Hi pf, my dad passed recently and left me with $65k. I think I've got a handle of how to "spend" it, but I'd love some critique/second opinions on my plan. I'm 24M live in NYC. I know I'm in a much better financial position than most, and I would trade it all in heartbeat to have my dad back. Obviously that's not possible, so I want to make sure I honor him by using his gift as wisely as I can.
Current financial snapshot:
Assets
- $11k Savings (Ally)
- ~$1.5k across checking accts
- $16.5k 401(k)
- $5.5k Roth IRA
- $49k Traditional IRA (rollover from previous employer)
- $3.9k HSA
Debts
- $17,750 student loans (avg ~3.5% interest)
- $5,800 on a CC (0% until April 2018)
I rent, and NYC has great public transit so I don't have any other debts. I pay off all of my other credit cards in full every month. I have roughly $4750 in expenses each month, with a budgeted take-home income of $5000 per month. My live-in girlfriend also contributes $950 to household expenses, so I save net $1200 per month. I'm paid biweekly, so I calculate my take home as two paychecks after taxes, 401k and HSA contributions. I'm on track to max out my 401k and HSA as I usually do each year. I also have a stock grant that begins vesting in August, this should be ~$40k before taxes on August and a little over $3k per month thereafter (also after taxes). I plan on divesting into a diversified portfolio immediately thereafter.
Thanks for making it this far. So here's my plan for the $65k:
- Pay off remaining student loans. Probably not the most financially sound in the long run since the interest rate is low, but this money was intended to replace what I paid out of pocket for my education.
- Increase Savings Acct to $20k (~4 month E-Fund)
- Backdoor Roth IRA for 2016 & 2017 (I can roll my current traditional IRA into my 401k to avoid pro rata rule)
- Mega-backdoor Roth IRA the remaining $27k by diverting my paychecks and living off the funds I have now.
I'm planning on moving from NYC in the mid-term (4ish years), so I'm not worried about aggressively saving for a downpayment on a house yet. I'm also fine with paying minimums on the 0% CC until the term is up and paying it off in full- those charges were incurred paying for funeral-related expenses, and I just happened to have the card form product changing an annual fee card. I don't plan on adding to the balance.
My stock grants will then be my post-tax savings starting in August. I guess my questions are: does this seem reasonable to you? Is there anything I'm missing? Figuring out a tax-efficient post-tax asset allocation will also be a hurdle, but I guess I would have a few months to decide on that. Thanks in advance for your insight!
Submitted March 07, 2017 at 11:56AM by throwaway_20170307 http://ift.tt/2mTlfHw
