Post # 1
So my dad’s mom passed away the day after Thanksgiving this year. And it turns out she left me and the other gradkids 20k each. I was not expecting this at all seeing as she had a live-in care giver for 10 years, honestly I thought there would be no inheritance left.
So, given an influx of an unexpected 20k, what would you do with it?
I’ve put my main choices in a poll (cuz I love polls), but if you clicked other, please explain in the comments.
Post # 2
I would do a combo of a few. Divide and pay off personal debt, some in savings, some in investments then the rest on student loans. Unless you have really high interest rates on your student loans, to me it would make me feel better to have some of the debt totally paid off.
Post # 3
What is your student loan payment per month and what interest rate do you have? I would pay off your debt only because it’s really nice to have it off, so I would pay off credit cards then student loans.
Post # 4
- Wedding: September 2012 - Southern California
I think that I would pay my personal debt, take a vacation (because you only live once), & put the rest towards paying down the student loans. 😊
Post # 5
Pay off debt starting with the highest interest personal or student loans and working down until there wasn’t any debt left or I retained debt at low interest – so basically choice 5 but along interest rate lines.
Post # 6
I haven’t been making payments because I was on an income based repayment plan that accounted for my incredibly low salary as an outdoor educator. Then they went into deferment since I went back to school to get my teaching credential and masters in education.
If I make a large chunk payment before October then I will lower my monthly payments for the life of the loan. Interest rate is around 6%.
Post # 7
I would pay off 5k personal debt, 12k student loans, and then spend the other 3k on a vacation.
Post # 9
Whatever yields the highest return.
I was a dope and answered the quiz before reading your post and said stock mkt because I don’t have debt with high interest rates at this point (just mortgage but the rate is low and with the fact you can tax deduct interest payments it’s not worth paying extra ATM.)
If you have a debt with an effective interest rate over 3-4% it’s worth paying that off, as the stock market return at the moment is below that (in fact currently it’s pretty blah, so arguably your threshold should be even lower.. but typically that’d be an average rate of return on the market).
If you have multiple sources of debt pay off the one with the highest interest rate first.
It seems counter intuitive to think of doing this as. “rate of return on your investment” but in fact by paying off high interest debt you are saving yourself from high interest payments in the future, and thus your money is yielding you the highest return.
Post # 10
If your student loan is anything like a UK loan, it is never intended 5o be paid off. The more you earn the more you pay and they add interest. Dont waste the money on something they don’t expect to be repaid.
Save most of it for a rainy day you never know what’s around the corner
Post # 11
- Wedding: September 2017 - Pearson Convention Centre
Neither of us have student loans or personal debt, I would want to pay one year of our mortgage
Post # 12
All of what the above posters said! Pay off personal debts (in total) and high interest rate student loans (up to 10k or so) put some into savings (at least 2.5k, preferably more) and reserve a small portion to spend freely and joyfully (start learning to invest? Take a class on how to do that? Take a vacation? Treat your self to something once you’ve reached a goal, etc.).
Then I would maintain my previous debt payments on the remaining student loans and pay those off that much faster.
My condolences on your grandma’s passing but how sweet that she was able to leave something to each of her grandkids.
Post # 13
Always personal debt first. Most people have student debt, not everyone has credit card debt
Post # 14
I clicked the wrong answer too- I clicked pay off personal debt before seeing the personal debt and student loans option. I assume your personal debt interest rate is above 6%, so I’d pay that off immediately then put the remaining majority towards the student loans (say, $10k). I wouldn’t spend it on a vacation- getting that debt squared away will feel much better than any vacation would. For the other $5k I’d keep it as a little emergency fund- if you have personal debt you may not have an emergency fund yet. Without one you could end up racking up more personal debt again should an emergency happen and that interest rate could be more than the deferred student loan interest rate.
Post # 15
If you’re in the UK please don’t use it to pay off your student loan!! I don’t know a single person who has managed to do it before it’s written off!
I’d pay off personal, don’t invest in stock because unless you know what you’re doing you will lose money.
personally I’d put half in regular savings then half in a bond with high interest to get you a bit extra.
At the the moment I would use an extra 5k on my wedding and 5k on my honeymoon then rest in savings/on new house!