We have a bit of experience with this since both of my husband’s parents are deceased and he got a sizable chunk of money when the estate was settled a few years back.
Here’s my advice:
This was your grandfather’s money. Remember that he worked for it and now you are the benefactor of his labor. Whatever you do with the money, please think of whether your grandfather would be pleased with what you are doing with the money.
That may mean putting the money aside to put down on a house. That may mean traveling through Europe, if your grandfather loved to travel.
My goodness… good luck and money loss seem to follow you around! At least this time it wasn’t stolen. Maybe you’ll find it when the snow melts. (But really, joking aside, that does suck).
Well, I have the advantage of not having any high interest loans. No credit card for me. I’m trying to avoid getting one until I’m out of school.
I guess it seems like the best option is 2k or 3k into an IRA, save some, and then do something fun. I think that Europe and Hawaii are out of the question right now…but my spring break is coming up in March, and I have always wanted to be able to actually do something during spring break.
Careful there. You can only contribute to an IRA if you’ve earned that much. If you have a job that you’ve made 3000$ this year, you can sock that much into your Roth (which does rock). However, if this is your only income, you’re out of luck. For more details on the Roth, check here: http://www.fairmark.com/rothira/essent.htm. It’s much more readable than the official site.
As for the tax hit, don’t worry about it. Parents can give their kids a certain amount of money each year (I think it’s 10K from your mum and 10K from your dad). You don’t have to declare it or pay tax on it.
I had a similiar situation when my mother died and we shared out a larger sum. Before doing anything with it, I sat down and wrote a list of what I wanted to buy and do, then over the next few weeks, took it out, reshuffled the list, added some and dropped others.
You did better by asking the SDMB. The advice here is very sound. Take it from someone in his early 40s, if I had your sad fortune, I’d put some of it away and let it grow. You’ve got time on your side for compound interest to have fun with your money.
Of course, you should also blow some of it on something you wouldn’t get otherwise. That’s what I did when I bought my laptop and Martin guitar.
(But really, joking aside, that does suck).