What to do with small "inheritance"
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| Tue, 03-21-2006 - 11:10am |
Hi all,
My grandpa died a little over a month ago, and today my grandma told me that she is sending each of the grandchildren a $5000 check. She didn't say it was an early inheritance, but I suspect she is wanting to start distributing some of her estate now while she still has control over it.
Anyway, she specifically stated that each of our children were to have $1000 put in college funds, which of course we'll do. That leaves $3000 to our discretion.
My question is this: since I feel this is sort of an "inheritance," I want to do something with it that will be both lasting and meaningful, and that will honor my grandmother. I don't want it to get whittled away.
What would you do with it? Pay off debt? Put it in a retirement fund? Put all of it in the boys's college funds? Buy something meaningful? Set it aside for a major purchase like land or property for our eventual dream home?
For reference, if we took the $2500 remaining of dh's bonuses (which is currently slated for other uses, like new floors and activities for ds#1, but that hasn't been spent yet) plus the $3000 and put it all on debt, we would have all our cc debt paid by May of THIS YEAR, and our car paid off by October, and ALL our debt (including $5000 we owe interest-free to parents but not including our mortgage) paid off by May 2007. That's in contrast to the current schedule of having it paid off entirely by December 2007.
I'm not saying that's necessarily what I want or that we will do that. In fact, in a way, it seems wrong to take part of Grandma's hard-earned estate (and she did work hard, and lived frugally, still does) and use it to pay for past mistakes. Perhaps it should go into our nest egg instead.
What would you do? What do you think we should do?
Thanks for your thought!
Heather

Well, darnit, iVillage ate my answer...here we go again.
I personally have used both my inheritances from grandparents to make furniture purchases. The first one was smaller and I bought pretty cheap stuff that I don't have anymore but the 2nd one, I bought nice stuff that I will probably have all my life. I'm a big fan of these sorts of long lasting purchases with these sorts of gifts. Since your debt retirement date is so near and attainable, I would not use it on debt. If you are at all uncomfortable with that, you could put it in a long term, hard to access savings vehicle like a CD and avoid spending it until you are debt free (could fit nicely with the idea of saving for property purchase anyway). 6mos-1 year CD's are around 5% right now. Wouldn't go much longer than that because rates are climbing every day but you could tuck it into one of those and forget about it until you get your debt handled.
What a nice gift! The kiddos will have a nice little nest egg by the time they are 18!
Peg
I would suggest asking her Grandmother if she had anything in mind for the money. If not, I would feel free to do with it as you please. If it's in your best interest to use it to pay off debts, then go for it. If it would make you feel better to use it for something else, that's fine too. Sorry, I'm not much help here! :)
Good luck with whatever you decide!
Thanks for the responses so far! Dh is of a different mind on the money than I am. Of course, he will defer to my judgment since it's my inheritance, but I value his input. He thinks that we should put the money (minus the $2000 for the college funds) straight onto our debt, one big chunk. His thinking is that it is the debt that is stopping us from doing the things we want to really do in life (like unchain the corporate manacles and go into business as a family, or head to Africa or Central America on a humanitarian mission, or join an intentional community, or buy a big piece of land and move to the country to learn to be self-sufficient--we haven't decided on one of these options, but none of them is even possible as long as we are chained to debt, and all of them have their appeal for us). So the sooner we can pay it off, the sooner we can move on to something that we will feel is more fulfilling.
He also wonders, if we put the money in a CD (which is an idea I love, by the way), what we will do with it. Of course, I feel like $3000 (well, $3300 in a couple years) can be used to jump start any of those possibilities--we will need at least a little cash.
But I don't know. Anyone see things the way dh does and have additional thoughts for me? Anyone coming down firmly with me? Or does anyone have new ideas to contribute?
Thanks so much!
Heather
Heather,
Well, I can see both of your points. These are sort of tough choices. Can you approach it from a dollars and cents perspective? You could calculate what each options would cost/earn. I guess my other question is "is the debt really the only thing stopping you?". If so, I guess I lean more the direction he does. If not and those other things will keep you from really moving forward until that debt sunset you had already mentioned, then I don't really buy his argument and agree with you that the money would be well spent on jumpstarting your new direction. Maybe it's a matter of splitting and doing a little of both.
Wishy-washy enough?!? LOLOLOL
Peg
Shannon