Inheriting $56,000

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Inheriting $56,000

CountingWizard: Jul 6, 2004

RisqueBarber posted:

My unmarried (no children) well-off Aunt just passed away and left me and four other cousins her 401k from her most recent company. The lawyer handling the estate called me yesterday and told me my individual amount is $56,000 and will be issued by Fidelity. Before I get into my own assets for advice, because this money is from her 401k it has not been taxed yet so any money I take out will take around a 20%(i think) tax cut. However, I can transfer it to my own IRA and have it not taxed. I can also take some money out and leave the rest in the IRA, only taxing some of the funds. I do not have to either leave it all or take it all out.

Me:
Currently 28 years old
$48,000 a year salary
The only debt I have is the $6,000 left on my student loans, as I just paid off my car.
In savings I have $1,700.

I know I was at least going to pay off my student loans and maybe put my savings up to $10,000 for an emergency fund. But because this money is being taxed maybe I should just leave the emergency fund in the IRA and only pull it out when I have an emergency?

Anyway, any help would be appreciative.

I would just put it in IRA unless you are at a point in your life where you want to make a down payment on a house. Do not waste this on paying off a low interest student loan, a car, tv, or wedding. $39,000 is enough of a down payment to take away a ton of headaches from home-buying and trying to figure out where you are going to get the money for all the closing costs, etc.

# ¿ Jul 30, 2015 14:51

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# ¿ May 17, 2024 10:29

CountingWizard: Jul 6, 2004

Nail Rat posted:

But he has less than 1 month of expenses saved up and at his current rate, getting to a six month emergency fund will take about ten years, since all but $100 of his surplus each month goes to student loans. This is a really god chance to get out of that.

He goes to the ER once for a relatively minor thing, or his car needs something non-trivial done, his whole emergency fund is just flat out gone.

Also $39k may not be enough of a down payment on a house depending on the situation. In the Chicago area, that wouldn't even be 20% down unless it was in a crack house or the western/far south suburbs no one wants to live in. Plus why the gently caress would you buy a house with $1700 in savings and only able to add $100 to that per month with your budget?

First, emergency savings is overrated unless you have major financial commitments like a hous3 payment; medical costs can be ignored for years or completely, and there are alternatives to having a personal car. Second, he would be buying a house for many years most likely, and by then it could be assumed he will have higher income.

I live in Austin, and $39,000 would be a good enough 20% down payment to get some small houses in the populated parts of the city, and more than enough to get a comfortable house in the surrounding area. I think Chicago has more affordable housing than Austin, especially considering we have had a housing crisis for the past few years, with not enough apartments or houses to meet our growing population. Only real estate inflated areas like big California cities and New York City would be a problem.

# ¿ Jul 30, 2015 16:40

CountingWizard: Jul 6, 2004

Nail Rat posted:

I can't figure out if you're a troll or not, but either way you're not a real counting wizard.

Your opinions on emergency savings are stupid and dangerous(it doesn't matter that he doesn't have "big expenses," he has over 2k a month in expenses. he'd literally be on the street in only a couple months), and you're just flat-out wrong about the Chicago real estate market. You can't have a place for under 300k anywhere that people actually want to live that's in good condition, and even that would be a great find.

It would probably help if you understood what kind of perspective I'm taking in these opinions. If he cashes out the inheritance, he is far more likely to spend it on things he wouldn't otherwise spend it on because it is simply available to spend. I was pointing out the fact there are still tools and strategies at your disposal even if you don't have or can't afford to save for an emergency fund. I'm also arguing from a point where the OP has family nearby he can live with if he were to lose his job. In either case he would still have access to the money if there was an emergency if it is an inherited IRA.

# ¿ Jul 30, 2015 18:39

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Inheriting $56,000