Hey Blogging Away Debt readers! I’m looking for a little input this week about something happening in our lives.
Last December, my beloved Meemaw passed away. I was (still am) absolutely heartbroken and it was very unexpected. She lived an amazing life and was pretty healthy. In the end, her colon cancer returned (she’d had a colostomy bag my whole life). When she went to go have surgery to remove the newest polyps, they took her off her blood thinner before the procedure. This ultimately led her to a massive stroke.
In January, I got a notice that I was one of six people named as beneficiaries in her trust. This was a surprise to me as we are adopted into the family. I assumed everything would go to her blood relatives (and I honestly only wanted the family photos from her house), but I’m extremely thankful for whatever she’s left.
I know that she had a net worth in the millions, but I have no idea how much will be left to me exactly. However, I’ve been considering some of the things I might do with a larger sum of money.
First, of course, I’d pay off debts (the IRS and our car first, student loans if there’s enough). Having these things paid off would free up a lot of income month-to-month and make it easier for us to save. My husband has mentioned looking at houses as well, but with the way the market is right now, I don’t think that’s the smartest decision unless we have a really big chunk we could put down AND eliminate all other debts.
I also contemplated booking a vacation to Disney World (one of my Meemaw’s favorite places). I know this isn’t the most responsible way of spending any of the money, but I know it’s something she’d love to know we did.
When all is said and done, I got what I really wanted – the big box of photos from her house. Everything else is just a wonderful added surprise.
All of that being said, how would you all spend an inheritance? What things would you focus on? I’d love to hear your thoughts in the comments!
Amanda Blankenship is the Director of Social Media for District Media. In addition to her duties handling everything social media, she frequently writes for a handful of blogs and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.
Pay off whatever debts you’re able to cover. Then, put the rest aside in a high yield savings account, and do nothing with it for six months. During that time, I would probably talk to a financial advisor and get some input.
Rash decisions rarely work well. Do what you can to avoid the temptations that would come along with a potential windfall.
Thanks for your comment! Depending on the amount, we will definitely be chatting with a financial advisor. We are going to pay off the IRS in full and then throw whatever we can at other debt (car and student loans, medical bills). I hadn’t considered a HYSA – so thanks for that suggestion. We will look at some!
I’d take a small percentage and do something in honor of your grandma and put the rest into a CD or some other savings account for a year and give it some thought.
I think you should continue to focus on getting your spend under control to pay off debt and build that budgeting/discipline muscle to live within your means long term.
In the meantime, you’ll have a perfectly funded emergency fund/retirement savings/education savings depending on how much you have. I bet it would have brought your grandma great joy to have provided that security for your family.
Thanks! I was thinking 10% or less would go to a trip or something in honor of my Meemaw. We had a lot of really memorable family vacations growing up and I’d love to do something like that with my little one in remembrance of her.
We’ve managed to save $600 in just two weeks with only eating out once a week and having no spend days! So I think we are getting on the right track there. But you’re right – the security this could provide us is just amazing! My husband said that even if it was just enough to pay off the IRS, it’s a blessing!!
Holy boats!! That is HUGE savings. My hats off to you for ignoring the siren call of quick dinner out. It’s easier said than done.
It’s definitely been a huge change but we are loving the results!
With any windfall payment (whether inheritance, a tax refund, or a large work bonus), I take a balanced approach. I would agree with paying off debt, but I am at a point in life where I don’t have any debt except my mortgage and I might do better investing a windfall into the market. Depending on the amount I personally do the following: 1. Pay off any debt except mortgage (and maybe a car loan if you have one and low interest). 2. Take a little bit for fun (no more than 10%). 3. Invest the rest of the money (whether this is home improvements, some actual investment like a 529 plan for kids or putting the money into an IRA).
Thanks for your comment! I like that approach as well. I think that we’d definitely want to focus on paying things off if we have enough (especially the IRS), but I also like the idea of taking a small amount for fun and investing some in our future too.
If you get any sort of inheritance you need to throw as much at the taxes as you can. If there’s any leftover, toward the car payment. Then save an amount as an emergency fund. If there’s still money left you can start to pay down student debt.
I would put a pause on Disney and just have a really nice dinner out instead. Disney is hella expensive and I suspect your Grandma would want you to be fully financially stable before taking an expensive vacation. Not saying no to Disney forever, just no for right now until you’re more financially secure. Your G would probably not be happy if you took an extravagant vacation and then had an unexpected emergency arise with nothing saved and tons of debt still…..
Thanks for your comment! Our first priorities would certainly be paying off debt and fully funding our EF.
getting out debt would be the first thing The car, student loans, definitely the IRS. Since you said she loved Disney I would make it a point to go. Don’t have to stay in the most expensive place but where your daughter will have memories and you can talk about your Meemaw. Congratulations on the money, use it wisely.
Definitely! The IRS will be the first people to get paid. I’ll be thrilled when that is off our shoulders. Then the car, student loans, and padding our emergency fund. And yes – she was a pro at going to Disney on the cheap. We’d always stay at the value resorts, bring our breakfast and lunches with us to eat at the hotel, and mapped out our trip to see the most/not spend too much. I learned how to book a Disney trip that won’t break the bank around age 10 haha. We went probably a dozen times in my life so far.
My grandparents left me some money with the explicit request that it was used to finish paying off my students loans, which is what I did. I didn’t have any other debts/needs at that time. Things I would have prioritized over the student loans:
-high interest debt, like credit card balances.
-Necessary health care for which I didn’t have the necessary money (like if I’d needed a bunch of dental work or a medical test insurance wouldn’t cover).
Thanks for your comment! That makes sense. We will definitely be putting it towards debt first (IRS, car, student loans, medical bills).
I definitely agree to getting rid of the IRS debt first. Then evaluating the other debts and see what you want to prioritize in what order.
Since you have gone to Disney about a dozen times you should definitely consider what age your daughter should be for your whole family to enjoy the experience the most and have memories of it.
I would like to know how you have been able to cut down on eating out? What strategies are you using? This is something my family struggles with a lot. I have yet to figure this out.