In the next few months I will receive approximately $40,000 as an inheritance. I will describe my current financial situation and my ideas on how to use the inheritance. Any comments or suggestions are welcome.
I am a 31 year-old academic in a secure position (tenure-track). My ten month salary is $66K. I have an emergency fund of $15K, mutual funds worth $13K, and owe $100K at 4.75% APR on a house valued at $150K. I do not have funds specifically set aside for retirement, but am on a pension plan that will offer 70% of salary after 35 years of service. I have no credit card, loan, or auto debt, though my two vehicles are each over 10 years old. One in particular is nearing the end of life.
My first idea is:
- Use 30% (~12,000) to invest in a retirement account that will supplement the pension.
- Use 30% (~12,000) to apply to mortgage principal and reduce the length of the mortgage term (I've checked that there are no pre-payment penalties)
- Use 30% (~12,000) to save and use as a down payment when my oldest vehicle needs to be replaced.
- Use 10% (~4,000) for, well, whatever we want to. A family vacation, hobby gear, etc.
Am I unwittingly doing something dumb or irresponsible? What suggestions do you have?
Submitted August 02, 2017 at 04:16PM by greaznasty http://ift.tt/2f9dPO0
