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How should I distribute 200k?

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Author Topic: husband died now what?  (Read 2885 times)

jaikab

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husband died now what?
« on: December 05, 2017, 08:41:13 PM »
My husband died this August and I was left with 200,000 since he did have life insurance.

My husband (28 years old) and I (30) didn't want to wait to move to an ideal place (Portland?) to live the way we wanted. We lived in a somewhat rural town in Virginia where cars rule as means of transportation. We wanted to get to the point where we could actually get rid of our car to cut expenses, or favorite thing to do. So, my husband would bicycle to work frequently since we lived close enough to his job. Unfortunately, he was hit and killed by a driver one morning while bicycling to work. I am left with two daughters, ages 1 and 3.

Currently I and the girls are receiving survivor benefits of 1665 total a month. I don't have a job (I was and still am a stay at home mom), so that is the only income that I currently receive. My rent is 700, phone 27, and car insurance 78. That leaves the rest to gas, clothing, car maintenance, and other expenses. Also having a job would affect my SSI, and having a job would also mean that I would need childcare, which would be a huge expense. As of now, having a full time job doesn't make any sense until my children are old enough to go to school (they receive benefits until age 18). I do live with family which helps immensely. I also do have about 11,000 from savings. My husband and I would talk about our finances all the time, but when it came down to it, he was the head in that department and it was his forte.

Anyways, I never imagined to have that amount of money all on one check. That's where I want the advice. I don't even see it as an option to use that money for daily living. I would like to invest it, but have no idea what to do. Vanguard and Betterment have been my top choice so far for investing. What would be the best thing to do with the money to benefit my family the most in the future?

surfhb

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Re: husband died now what?
« Reply #1 on: December 05, 2017, 08:57:24 PM »
I would read this book and follow it to a T

https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926/ref=sr_1_1?ie=UTF8&qid=1512532551&sr=8-1&keywords=j+collins+investing

By far the best financial book ever written...and I've read them all.

I wish you and your 2 girls all the luck and love there is. 
« Last Edit: December 05, 2017, 09:03:00 PM by surfhb »

frompa

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Re: husband died now what?
« Reply #2 on: December 05, 2017, 08:58:05 PM »
Wow, Jaikab, first of all, I'm so sorry for your loss. You must be reeling. 

This is no time for you to have to be making big financial decisions, so I would suggest that the best thing you can do it take the $200k, break it down into manageable increments of $20k, $50k, whatever makes sense to you, and put it in Certificates of Deposit (CD's) that will mature in 6 months time, year's time, maybe up to four years' time, (go with the highest interest rates, within the realm of how far you want them spaced) then when the CDs mature, put them in indexed funds with low administrative costs, such as Vanguard.  It would probably be best if you put $100k in one financial institution and $100k in another, so as to divide the risk and be below the FDIC insured max.  Also, the stock market is a little high right now, so you are probably safest putting this money into even indexed funds a bit at a time, rather than all at once, so that if/when it drops, you are not risking too much.  In the meantime, in CDs, the money will be relatively safe for the short term, and will at least do a little to earn its keep.

Best of luck, and again, I'm very sorry for your loss, which must be incalculable.   
   

change_seeker

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Re: husband died now what?
« Reply #3 on: December 05, 2017, 10:24:30 PM »
jaikab-

My heart goes out to you for your loss.  My wife's brother passed away unexpectedly in February at the age of 32.  My sister-in-law is going through much the same process as you.  I would second the advice to move slowly.
« Last Edit: December 17, 2017, 10:04:10 PM by change_seeker »
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ShoulderThingThatGoesUp

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Re: husband died now what?
« Reply #4 on: December 06, 2017, 04:15:39 AM »
I am so sorry. I think the advice to split it into different term CDs is great, so that you can deal with it and invest it gradually.

MrThatsDifferent

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Re: husband died now what?
« Reply #5 on: December 06, 2017, 05:38:12 AM »
My thoughts are with you and your family. I canít imagine what youíre going through. I hope they caught the person responsible. Iíd sue their ass.  The advice of going slow is good. Give yourself time to process and read up on managing finances so you can work out a strategy. Invested well and that 200k could be 400k in 10years and 800k in 20 years. I wish you all the best.

Dee18

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Re: husband died now what?
« Reply #6 on: December 06, 2017, 08:49:07 AM »
I'm so very sorry for your loss.  I did want to point out that you could work part time, if you choose to, and not have your benefits decreased.  The triggering earnings amount is adjusted each year.  Here is what I found on the Social Security website:
"If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2017, that limit is $16,920."

So you could earn up to $16,920 and still get your full benefit.  I am not suggesting you should do so now, by any means, but you may want to at some point as that extra $1000+ per month could make a huge difference in your financial future.  While daycare is expensive, there may be low cost options for part time.  Where I live churches proved Mother's Day out for almost nothing and I know part time workers who found that to be a good option.  Or just tuck that info away until the children are in school.

I agree with the poster who said break the money into increments and purchase Certificates of Deposit that mature in different years for any money you might need in the next 5 years.  You can find out current rates at Bankrate.com. That site also gives star ratings to the banks.  FDIC insurance now covers amounts up to $250,000 per depositor so you don't have to worry about that.  I recently purchased some CDs from a highly rated bank, doing it all online, after find the best rate at Bank.rate. 

For money you won't need for more than five years, you could certainly invest it and Vanguard is a great place to do it.  (I have not used Betterment personally.) Jim Collins's stock series, as suggested above, is a great resource on investing.

I also would consult with an attorney about a possible settlement from the driver who struck your husband, if you have not already done so. You and your children are entitled to that, and drivers are required to have insurance.

debbie does duncan

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Re: husband died now what?
« Reply #7 on: December 06, 2017, 09:37:58 AM »
You have my sympathies. This will be a tough season for all three of you. Be kind to yourself.
Hire a CPA. Do not use a close family member who thinks they know " stuff ".
Ask for recommended CPA s that your Dr/Dentist uses.
 Go in knowing you may not remember stuff ...so plan it. Write down specific questions and leave space for the answers. Ask short term and longterm questions. Write down the answers.
If you feel rushed...stop, take a breath and remind yourself or the CPA that you are newly widowed and you need time to learn how to reprocess without grief in your thinking.
 Big money needs to be planned out . This will give your time and space to thing about your future lives. Do not mention how much you have to others. People get weird around new big money.

I do like your plan to stay put  and be a SAHM until the girls are in school.
 It gives you a time frame and a feeling of security.
Good Luck honey

honeybbq

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Re: husband died now what?
« Reply #8 on: December 06, 2017, 10:03:36 AM »
I am so sorry for your loss.


I have to ask since I'm thinking about your entire financial picture:
Is there no wrongful death judgement or anything from the person who hit your husband? Or any indication there will be in the future?

calimom

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Re: husband died now what?
« Reply #9 on: December 06, 2017, 10:49:38 AM »
I'm so sorry for your loss, jaikab. My husband was killed by a drunk driver 10 years ago when my youngest was the same age as your youngest. It's really rough, please know things get more manageable eventually. It can take some time. I was and am still grateful for the SSA survivors' benefits. Remember your own benefit ends when your youngest is 16, though theirs goes till 18, or 19 if still in high school.

The above advice to not make immediate financial decisions is spot on. I put my life insurance proceeds into CDs and a money market until I felt like I had enough information to make some investment choices. Since joining this forum, I've made some additional changes. Everyone's different, but you may find it necessary to consider working at some point. It would be hard to have to enter the workforce in your late 40s with no skills or job history. Lots of time for you to figure out your path, right now just focus on your children and healing.

Wishing your family the very best, and feel free to PM me if you like. I have a couple of non-financial resources you might find helpful.

terran

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Re: husband died now what?
« Reply #10 on: December 06, 2017, 11:53:51 AM »
I think most of those suggesting putting the money in a CD are referencing the common advice on managing a windfall (I know "windfall" is an insensitive thing to call a life insurance payment, but from a financial perspective where the money is from doesn't really matter) to take 6 months to a year to make any investment decisions. Given that, I think it would be reasonable to not worry about all this laddering business and just stick it all in a high yield savings account or no penalty CD.

Looking at Ally Bank, which usually has pretty near the top rates, you'd get 2.35% interest on a five year CD, and your return would actually be lower if you laddered since you'd need some CDs with shorter terms to get the ladder going. If you just go with a single no penalty CD (1.5% interest) or savings account (1.25% interest) you'd only be "losing" $1700-2200 in the year compared to the 5 year CD.

None of these CD or savings account options are optimal anyway, so I just wouldn't worry too much about figuring out the laddering thing. Just put it all in one savings account or no penalty CD and then follow the advice in the link above to take the next 6 months to a year to deal with everything else in your life that you need to deal with and to figure out a long term plan for the money.

I would also 2nd the Simple Path to Wealth book suggestion. If you did nothing else but read that book and follow its advice during the next year you'd have done everything you need to do from a financial perspective.

tarheeldan

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Re: husband died now what?
« Reply #11 on: December 06, 2017, 12:05:07 PM »
Sorry for your loss

mm1970

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Re: husband died now what?
« Reply #12 on: December 06, 2017, 12:53:32 PM »
I am so sorry for your loss.

Move slowly
Hug those babies
Don't worry about going back to work any time soon. 

WootWoot

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Re: husband died now what?
« Reply #13 on: December 06, 2017, 03:18:34 PM »
I don't have advice to offer, but I do want to offer my sympathies to you and your children.

lhamo

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Re: husband died now what?
« Reply #14 on: December 06, 2017, 08:13:36 PM »
I'm so sorry.

If you don't already have a degree/experience that can land you into a decently paying career once your kids are school age you might want to look into what benefits might be available to you for higher ed as a single/low-income mom.  There might be subsidies available for child care, special scholarships etc.   Might be something to plan for 2-3 years down the road when your oldest is in kindergarten and child care won't be such a big expense.

Keep in mind that your kids benefits will not be reduced if you go back to work.  It is great that you have/can live on the survivor benefit alone while taking some time to figure things out, but I think you can probably do much better financially by retraining or starting your own business eventually.

Again, so sorry.   I got survivor benefits when my dad died and I am always so glad to know that it is one of the many great benefits our system provides to people who need it.  I'm glad a little bit of my taxes are going to help you and your girls during this challenging time.
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NoStacheOhio

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Re: husband died now what?
« Reply #15 on: December 07, 2017, 06:17:40 AM »
My husband died this August and I was left with 200,000 since he did have life insurance.

My husband (28 years old) and I (30) didn't want to wait to move to an ideal place (Portland?) to live the way we wanted. We lived in a somewhat rural town in Virginia where cars rule as means of transportation. We wanted to get to the point where we could actually get rid of our car to cut expenses, or favorite thing to do. So, my husband would bicycle to work frequently since we lived close enough to his job. Unfortunately, he was hit and killed by a driver one morning while bicycling to work. I am left with two daughters, ages 1 and 3.


This is horrific, and I can't imagine the pain. You mentioned life insurance, but did you receive anything from the driver's insurance? Have you been in contact with them? Depending on the circumstances, that could be a settlement larger than the life insurance, and would make things significantly easier for your family.
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radram

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Re: husband died now what?
« Reply #16 on: December 07, 2017, 07:17:35 AM »
Thank you for reaching out to someone for advice BEFORE acting. Best move you can make.

I agree that you should be comfortable before investing, and you are probably still too close to act.

I disagree with the CD ladder technique. That is a great strategy to generate money to live off of short time (3-5 years) with little to no risk of loss. It doesn't seem like you need that AT ALL with this $200k, since you have a dependable revenue stream that exceeds your spending for at least the next 10 years.

You must decide your level of acceptable risk. You mentioned possibly leaving the area for a new start. I think you also realize it is too soon to make such a decision. That might end up being the best thing for you and your family, but not today. If this $200k might end up being used for this move within the next 5 years, I do not think the stock market is the best place for it.

I believe the best place for this money today is the best interest rate you can get at a bank with immediate access to the money once you decide your long term plan. Ally or Synchrony at around 1.3% would be by recommendation.

If you know you are staying put and do not need the money for 10+ years, then the Vanguard total stock market index (VTSAX) is probably the best place to be. If you are not comfortable with that level of risk, I would recommend the 60/40 stock/bond balanced fund(VBIAX) but again only if you know you will not need the money for 5-10 years.

I respectfully disagree with the prior advice of hiring the CPA used by your Doctor/DDS. Your income will simply be too low to make an accountant of any kind worth the money they will charge. You can definitely manage this amount of money yourself, especially if you keep coming back here.

Absolutely stay home with your children until school. Best gift you can give to them and your husband. All this other stuff means shit compared to that. Make sure to plan plenty of time with grown-ups.

merula

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Re: husband died now what?
« Reply #17 on: December 08, 2017, 07:04:18 AM »
My husband died this August and I was left with 200,000 since he did have life insurance.

My husband (28 years old) and I (30) didn't want to wait to move to an ideal place (Portland?) to live the way we wanted. We lived in a somewhat rural town in Virginia where cars rule as means of transportation. We wanted to get to the point where we could actually get rid of our car to cut expenses, or favorite thing to do. So, my husband would bicycle to work frequently since we lived close enough to his job. Unfortunately, he was hit and killed by a driver one morning while bicycling to work. I am left with two daughters, ages 1 and 3.


This is horrific, and I can't imagine the pain. You mentioned life insurance, but did you receive anything from the driver's insurance? Have you been in contact with them? Depending on the circumstances, that could be a settlement larger than the life insurance, and would make things significantly easier for your family.

It's possible that the driver had insurance that was very low limits. However, if frompa and her husband had uninsured motorists coverage on their own insurance, that could be something.

I'm so sorry for your loss. Please PM me if you have any questions on the auto insurance piece of it. I work in insurance, and these things are complex, but I'd be more than happy to do anything I can to help you out.
« Last Edit: December 08, 2017, 06:37:10 PM by merula »

FLBiker

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Re: husband died now what?
« Reply #18 on: December 08, 2017, 08:43:35 AM »
I also want to express my condolences.  I'm a bike commuter, and I know my wife worries about this.  I'm so sorry.

In terms of practical stuff, I encourage you to take merula up on the insurance angle.  More money couldn't hurt. 

And in terms of investing, I really like the book "The Only Investing Guide You'll Ever Need" by Andrew Tobias.  Very, very briefly, though, for money you're not planning to touch for 7-10 years (or more), I'd put it in Vanguard index funds, admiral class, something like 70 / 30 or 60/40 domestic / international (ie 70% VTSAX, 30% VTIAX).  I'm not a big proponent of bonds, but if you want to be more conservative you could put 10-20% of that into bonds ie VBTLX.

For the money you do need w/in 7-10 years, CDs or money market accounts.

Take care!

calimom

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Re: husband died now what?
« Reply #19 on: December 08, 2017, 07:34:04 PM »
Just checking in, how are you doing? Hopefully you've read the responses to your initial post and feel supported and cared for here.This is a group of really good, smart people Much of the financial advice is excellent and can be filed away till such time that you can sort it out. That you're thinking in such terms is great! Many new widows make terrible money mistakes that can't be undone. Overspending, expensive "advisors" and the list goes on. Kudos, you. The first holiday season post loss can be brutal. So glad to hear that you have what appears to be good family support. It helps so much.

Just a note on the survivors' benefits: Next year you'll receive a Representative Payee Report. The primary question the government asks is "did you spend all the funds received" Always answer yes, and of course raising children is expensive with pre-school, housing, utilities, fuel for your car, and food. It's tempting, as financially responsible people, to wish to save some of the SSA benefits for further education or to help your children get a start in life. Under the SSA rules, any funds saved out of your benefits must be turned over to the child upon graduation from high school, or age 18. Not a problem for a college bound senior or otherwise responsible young adult, but recipe for disaster for another type of kid. Always save for your children out of "your" money - dividends, interest, earnings from employment, etc. At some point you might wish to investigate 529 savings plans and the like.

Take care, and thinking of you and your sweet kids.


Bracken_Joy

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Re: husband died now what?
« Reply #20 on: December 08, 2017, 09:12:56 PM »
OP, you've received better advice than I could hope to give. So I will just add my sympathy, and my well wishes for you and your children.

Just checking in, how are you doing? Hopefully you've read the responses to your initial post and feel supported and cared for here.This is a group of really good, smart people Much of the financial advice is excellent and can be filed away till such time that you can sort it out. That you're thinking in such terms is great! Many new widows make terrible money mistakes that can't be undone. Overspending, expensive "advisors" and the list goes on. Kudos, you. The first holiday season post loss can be brutal. So glad to hear that you have what appears to be good family support. It helps so much.

Just a note on the survivors' benefits: Next year you'll receive a Representative Payee Report. The primary question the government asks is "did you spend all the funds received" Always answer yes, and of course raising children is expensive with pre-school, housing, utilities, fuel for your car, and food. It's tempting, as financially responsible people, to wish to save some of the SSA benefits for further education or to help your children get a start in life. Under the SSA rules, any funds saved out of your benefits must be turned over to the child upon graduation from high school, or age 18. Not a problem for a college bound senior or otherwise responsible young adult, but recipe for disaster for another type of kid. Always save for your children out of "your" money - dividends, interest, earnings from employment, etc. At some point you might wish to investigate 529 savings plans and the like.

Take care, and thinking of you and your sweet kids.

Calimom, thank you for always taking the time to reply in threads like these. I wouldn't wish your experiences on anyone, but it lifts my heart to see you reaching out to people going through similar hardships. I just wanted to let you know that it just... I'm really grateful you're on these forums. Your actions are noticed and appreciated even by those who aren't directly benefiting from them at the time.
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jmwagner5

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Re: husband died now what?
« Reply #21 on: December 08, 2017, 10:47:50 PM »
My husband died this August and I was left with 200,000 since he did have life insurance.

My husband (28 years old) and I (30) didn't want to wait to move to an ideal place (Portland?) to live the way we wanted. We lived in a somewhat rural town in Virginia where cars rule as means of transportation. We wanted to get to the point where we could actually get rid of our car to cut expenses, or favorite thing to do. So, my husband would bicycle to work frequently since we lived close enough to his job. Unfortunately, he was hit and killed by a driver one morning while bicycling to work. I am left with two daughters, ages 1 and 3.


I am so sorry for your loss Jaikab.