what do we do with 92K?

**safari** · 09-15-2006, 01:34 AM

Re: what do we do with 92K?

I'll try to address your questions and give my recommendations.

1. Investing in real estate market might not be such a good idea at this particular time. House prices already started going down here in California. I'd wait and see what happens to the housing market.

2. Roth IRA has a yearly limit on how much you can contribute. For 2006 that limit is $4000 for each individual. You won't be able to put $10,000 into Roth IRA this year.

3. Consider opening 529 Education account for your daughter. Any earnings grow tax-deferred, and distributions for qualified higher education expenses are free of federal income tax.

4. You didn't mention if you have any other debt besides your car loans. I recommend paying off the debts first. What interest are you paying on your car loan? Sometimes car manufacturers offer special rate, like 1.9% or 2.9% financing. If your rate is that low, you would be better off by keeping your money in a high interest savings account and earning 5.25% interest instead of paying off your car loan.

5. Consider investing the rest of the money in mutual funds. There are many threads on this board discussing various mutual funds. I recommend either Vanguard or Fidelity; both of them offer a variety of no-load mutual funds without transaction fees and low management fees.

**tcn_321** · 09-15-2006, 02:22 AM

Re: what do we do with 92K?

Thank you for the quick reply!

1. I think the houses here in C.A are way over priced to begin with so I am not surprised the prices are going down. That is why we want to purchase in New Mexico where the prices are still reasonable.

2. I forgot about the maximum yearly contribution limit.

3. I heard that these are not good because if your child does not go to college then you will be taxed a great deal to use the money for something non educational. Is this correct?

4. We have no other debt beside the loan on are cars. We have a interest rate of 8% on both car loans that is another reason we are leaning towards paying my car off and getting her a new one a much lower interest rate.

5. I will look into mutual funds. I have looked many times at the Vangaurd site because I currently have my company 401k with them.

**tcn_321** · 09-15-2006, 10:50 PM

Re: what do we do with 92K?

Anyone else able to shed some light on this? I have 97 views and one comment. Really looking to get some good advice.

**LuxLiving** · 09-16-2006, 04:18 AM

Re: what do we do with 92K?

I'd sit it in a MM account for at least a couple of months to get a real feel for EXACTLY what you want to do with it. Safari has good ideas for you...but some of them are jumping off points. Once you do them, they are hard to undo!

I'd read some on the internet about windfalls and inheritances (even though yours isn't one) and see what they advise you to do! Most say to WAIT a bit before you jump into the deep end with your cash!

With that amount of money involved I would definitely go to see a 'fee-only' financial advisor and see what they would recommend for YOUR family and YOUR needs - long term.

**mbhunter** · 09-16-2006, 07:20 PM

Re: what do we do with 92K?

Paying off the debt is an excellent idea. I'd wonder why you would want to acquire new debt for another automobile (or maybe for one of your current ones) as it sounds like you want to do. Shouldn't there be enough left over to buy a newer, used car outright? You have the cash now, which will save you money in the long term if you choose to buy a car paid in full.

**Bluezy** · 09-17-2006, 04:32 AM

Re: what do we do with 92K?

Let's see...

1. Buy a House: You never go wrong buying a property and declaring homestead, however, the market is not done going through price declines. Hold off until this market simmers down. Never move fast in an uncertain market.

2. Roth IRA: This would be an option in that in would make you hold on to this principle for five (5) years. But again, don't move too quickly.

3. Savings: Divide the settlement amount and open high interest online savings accounts. The money will be earning good interest and will be available to you within 3-5 business days.

4. Cars: I personally do not like pricey investments that depreciate as soon as you drive them off the lot. I would scale down to a smaller vehicle that your spouse would like with smaller or no monthly payments. Freeing up a high car payment every month would lead to more money to contribute to paying off other debt and NOT having to touch your settlement principle.

Congratulations on your windfall and your wisdom to plan with it wisely

**cschin4** · 09-17-2006, 05:31 AM

Re: what do we do with 92K?

If you really want a jump on the future, your best bet is to pretend you never got the money! By that I mean it needs to be put away in "untouchable" accounts and let it ride. Why not take 25K or so and put in a mutual fund earmarked for your daughter's education? The rest put into a retirement plan of your own.
Then just continue on with your financial plans as if that money is unusable. Just my opinion.

**terry1156** · 09-17-2006, 08:26 AM

Re: what do we do with 92K?

One issue that I haven't seem mentioned is have you set aside money for taxes that you will have to pay on this money? If taxes will be due, place that money aside first and you'll find you have a lot less to work with.

Think long and hard about buying property where you are a distance away. It's a pain when things go wrong if you don't have someone close that can take care of them (and everything in the world will go wrong if you have renters)

**Ima saver** · 09-17-2006, 09:21 AM

Re: what do we do with 92K?

I would definately not buy a house, especially if you live in another state. I thought that would be a smart thing to do also, so I bought 3 rentals. The tennants trashed the houses, called us constantly to fix things and would not pay their rent. We sold all 3 at a BIG loss.
I would put $4000 each in a roth IRA, some in a high yield emerency fund (5% or more) and then open an account in Vanguard Index 500. I would dollar cost each month into that Index fund!
Worry about your own retirement money before you set up money for your children's education. If your savings grow, you can pay cash for their education.

**Duchesse** · 09-18-2006, 09:56 AM

Re: what do we do with 92K?

[QUOTE=Ima saver]I would definately not buy a house, especially if you live in another state. I thought that would be a smart thing to do also, so I bought 3 rentals. The tennants trashed the houses, called us constantly to fix things and would not pay their rent. We sold all 3 at a BIG loss.

I couln't have said this better. I've been here too. Think long and hard about dealing with tenants.

**vsjhoc** · 09-18-2006, 11:04 AM

Re: what do we do with 92K?

Roth IRAs - they are available only if your annual income is somewhere around $95,000 (sorry, I don't remember the exact amount and am too lazy to look it up) so you will probably not be eligible. You can contribute to the regular garden-variety IRAs. I agree with others that you should stick all the money in a high yield money market account for a few months until you figure out what to do.

**vsjhoc** · 09-18-2006, 11:33 AM

Re: what do we do with 92K?

Originally posted by vsjhoc

Roth IRAs - they are available only if your annual income is somewhere around $95,000 (sorry, I don't remember the exact amount and am too lazy to look it up) so you will probably not be eligible. You can contribute to the regular garden-variety IRAs.

OK, I was on the right track ...

http://personal.fidelity.com/products/retirement/getstart/aboutira.shtml.cvsr?banner=12493134&immid=00045&psite=google&crtype=search&kw=Roth_IRA

**tcn_321** · 09-18-2006, 10:16 PM

Re: what do we do with 92K?

Originally posted by vsjhoc

Roth IRAs - they are available only if your annual income is somewhere around $95,000 (sorry, I don't remember the exact amount and am too lazy to look it up) so you will probably not be eligible. You can contribute to the regular garden-variety IRAs. I agree with others that you should stick all the money in a high yield money market account for a few months until you figure out what to do.

Thanks for the advise but if you read the qualifications for Roth IRA's you have to make below 95k as a single to make full contributions to your Roth or make below 150k if its a joint account.

**boefixepa** · 09-19-2006, 07:35 AM

Re: what do we do with 92K?

I can't imagine having so much money to play with...interesting position. I am by no means an expert, but this is what I would think..

1.) Find out what the tax burden is going to be add 10% for safe measure and but in a CD to mature in May or Early April. That way you earn as much interest as you can before having to dish it out.

2.) Set up three accounts. Personally I go with the Vanguard retirement funds. Two funds for you and your wife. The last fund probably a MM one for your daughters education. Divide the money up in the way you see fit. (Personally I don't feel it's right for parents to pay for there child's education in full, but to each their own. I saw too many kids taking advantage of it while I was in school and not learning any responsibility or accountabilty with regards to their parents hard earned money.)

3.) I'm guessing from the loan amounts you and your wife like nicer cars, nothing wrong with that. I'd certainly pay those off so that you are not losing the interest and vow never again to carry a car loan. Car are simply money eaters anyway you look at it. I personally can't understand why some people are so willing to spend money on them, but then people don't get my dogs either....so my cars just eat dog food and I have to pooper scoop!

what do we do with 92K?