The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: evensjw on December 14, 2016, 07:54:10 PM
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I just received an unexpected windfall of ~$5000. Not a life changing amount but enough for me to stop and consider the best course of action.
My current situation:
33
I make about $85K salary plus ~$7500 from a few side gigs
$145K mortgage on a $240K house @ 3.75%
No credit card debt
No car loan (own a 2008 4cyl Tacoma)
No other debt
$90K in 401(k)
$10k in an S&P 500 tracking index fund.
Thanks
J
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In your shoes, I would probably put it in an IRA.
In mine, I would put it in my house/car savings fund.
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I'd open a Roth IRA
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I'd open a Roth IRA
+1 on the IRA, though I might opt for traditional depending on your taxes.
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Buy 5k worth of REITs
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you're doing awesome. I'd probably put it in retirement accounts (either 401k or open a roth IRA)
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I'd put it in a tIRA at vanguard into a fund that fits my AA, and then find the $500 to max the 2016 contribution.
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Looks like you are doing a good job with your finances.
I'd suggest you blow a portion of it on something you want / need, or something you want to do, then stash away the rest.
What good is money, if you can't enjoy some of it?
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I'd put 4500 in an IRA and blow the rest on tacos/bourbon. $500 is like 10 Fridays worth of really good tacos and bourbon!
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I'd open a Roth IRA
+2
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Buy 5k worth of REITs
zaz, do you have a particular recommendation of whose REIT to buy? I keep getting emails from Fundrise but they come across as a bit scammy.
Cheers
John
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I'd open a Roth IRA
+2
I'm confused on the Roth IRA suggestions. If I'm Mustashing correctly, don't I expect to be paying close to zero tax in retirement?
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I'd open a Roth IRA
+2
I'm confused on the Roth IRA suggestions. If I'm Mustashing correctly, don't I expect to be paying close to zero tax in retirement?
Hedge that bet.
Also, different investments are taxed differently. REIT's do better in tax exempt/deferred accounts.
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500,000 swedish berry penny candies.
They're 12.72 calories each, which means you would need to eat 157 to meet a 2000 cal/day daily caloric requirement. That works out to 8.72 years of food. They seem to store reasonably well, so this is an added bonus for you preppers out there.
Might want to add a multi-vitamin to the mix for peace of mind which will increase costs somewhat, but that's still reasonably efficient. Not to mention the add-on bonus of not having to waste time cooking or figuring out what you're going to eat for eight years!
TLDR - Take your life back from the oppressive consumerist supermarkets . . . eat only penny candy.
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I'd open a Traditional IRA... While you are making 85k/yr, it seems better to lower your tax now and worry about the rollover to Roth later when you have a smaller tax bracket
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Another vote for tIRA. Personally I would invest in in VTSAX or similar. The real estate market is pretty frothy atm and half of your net worth is already in RE (the equity in your house).
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I'm confused on the Roth IRA suggestions. If I'm Mustashing correctly, don't I expect to be paying close to zero tax in retirement?
Yes, if your expenses are low enough you can maintain low taxes in retirement if you plan properly. However you do need funds that can be used to bridge between stopping working and having access penalty free access to your tax deferred savings (usually about 5 years). Roth IRA contributions can be a useful part of those bridge funds. If you're single, you're close to the point where traditional IRA contributions are not fully-deductible, so Roth might make sense in your tax situation. If your quoted income is total married income then your traditional IRA contributions are fully deductible and I'd just worry about building your FIRE bridge when you're closer.
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Probably spend $500 of it on junk, and put the rest into our investment funds.
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500,000 swedish berry penny candies.
They're 12.72 calories each, which means you would need to eat 157 to meet a 2000 cal/day daily caloric requirement. That works out to 8.72 years of food. They seem to store reasonably well, so this is an added bonus for you preppers out there.
Might want to add a multi-vitamin to the mix for peace of mind which will increase costs somewhat, but that's still reasonably efficient. Not to mention the add-on bonus of not having to waste time cooking or figuring out what you're going to eat for eight years!
TLDR - Take your life back from the oppressive consumerist supermarkets . . . eat only penny candy.
LOL. I was trying to think of something really ridiculous to spend $5k on to post here in response, but I'm not sure i can beat that.
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I would invest it according to you investment plan.
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I'd open a Roth IRA
+2
I'm confused on the Roth IRA suggestions. If I'm Mustashing correctly, don't I expect to be paying close to zero tax in retirement?
If your MAGI is low enough to take a deduction for a tIRA, I would do that.
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Save it, we are a boring lot.
I'd open a Roth IRA
+2
I'm confused on the Roth IRA suggestions. If I'm Mustashing correctly, don't I expect to be paying close to zero tax in retirement?
If your MAGI is low enough to take a deduction for a tIRA, I would do that.
If OP is single he very likely makes too much for tIRA.