You can find my original thread here
http://forum.mrmoneymustache.com/ask-a-mustachian/what-should-i-do-with-an-inheritance/msg850262/#msg850262I was caught between paying off my student loans and buying a house with cash. What I decided to do was based on a lot of reading on this forum, some advice from my Executive Director, and a whole lot of math.
I paid off $53,705.44 to have a zero balance on my student loans.
I paid off $56,482.03 to have a zero balance on my wife's student loans.
I ended up paying $18,202 for my inheritance tax
My lawyer gets $6,800 as a flat fee based on the estate.
The money that we had left over was just enough for 20% down on a 7 year old home. We shopped around and found a great place that fits our needs and is in a great community. Our monthly mortgage payment will be ~$750 a month with similar utilities. Our current rent is $700 a month. We also have a storage unit currently, which is $60 a month. That will be gone once we move into the house in January, making up the difference, plus a bit.
The only other debt we have is our cars, which amounts to ~$24,563. We plan to take the extra money saved from not having student loan payments and put that towards the cars to pay them off early.
We tried to be smart when it came to buying a house, and the one we chose was due to the down-payment of 20%. We didn't want to dip into our emergency fund to pay that, so we shopped around at a lot of places. We did 20% to avoid the private mortgage insurance, we chose the next city over because it saves a lot of travel for me. My wife has to drive a greater distance, but it's all interstate travel, and the increase is probably 15 minutes max. We chose a newer house to avoid the big issues like needing a new roof or heat and air units, and we have a small yard to keep cost of maintenance down. Once we pay off the cars we will have freed up $1,100 a month, not counting having a zero balance on all credit cards, which we finally have control of. We've even been cooking meals at home using a crock-pot, which has saved an unbelievable amount of time and stress. We're going to start planning for side hustles in 2016, and I really can't be more excited to finally be almost completely debt free, a home-owner, and able to start saving for retirement! That leads me to my one question:
We are planning on opening Roth IRAs in January, but without having the full $5,500 for this year, would it still behoove me to open one this year with just $1,000?