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| What to do with inheritance: updated Posted by Kolbysfan on 1/4 at 9:06 pm Will be inheriting some $ soon, 40-50K from my pawpaw. I'd like to pay my student loans off but I don t want uncle same to rape me... What are my choices. Must I take the money out right or can I put it somewhere to save on taxes or if I do pay the student loan can I do it directly and save in taxes? This post was edited on 5/14 at 6:19 pm Reply • Back to Top |
| Unless any of the assets were "not previously taxed" such as 401 K or IRAs or some portion of the assets were in a trust established prior to 1976 there would be no tax on this disbursement. There could have been some taxes paid in probate of the estate but the amount you get (with the above exceptions) would be tax free. There would be special rules for any none cash assets you receive such as real estate but that appears not to be the case. Reply • Back to Top |
| That's good news. Thanks Reply • Back to Top |
| That's a good use for your inheritance. I've seen some people do some stupid shite with their parents hard-earned money. It's disgusting. Reply • Back to Top |
| It is a good idea to get the Student loans off your back. If you do pay off the loans, make sure you keep your records FOREVER. They are notorious for poor record keeping. Reply • Back to Top |
quote: Put the money in some type of fund like you don't even have it. Use it for down payment on house down the road or something that nature. Keep working on paying off your student loans. Reply • Back to Top |
quote: Assuming his student loans are at 6.8%; I'd note that mortgage rates are hovering around 4% right now. Edit: of course, student loans are unsecured, and the general rule is not to trade unsecured debt for secured debt (ie, a higher mortgage). But student loans are a special case because they're nondischargeable in bankruptcy. This post was edited on 1/5 at 10:03 am Reply • Back to Top |
| +5 Reply • Back to Top |
quote: interest is tax deductible and I wouldn't rush if I was him to spend the money he just got. When is aid use it for a d.p... like down the road. HOld onto the money a bit. Don't rush into a decision of getting rid of the money. Reply • Back to Top |
quote:Only if you make less than 75k or so. Not sure what the OP does. I was only eligible the first year I started working. Reply • Back to Top |
quote: This is almost always a bad reason for doing anything but especially this. As noted, there's a relatively low phase-out. If you make enough money to be in a high tax bracket you can't claim it. And if you don't make enough money to be in a high tax bracket it won't do you much good. And, of course, mortgage interest (once he does get a mortgage) is also deductible. Reply • Back to Top |
quote: That's what i was referring to. Reply • Back to Top |
| "Save money" for a down payment on a house (assuming OP even has aspirations of dumping money into real estate in the first place) and earn, at best, maybe 1 percent, while paying 6.8 percent on student loans. 1 - 6.8 = -5.8. So in effect, you're paying a premium to save money for a down payment on a house, which will then afford you the ability to pile another 4 or 5 percent on top of your 6.8 percent. Or just pay it off, earn 0 percent and wipe out all future interest, then start saving. There's no reason to go backwards if someone gives you the ability to do so IMO, unless your horizon for house buying is so incredibly short that the time value of money is worth 5.8 percent to you (which you're certainly entitled to think, but its financially insane). Reply • Back to Top |
quote: This is excellent advice, especially for those who have never had a nice chunk of change available to them. Typically there can be a lot of regret by people who rush to decisions a few years later. Much better advice than some of Chadboy's stock tips.   Reply • Back to Top |
| How much student debt do you have? Do you have any other savings/assets? Reply • Back to Top |
quote: thats why you take out a regular loan, pay off the student loan and then declare bankruptcy  Reply • Back to Top |
quote: This all assumes one has the financial restraint to not piss the money away if he goes off and pays his student debt off. It's not that easy to say that those new monies will be going in the right direction. He could go the hookers and blow route. Numbers don't always make cents. Boom, title of my new book. This post was edited on 1/5 at 1:41 pm Reply • Back to Top |
| Paying off non-dischargeable debt is not the worst thing in the world. That would be the hookers/blow/BMW purchase or investing in the stock market at high valuations with no experience thinking the investor will have a good outcome. Money, it can cause quite a conundrum. Nothing wrong taking 6-months or so to really think about the future and the best use/uses for the money. Reply • Back to Top |
quote: I can't believe it took that long for someone to mention H&B. I was waiting to see if it could get to the second page. Your logic is flawed, because he could use the savings in the same way. Reply • Back to Top |
quote: Sit on cash, wait for the Dow to hit 11,000-11,500 and go all in for a rise or two. Reply • Back to Top • Refresh |
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