much closer to work in Wheaton or St. Charles (where they have offices)
3) We're much closer to the kids school (private through 8th grade), but once out, they WON'T be in U-46
I don't have anything high interest. I like keeping available credit and always thought it was beneficial to your credit score to show long term credit. Regardless, I have two mortgages on my credit right now, probably like $90-100k in available credit, and an 825+ credit score.
I did the math on both mortgages and I'd be paying roughly $70k on each of them over the remaining balance of the terms. I'll talk to my accountant to see she has any thoughts regarding this and which house is better to pay off, but I assume the rental.
That's awesome on the house. I have great tenants right now who plan to stay in the house for the next 5-8 years, hopefully. If that holds true, I'll be close to having my current house paid off. At that point, I could rent my current residence as well and buy something I really like (if I don't sell it next year, that is). I'll invest the rest or starting going nuts once both houses are paid off. Hell, that is saving $100k+ in interest alone by paying one off and the other early.
1. I hate my current residence because my taxes are just as high as Spring Grove, sub-par schools here, and I want more land/nicer house/bigger garage.
2. My commute is super short right now and it would be great to unwind on a 20 minute drive, right now I'm less than five minutes away.
3. My mother (who passed) lived with us and the basement was setup specifically for her. I definitely won't make good use the nicely finished basement for a bar or anything like that. I'll always consider it her space/home.
I did the math on both mortgages and I'd be paying roughly $70k on each of them over the remaining balance of the terms. I'll talk to my accountant to see she has any thoughts regarding this and which house is better to pay off, but I assume the rental.
That's awesome on the house. I have great tenants right now who plan to stay in the house for the next 5-8 years, hopefully. If that holds true, I'll be close to having my current house paid off. At that point, I could rent my current residence as well and buy something I really like (if I don't sell it next year, that is). I'll invest the rest or starting going nuts once both houses are paid off. Hell, that is saving $100k+ in interest alone by paying one off and the other early.
1. I hate my current residence because my taxes are just as high as Spring Grove, sub-par schools here, and I want more land/nicer house/bigger garage.
2. My commute is super short right now and it would be great to unwind on a 20 minute drive, right now I'm less than five minutes away.
3. My mother (who passed) lived with us and the basement was setup specifically for her. I definitely won't make good use the nicely finished basement for a bar or anything like that. I'll always consider it her space/home.
i'm not sure, a lazy easy way to do it is that you can fund the prior tax year up through 4/15 of the current year iirc. so if you are close or in the tapering area, you can be doing your 2017 taxes in 2018 and find out to the dollar what you're allowed to contribute for 2017, and still go back and do it. my roth ira is with fidelity and it was easy to set up.
First and foremost. Sorry to hear about your mother. It's hard loosing a parent. I can relate to that as I lost my father a few years back. I also came across some inheritance so I might be able to help.
Is this straight cash inheritance or from a work 401K that was in her name?
If it was straight cash and depending on how much it was (say 100K+) I would put it straight into IRA account. I bet you'll compound more interest over the years then paying your house off to ditch out on the interest. Unless you're strapped for cash monthly which it doesn't sound like you are?
If the inheritance was from a 401K, you'll need to move that over to a Beni IRA in your name. You'll have to pay tax on this if you take out ANY money. This is my current situation. I'm required to take a yearly distribution from this account and pay the tax. I take that money and stick in my personal Roth IRA account (Compounding interesting on compounding interesting).
Is this straight cash inheritance or from a work 401K that was in her name?
If it was straight cash and depending on how much it was (say 100K+) I would put it straight into IRA account. I bet you'll compound more interest over the years then paying your house off to ditch out on the interest. Unless you're strapped for cash monthly which it doesn't sound like you are?
If the inheritance was from a 401K, you'll need to move that over to a Beni IRA in your name. You'll have to pay tax on this if you take out ANY money. This is my current situation. I'm required to take a yearly distribution from this account and pay the tax. I take that money and stick in my personal Roth IRA account (Compounding interesting on compounding interesting).
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