# Windfall - Need money advice. **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 19, 2015, 3:38pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096 "2015-02-19T15:38:49Z")\ **Posts on this page:** 17\ **Page:** 2
**Author:** ![Maggie\_the\_Ocelot](https://avatars.discourse-cdn.com/v4/letter/m/df705f/32.png) [@Maggie\_the\_Ocelot](https://boards.straightdope.com/u/Maggie_the_Ocelot)\ **Post date:** [February 19, 2015, 10:28pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/21 "2015-02-19T22:28:01Z")
Oh, and this: > [@nearwildheaven](#): > > Downpayment on a house? Heck, buy one outright if you can. made me:eek: šŸ˜•šŸ˜•. Then I remembered that the rest of the country is not Los Angeles, where fixer-uppers in marginal-at-best neighborhoods start at $250k. ---
**Author:** ![SmellMyWort](https://avatars.discourse-cdn.com/v4/letter/s/ea5d25/32.png) [@SmellMyWort](https://boards.straightdope.com/u/SmellMyWort)\ **Post date:** [February 19, 2015, 10:38pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/22 "2015-02-19T22:38:48Z")
> [@Maggie\_the\_Ocelot](#): > > Okay, what Iā€™m hearing is this: > > 1. Donā€™t make any big purchases hastily. > > 2. That said, it would probably be a good idea to pay off credit card debt ASAP, though not longer-term lower-interest debt. > > 3. Consult with a CPA and/or a fee-based financial advisor. They should be able to tell me what to do with the rest of the $, as well as whether it would be worth it to put it toward a house. (Mom is a Real Estate Agent, so sheā€™s going to be pushing me hard to do that - but sheā€™s also biased in that direction, and I need a more objective opinion.) > Further questions, because I really do have no idea how these things work: > > Are the CPA and the Fee-Based Financial Advisor generally the same person? If not, what aspects of the money does each one specialize in? > > Will they handle doing my taxes as well? Because Iā€™m pants at my taxes, and I have a feeling Iā€™ve been doing it wrong for years. > > How much do their services usually cost? Is it per thing I have them do, a flat monthly fee, or something else? My financial adviser does not do taxes but it wouldnā€™t surprise me if there is some overlap. Have you done your 2014 taxes yet? If not, pick up one of the software packages; you can create and save multiple returns. You can be sure youā€™re doing it right this year, and then mock one up including the windfall info and see how it changes things. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 19, 2015, 10:52pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/23 "2015-02-19T22:52:35Z")
> [@Maggie\_the\_Ocelot](#): > > 1. Donā€™t make any big purchases hastily. As you said that youā€™re ā€œabout to inherit some moneyā€ but havenā€™t yet received it, _definitely_ donā€™t spend any of it yet. Just in case Something Bad happens. Regarding the idea of buying a house, I think it matters whether you plan to stay put for a while. If your goal is to move someplace else in a few years, it might be better to keep renting. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [February 19, 2015, 10:55pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/24 "2015-02-19T22:55:32Z")
> [@Maggie\_the\_Ocelot](#): > > : > > Are the CPA and the Fee-Based Financial Advisor generally the same person? If not, what aspects of the money does each one specialize in? > > Will they handle doing my taxes as well? Because Iā€™m pants at my taxes, and I have a feeling Iā€™ve been doing it wrong for years. > > How much do their services usually cost? Is it per thing I have them do, a flat monthly fee, or something else? Not usually. When we had a CPA for my wifeā€™s writing work I wouldnā€™t trust him for investment advice (and he never offered any) and I wouldnā€™t trust my financial adviser with tax advice, not that he has ever offered any either. 10 year ago it cost somewhere around $700 to have a CPA do our taxes - but after a few years things were stable and we moved to TurboTax. This was only because my wife was a writer and could use some non-obvious business expenses to reduce her net income. I donā€™t know anything about inheritance income, but if it is truly not taxable in your state you might get away with TurboTax only. Worth doing some research. I almost enjoy doing taxes with a program, but if you hate it it is worth getting a CPA. My wife is very organized, so for us it is a breeze. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [February 19, 2015, 11:48pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/25 "2015-02-19T23:48:44Z")
I wouldnā€™t hire any fee based financial advisor, many of them arenā€™t any smarter than you are. I would talk to a CPA and make sure you wonā€™t owe any taxes. Then Iā€™d pay off any debt higher than 8% interest. Why 8% - because thatā€™s what the stock market pays out conservatively over the long term. Then Iā€™d look at where you are and where you need (not want) to be short term. If you have an urgent need for a functional car because the POS you drive is impacting your ability to work, thatā€™s something you need to address short term. If you have a perfectly functional car but have always wanted a BMW - nope. Then Iā€™d look at where you need to be in general. Are you 50 with no retirement savings? Are you 24 with a job where the stability is questionable? Do you have kids? Are you married to someone who is likely to spend it if its in the bank? All those sorts of questions - but answer those questions slower. Put six months of living expenses into a savings account you donā€™t touch. And in the meantime, read the Bogelheads forum. It will take a while for the money to arrive and youā€™ll be fairly well educated about what you feel comfortable with by then. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 20, 2015, 2:55am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/26 "2015-02-20T02:55:56Z")
> [@Dewey\_Finn](#): > > If you die with some debts, wouldnā€™t your savings first go to satisfy your creditors before your heirs get anything? > [@D\_Anconia](#): > > Wouldnā€™t the creditors have first claim to the assets in the estate, over potential heirs? It depends on the state, the type of debt, who the heirs are (e.g. surviving spouse, minor children), and how you have structured the assets (e.g. payable-on-death accounts, trusts, gifts). YM **will** V. If you have sizable assets and care where they end up, it can pay to pay for advice. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [February 20, 2015, 3:00am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/27 "2015-02-20T03:00:16Z")
> [@Trom](#): > > For starters, do nothing. Donā€™t spend it, donā€™t but a house, donā€™t buy a new car. Take some time and learn about your options and what is the best course of action. The money isnā€™t going anywhere. You donā€™t have to make any quick decisions. This, in **spades**! You could take three to six months researching and thinking about what to do. Just dump the money into a FDIC insured six month CD in the bank. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 20, 2015, 3:06am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/28 "2015-02-20T03:06:03Z")
> [@MandaJo](#): > > > [@Dustin\_the\_Wind](#): > > > > Elaborate on the second point please? > > Well, for example, my home mortgage is at 3.75%. If I had a windfall, I could put it toward my mortgage. But what if I need to buy a new car in a few years? Probably I would not be able to borrow money for a car at anything close to that rateā€“so I would be better off to save the price of a car now, preferably in an interest-bearing something, and pay cash for the car. This is true for all sorts of purchases. Paying off very low interest, long term debt is bad if it means you pick up short-term high interest debt later. Another example; Apple, the giant company that makes the iPhone and Macintosh computers, is sitting on _$178 billion_ in cash. And yet a couple of weeks ago, they sold $6.5 billion in bonds (and have over $40 billion in total debt). ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [February 20, 2015, 4:00am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/29 "2015-02-20T04:00:21Z")
> [@Ruken](#): > > It depends on the state, the type of debt, who the heirs are (e.g. surviving spouse, minor children), and how you have structured the assets (e.g. payable-on-death accounts, trusts, gifts). YM **will** V. If you have sizable assets and care where they end up, it can pay to pay for advice. The vast majority of people donā€™t have trusts. So creditors will have first claim against estate assets. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 20, 2015, 4:02am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/30 "2015-02-20T04:02:35Z")
> [@D\_Anconia](#): > > The vast majority of people donā€™t have trusts. > > So creditors will have first claim against estate assets. So keep the money out of your estate. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 20, 2015, 4:06am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/31 "2015-02-20T04:06:06Z")
Or set up a trust. It doesnā€™t just happen on its own. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [February 20, 2015, 5:07am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/32 "2015-02-20T05:07:55Z")
> [@D\_Anconia](#): > > The vast majority of people donā€™t have trusts. > > So creditors will have first claim against estate assets. Life insurance is paid directly to the named beneficiary. Itā€™s not an estate asset, unless the estate is the named beneficiary. But thatā€™s dumb. (Some people still do it that way, though.) ---
**Author:** ![CairoCarol](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cairocarol/32/3825_2.png) [@CairoCarol](https://boards.straightdope.com/u/CairoCarol)\ **Post date:** [February 20, 2015, 5:32am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/33 "2015-02-20T05:32:02Z")
> [@vomit\_comet](#): > > Find someone to love and trust and give them a tax free gift. Done. But if she does that, the recipient of her largesse is going to start a thread on the SDMB that goes: > [@](#): > > **Windfall - Need Money Advice** > So, Iā€™ve just learned that **Maggie the Ocelot** is about to give me some money - not a huge amount, as money goes, but in the low 6 figures, WAY more than Iā€™ve ever had in a single lump before in my life. > > And I donā€™t know what to do now! What will your advice be? ---
**Author:** ![Senegoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senegoid/32/6606_2.png) [@Senegoid](https://boards.straightdope.com/u/Senegoid)\ **Post date:** [February 20, 2015, 6:24am UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/34 "2015-02-20T06:24:07Z")
Try to find out fairly quickly what your tax liability will be. As noted above, probably no federal tax, but possibly some state tax. Either way, if itā€™s any non-trivial amount, you may need to pay estimated tax on it right away to avoid some kind of penalties later. ---
**Author:** ![SmellMyWort](https://avatars.discourse-cdn.com/v4/letter/s/ea5d25/32.png) [@SmellMyWort](https://boards.straightdope.com/u/SmellMyWort)\ **Post date:** [February 20, 2015, 5:00pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/35 "2015-02-20T17:00:40Z")
> [@MandaJo](#): > > Well, for example, my home mortgage is at 3.75%. If I had a windfall, I could put it toward my mortgage. But what if I need to buy a new car in a few years? Probably I would not be able to borrow money for a car at anything close to that rateā€“so I would be better off to save the price of a car now, preferably in an interest-bearing something, and pay cash for the car. This is true for all sorts of purchases. Paying off very low interest, long term debt is bad if it means you pick up short-term high interest debt later. Actually, unless you have crummy credit it should be fairly easy to get a new car loan for 3.75% or less. ---
**Author:** ![Iggy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/iggy/32/3364_2.png) [@Iggy](https://boards.straightdope.com/u/Iggy)\ **Post date:** [February 20, 2015, 5:03pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/36 "2015-02-20T17:03:46Z")
High interest debt gets settled first. Short term savings such as for a home down payment that is anticipated in the next few years get set aside next. For longer term retirement savings the OP mentioned not having a 401K. She may want to consider a Roth IRA in addition to a SEP, Traditional, or SIMPLE IRA that (currently) can be rolled over into the Roth (a so-called [back door Roth](http://www.bogleheads.org/wiki/Backdoor_Roth_IRA)) as a means of leveraging the tax code to improve her retirement situation long term. The more years you have until retirement, the more advantage you gain from using the Roth. Of course any funds put into a Roth or any IRA should be funds you absolutely will not need to access until retirement. Early withdrawal taxes would apply. ---
**Author:** ![SpoilerVirgin](https://avatars.discourse-cdn.com/v4/letter/s/4491bb/32.png) [@SpoilerVirgin](https://boards.straightdope.com/u/SpoilerVirgin)\ **Post date:** [February 20, 2015, 5:12pm UTC](https://boards.straightdope.com/t/windfall-need-money-advice/713096/37 "2015-02-20T17:12:39Z")
> [@Iggy](#): > > Of course any funds put into a Roth or any IRA should be funds you absolutely will not need to access until retirement. Early withdrawal taxes would apply. Just to clarify, funds that you put into a Roth IRA can be withdrawn at any time without penalty (since they are after-tax). The _gains_ on those funds are subject to tax/penalty. However, itā€™s still a good idea to look at any retirement fund as untouchable. [Previous page](https://boards.straightdope.com/t/windfall-need-money-advice/713096.md?page=1)