What to do with inheritence?
I just got a $25K cheque in the mail from the estate of my mom's best friend who died last year. I knew it was coming eventually, but was surprised when I opened it today.
Anyway, we want to use the money wisely. We have no c/c debt, but we do have a zero % c/c with a zero balance. We have a HELOC at prime minus 1 (7.25% right now) and owe around 12K on it for some renovations we just did to the house in anticipation of selling.
Our mortgage payment is $750 per month. We owe $130K on a home worth around $250K. We will be selling sometime this year once dh's job transfer is finalized, so we were thinking of paying off the HELOC when the house sells rather than using this money to pay it off now. Another alternative is to move the HELOC balance to the zero % card.
My concern with moving it to the zero card is the limit is 15K, and moving the HELOC there to save money on interest would put it at a high balance in terms of it appearing close to maxed, which I fear it will harm my FICO score. I would much rather pay interest on the HELOC than have a negative mark on my credit.
Instead, I want to put about $15K into a high yield savings account like Emigrant direct for our emergency fund. The remainder into Roth IRA's and/or traditional IRA's for me. We already contribute $800/month to the Federal govt TSP and are getting agency matching which makes the total montly contribution close to $1000. We could actually increase our contributions for the tax break because dh is moving to from GS9 to GS11 payscale this month.
I want to use a small portion of the money, around $3K to buy a new bedroom suite. I'm 40 YO and don't have decent bedroom furniture. In fact, I am still using the same nightstand and drawers from my room as a teenager. I need something more grown up and I think Auntie Bev would be really pleased that I bought something nice for myself.
Does this sound like a feasible plan?
Keep the HELOC til we sell, keeping in mind I would much rather preserve my credit score than save money in interest on a zero card.
Put a large portion in a secure high interest savings/MMA/CD for an ER fund.
Buy IRA/Roth for me, the amount determined by the tax savings.
Buy Bedroom suite for $3K max, but could be much less depending on what I find.
Oh, I just thought of something. My husband is getting the calculations for buying back his military time, which will add to his retirement. The cost of it will be around $5K, interest free for the next year, with interest starting after that til it's paid off. We figured since it's payroll deduction, we won't miss $50/pay for the added retirement. So, thinking quickly, I don't think we'd use the money to pay the military time in a lump sum, but it's something we could consider. The interest on the high yield savings/MMA/CD would offset interest paid to buy back the military time.
Am I on the right track?