Hello Fellow Mustachians,
I could use some guidance in figuring out what to do with a small inheritance I received from my grandmother, who passed away a few months ago. The total amount is about $8500. $1700 is earmarked for our 5-month old son and we are likely to open a 529 account for him using that as seed funding. It's the remaining $6800 that I'm unsure about. These seem to be the options:
Pay down debt. We have a mortgage (340k remaining, 4.875% APR), I have a student loan (37k remaining; 3% interest), and we have a loan from my husband's mother (13k remaining, 0% interest).
Bulk up our emergency fund (16k current balance) which was depleted when we got an unexpected tax bill earlier this year.
Put into retirement fund (we have about 200k saved right now; we are 38 and 40 years old).
Put toward new car fund. Neither of our 2 cars (both paid off) is particularly family friendly; we are likely to sell my Mini Cooper in the next year & replace with something bigger - but we won't get enough from the sale of the Mini to fully fund a purchase.
Do something sentimental with the money. My sister plans to buy artwork to remember grandma by; my husband and I talked tonight about creating a mini "endowment" that would throw off a small sum each year that we would use on, say, grandma's birthday to do something special in remembrance. The latter idea could also double as additional emergency savings.
It feels like the obvious answer is debt, but there's something so clinical and unsatisfying about doing that. It's not like we'd be able to pay anything completely off; we would just make a dent.
What say all of you?