Am I the only one who just noticed that it’s Wednesday? The holiday week with the free day is completely screwing me up.
Just to make this a relevant post:
Spend less!
Save more!
Invest!
Wee!
Handling a Windfall
What would you do if you were handed $10,000 tomorrow? $20,000?
The easy default answer–if you spend time in the personal finance world–is to pay off debt and save the rest.
But is that the right answer?
When my mother-in-law died, we inherited a little bit of money, a house that hasn’t been updated since the 60s, and a new-ish car that still has an active loan.
We also have about $16,000 in credit card debt and a small mortgage.
The Dave Ramsey answer would be to pay off the card at all costs and worry about the inherited house later, but that seems off. If we modernize the house and fix the things that are broken, we have a mortgage-free rental property. Our local rental market is strong; we should be able to clear $800 per month after expenses.
Is the right answer to pay off our card and scrape to get the house ready or should we fix up the house and use that new income to pay off the card?
My wife has also inherited an IRA that–due to its status as a Beneficiary IRA and the fact that there have been disbursements–has to be drained within 5 years. It’s not huge. After taxes, it’s about the size of the car loan. Should we make the $200/month payments, or cash out the temporary IRA and make the car loan go away immediately? Should we cash out the IRA and open one for my wife?
Although the cause was sad, these are good problems to have. If we manage this right, we’ll be more financially stable than we would have been for decades, otherwise.
I want your opinion, please.
2 questions:
1. House or credit card?
2. What would you do with a $10,000 IRA that has to be cashed out over the next 5 years?
Debanking
I’m overbanked.
The National Bank, Oamaru, built 1871: a prostyle Palladian portico on a neoclassical facade (Photo credit: Wikipedia)I’ve mentioned that before.
I won’t give up my herd of CapitalOne 360 accounts. I use those to track my savings goals, all 17 of them. I can’t drop my business accounts, my kids’ savings accounts, or the personal accounts that I actually use to spend money.
I do, however, need to simplify a bit.
Last month, I went through the hassle of transferring my 401k from two jobs ago and my IRA from my last job. Now, I’m down to just two retirement accounts. One is for my current job, and the other is a self-managed IRA with Sharebuilder.
Two down.
A few months ago, I went to yet another bank to close an account. My last job offered crappy health insurance, but balanced it out with an HSA. It complicated things, but the actual costs came to almost the same as the previous plan that didn’t have a high deductible. When I left, my HSA just sat there.
Last year, my oldest got braces, so I cleaned out the HSA ahead of time so we could pay up front and save 5% without paying interest.
Another one down.
That’s three accounts down out of 34.
Thirty-four?
Crap. That’s retirement accounts, business accounts, and personal accounts for two adults and three kids.
Bank 1 has the checking account we use, plus two savings accounts, one of which is where we store the rent money until we take a payday.
Bank 2 has a checking account, 16 savings accounts, and stock-trading account, a CD, and two IRAs for my wife and I.
Bank 3 has a checking account, and savings account for each of two businesses I own, a spare set of personal accounts, a savings account for each of the kids, and a checking account for my teenager.
Bank 4 holds nothing but my current 401k.
The only thing I can simplify without sacrificing my organizational jungle is to combine the personal accounts from bank 1 and 3. The problem is that Bank 1 has all of my bill pay information and there is still an account open for my mother-in-law’s estate. We keep that open just in case we find any other checks we need to cash. Bank 3 has my business accounts tied to my personal account and is the bank that my business partner uses, so that’s convenient to move money around.
I may be stuck.
Net Worth, April 2016
Last year wasn’t a good year for my net worth. It came with a $7000 drop.
Q1 2016, however, was a great quarter.
In December, we had $13,271 in credit card debt. At the time I took this screenshot, it was down to $3836.43. As of this moment, it’s down to $2640.91. If things go as expected this week, I should wake up on Friday to a paid-off credit card. I had to raid some of our savings accounts to make it happen, but it’s happening. Some of it was a tax refund, some of it was the fact that my mortgage payment went away in December.
That’s seven years of hard work, almost to the day. Seven years ago, I was researching bankruptcy, and stumbled across Dave Ramsey. Seven years ago, we were drowning in debt.
Next week, we’re free. No more debt, hanging over our heads. We’re free to take vacations. We’re free to finally save for college, when my son is 16, and stand a chance of being able to pay for it for him. We’re free to do…whatever we want to do. Our monthly nut after the debt is paid–only in fall/winter/spring when my wife is working–is roughly 1/3 of our take-home pay.
That’s how hard we’ve cut to make sure we can pay our bills and make debt die. We do have some things that would be considered extravagant. We’re not savages. But my car is 10 years old. My wife’s is 7. My motorcycles are 35 and 30; one of them was purchased before we cared about our debt.
Back to the net worth….
The biggest change came from our property values, which sucks. That was $36,000 of the difference, which comes with the painful tax bump to go with it. A large chunk of the savings increase was the money we set aside every month to cover the property tax bill, and that will go away next month.
Still, $641,000 dollars is a long way from nothing. I’m pretty happy.
Twitter Weekly Updates for 2009-12-05
- Guide to finding cheap airfare: http://su.pr/2pyOIq #
- As part of my effort to improve every part of my life, I have decided to get back in shape. Twelve years ago, I wor… http://su.pr/6HO81g #
- While jogging with my wife a few days ago, we had a conversation that we haven’t had in years. We discussed ou… http://su.pr/2n9hjj #
- In April, my wife and I decided that debt was done. We have hopefully closed that chapter in our lives. I borrowed… http://su.pr/19j98f #
- Arrrgh! Double-posts irritate me. Especially separated by 6 hours. #
- My problem lies in reconciling my gross habits with my net income. ~Errol Flynn #
- RT: @ScottATaylor: 11 Ways to Protect Yourself from Identity Theft | Business Pundit http://j.mp/5F7UNq #
- They who are of the opinion that Money will do everything, may very well be suspected to do everything for Money. ~George Savile #
- It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach. ~Franklin Delano Roosevelt #
- The real measure of your wealth is how much you'd be worth if you lost all your money. ~Author Unknown #
- The only reason [many] American families don't own an elephant is that they have never been offered an elephant for [a dollar down]~Mad Mag. #
- I'd like to live as a poor man with lots of money. ~Pablo Picasso #
- Waste your money and you're only out of money, but waste your time and you've lost a part of your life. ~Michael Leboeuf #
- We can tell our values by looking at our checkbook stubs. ~Gloria Steinem #
- There are people who have money and people who are rich. ~Coco Chanel #
- It's good to have [things that money can buy], but…[make] sure that you haven't lost the things that money can't buy. ~George Lorimer #
- The only thing that can console one for being poor is extravagance. ~Oscar Wilde #
- Money will buy you a pretty good dog, but it won't buy the wag of his tail. ~Henry Wheeler Shaw #
- I wish I'd said it first, and I don't even know who did: The only problems that money can solve are money problems. ~Mignon McLaughlin #
- Mnemonic tricks. #
- The Wilbur and Orville Wright Papers http://su.pr/4GAc52 #
- Champagne primer: http://su.pr/1elMS9 #
- Bank of Mom and Dad starts in 15 minutes. The only thing worth watching on SoapNet. http://su.pr/29OX7y #
- @prosperousfool That's normal this time of year, all around the country. Tis the season for violence. Sad. in reply to prosperousfool #
- In the old days a man who saved money was a miser; nowadays he's a wonder. ~Author Unknown #
- Empty pockets never held anyone back. Only empty heads and empty hearts can do that. ~Norman Vincent Peale #
- RT @MattJabs: RT @fcn: What do the FTC disclosure rules mean for bloggers? And what constitutes an endorsement? – http://bit.ly/70DLkE #
- Ordinary riches can be stolen; real riches cannot. In your soul are infinitely precious things that cannot be taken from you. ~Oscar Wilde #
- Today's quotes courtesy of the Quote Garden http://su.pr/7LK8aW #
- RT: @ChristianPF: 5 Ways to Show Love to Your Kids Without Spending a Dollar http://bit.ly/6sNaPF #
- FTC tips for buying, giving, and using gift cards. http://su.pr/1Yqu0S #
- .gov insulation primer. Insulation is one of the easiest ways to save money in a house. http://su.pr/9ow4yX #
- @krystalatwork It's primarily just chat and collaborative writing. I'm waiting for someone more innovative than I to make some stellar. in reply to krystalatwork #
- What a worthless tweet that was. How to tie the perfect tie: http://su.pr/1GcTcB #
- @WellHeeledBlog is giving away 5 copies of Get Financially Naked here http://bit.ly/5kRu44 #
- RT: @BSimple: RT @arohan The 3 Most Neglected Aspects of Preparing for Retirement http://su.pr/2qj4dK #
- RT: @bargainr: Unemployment FELL… 10.2% -> 10% http://bit.ly/5iGUdf #
- RT: @moolanomy: How to Break Bad Money Habits http://bit.ly/7sNYvo (via @InvestorGuide) #
- @ChristianPF is giving away a Lifetime Membership to Dave Ramsey’s Financial Peace University! RT to enter to win… http://su.pr/2lEXIT #
- @The_Weakonomist At $1173, it's only lost 2 weeks. I'd call it popped when it drops back under $1k. in reply to The_Weakonomist #
- @mymoneyshrugged It's worse than it looks. Less than 10% of Obama's Cabinet has ever been in the private sector. http://su.pr/93hspJ in reply to mymoneyshrugged #
- RT: @ScottATaylor: 43 Things Actually Said in Job Interviews http://ff.im/-crKxp #
- @ScottATaylor I'm following you and not being followed back. 🙁 in reply to ScottATaylor #
Yakezie Beta Chapter Search
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In an effort to promote the crap out of the Yakezie Beta Chapter, I’ve created a search specific to us. This will make it easy to find Beta Challengers to promote.
The current list in the search is:
Live Real, Now
http://www.YourSmartMoneyMoves.com
http://meinmillions.blogspot.com/
http://www.rentingoutrooms.com
http://www.yesiamcheap.com
http://SimpleVesting.com
http://untildebtdouspart.blogspot.com/
http://www.blondeandbalanced.com
http://jamesfowlkes.com/
http://www.mightybargainhunter.com
http://www.beatingtheindex.com
http://www.thepassiveincomeearner.com
http://www.prairieecothrifter.com
http://sustainablepersonalfinance.com/
http://www.toddswanderings.com
More will be added as I have time to dig through the forums. If you’re a Beta Challenger and don’t see your name, leave a comment below and I’ll get you added ASAP.
