Hi Mustachians!
I’ve loved reading this forum and website over the past few months, and I’m hoping you can give me some advice.
Recently, I’ve been blessed with a wonderful stroke of luck. I owned a small percentage of my dad’s company that just recent sold. I’ve now got extra money, and I don’t know what to do and am hoping you all can give me some advice. After taxes and paying off a small family loan, I’m left with about $140,000 of extra money.
Here’s some background info:
Personal:
• I’m 33 and single, no kids.
• I have a job I like but don’t love. I make around $70K per year with a 15% bonus, so I average a little more than $80K
• I own a townhouse (2/1.5) that’s worth pretty much exactly what I owe: $92K. I paid $135K.
o I want to move into a larger townhouse (3/2.5) in my same neighborhood mainly for the increased outdoor space.. It would cost about $120K. to purchase and, ideally, I’d like to do about $30K in renovations. The plan is to stay here for a long time. Prior to 2008, these townhomes sold for around $220K. It seems like a good value for the money, and I love the neighborhood.
Financial:
• No debts except my mortgage.
• Expenses: Approximately $2300/ mo. That includes a $915 mortgage payment.
• 401K: I have around $31,000 right now. I’ve been stupid in the past and haven’t contributed what I should. My full bonus in March plus my extra paycheck (I get paid three times that month) will go to my 401K. This will allow me to keep my 8% contribution rate, get the match, and hit $17,500 at the end of the year.
o Below is the allocation for the 401K. These are the only three index funds I have to choose from.
• 50% S&P 500 Large Cap
• 20% S&P 500 Mid Cap
• 30% S&P 500 Small Cap
• Roth: I have just over $16,000 in VTSAX. I just started contributing and will make this a priority to fully fund every year.
• Taxable Accounts: I’ve got about $5500 right now in Vanguard Total International Stock index fund. Any extra money each month will get funneled here. It should be between $500-$1200 per month.
I don’t know if I should keep that $140K in the bank until I determine if I can buy a three bedroom townhouse. I’d need a lot of that for a down payment and renovations. Or do I pay off my house now? I’m at 4.5% on a 15 yr so that equals about $300/mo in interest.
I apologize for the long post. I’m open to any and all suggestions. Right now, I’m just stuck on what to do. Thanks for your help!