How should my Spouse and I handle a $300,000 Settlement?

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Nate79
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Nate79 » Sun Aug 11, 2019 1:54 pm

I would put the money into the household bucket and pay off as much debt as possible. If you can not spend money as a couple but instead as a roommate I would also suggest marriage counseling because this won't last long thinking separately.

And I second the recommendation of Dave Ramseys financial peace university if you want to learn to win with money.

fposte
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by fposte » Sun Aug 11, 2019 1:59 pm

OP, you've paid off your credit card debt, which is great. And your wife has likely been through a lot in the last few years and doubtless appreciates you standing behind her. But here are things that worry me:

you and your wife are very much not on the same page financially
you are riskily superstitious about your investments
your car loan amount suggests you still have that Civic from your previous thread, and if so you and your wife have three cars between you, one on a high-interest loan, and you don't even commute
Your approach to the car issue seems to be one of what feel you're entitled to rather than what you can afford when you look at the future

I don't think you're a spendthrift; you seem to have a paying roommate, you paid off your credit card, etc. I can even see a $20k sports car as being a defensible expense in a budgets, and I am utterly indifferent to cars. But the way you're making decisions here is opening you up to problems down the line. What happens with the settlement money may matter less in 10-15 years than the rest of it.

TIAX
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by TIAX » Sun Aug 11, 2019 2:30 pm

smithbt2 wrote:
Sun Aug 11, 2019 12:49 pm
My worry right now is the market is so volatile. I personslly believe the market is overvalued and we are overdue for a pullback. While I do contribute to my accounts weekly and I am 10% YTD, I am reluctant to throw large sums of money into index funds right now. Bonds may collapse soon. I do not feel great about our current monetary policies and I would not be surprised to see negative interest rates in our future.
Review the most recent SPIVA report. For example, over the last 15 years, 88.97% of domestic active funds, who try to time the market like you, under-performed the relevant index. Bond fund managers similarly under-perform the index.

And how will bonds "collapse"?
Last edited by TIAX on Sun Aug 11, 2019 8:41 pm, edited 1 time in total.

cherijoh
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by cherijoh » Sun Aug 11, 2019 3:05 pm

smithbt2 wrote:
Sun Aug 11, 2019 11:06 am
BarbBrooklyn wrote:
Sun Aug 11, 2019 11:04 am
Isn't this your spouse's money?
It is, technically. But it is "our" money. I pay the mortgage and all of the household bills, except for my spouse's auto loan. My spouse also did not work for 2 years, a time during which I paid all bills.
"our" money, but "your" house? :oops:

Your spouse should definitely pay off usurious car loan and then you both need to attend Dave Ramsey Peace University. And lock up the rest of the money so neither one of you can spend it until you both get on the "live within your means" plan.

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Doom&Gloom
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Doom&Gloom » Sun Aug 11, 2019 3:43 pm

After reading your other thread it appears that you sold both cars you had then to buy another vehicle? Is that correct? What are you driving now?

Your previous post reads as if you might well have been single then? Is that correct? How long have you guys been married? How much discussion do you two have about finances? How much have you discussed the proceeds from this settlement? What has your wife said about what she would like to do with that money?

It is all well and good for us to spout financial advice to you, but if she is not involved in the process, then our advice is futile unless she has delegated all financial decisions to you. The advice you receive here would be far more meaningful and useful to you if we had some idea what her expectations, wishes, and plans are.

cherijoh
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by cherijoh » Sun Aug 11, 2019 3:50 pm

Northern Flicker wrote:
Sun Aug 11, 2019 11:44 am
I supported her and paid all costs - including her vehicle - for two years while she did not work. At the time she had a Chevy Tahoe (more expensive than my sports car!) She lives in my house and does not pay any bills, not even Internet or utilities. As a result I have saved very little.
You made a bad financial decision to buy a car costing about 3x or 4x the cost of a car that is just reliable transportation (costing even more once the cost of repairs etc are factored in) and you are trying to blame your low savings rate on your spouse?
+1

harrad
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by harrad » Sun Aug 11, 2019 4:04 pm

smithbt2 wrote:
Sun Aug 11, 2019 12:02 pm
Northern Flicker wrote:
Sun Aug 11, 2019 11:44 am
I supported her and paid all costs - including her vehicle - for two years while she did not work. At the time she had a Chevy Tahoe (more expensive than my sports car!) She lives in my house and does not pay any bills, not even Internet or utilities. As a result I have saved very little.
You made a bad financial decision to buy a car costing about 3x or 4x the cost of a car that is just reliable transportation (costing even more once the cost of repairs etc are factored in) and you are trying to blame your low savings rate on your spouse?
I am defending myself from people such as yourself, who instead of answering my questions or concerns, attacked me directly without knowing the full story.

I have paid her Laywer Fees = $10,000
I have paid her Car Payments = $24,000
I incurred $20,000 in Credit Card Debt to support us both over those two years, all of which I paid back on my own by saving dilligently.
I have paid her Medical / Therapy = $15,000

It sucks that I can't get help on this Forum without being attacked directly and judged. I am a good person and I did more for her than most would. I sacrificed a lot, even dropped out of college to work full-time and held two full-time jobs at one time. I worked crazy hours. Thanks for your understanding. I greatly appreciate it.

Don't take it to heart by the frank feedback you are getting. The folks at this board tend to represent a niche section of society: Extremely shrewd in the spending habits with above average incomes. In the long run, I hope you appreciate the candor.

I believe the suggestions are all good. First ensure your tax liability, pay down existing debts. I would boost the rainy day expenses fund a bit and then deploy the rest in a mutual fund.

cherijoh
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by cherijoh » Sun Aug 11, 2019 4:14 pm

smithbt2 wrote:
Sun Aug 11, 2019 12:02 pm
Northern Flicker wrote:
Sun Aug 11, 2019 11:44 am
I supported her and paid all costs - including her vehicle - for two years while she did not work. At the time she had a Chevy Tahoe (more expensive than my sports car!) She lives in my house and does not pay any bills, not even Internet or utilities. As a result I have saved very little.
You made a bad financial decision to buy a car costing about 3x or 4x the cost of a car that is just reliable transportation (costing even more once the cost of repairs etc are factored in) and you are trying to blame your low savings rate on your spouse?
I am defending myself from people such as yourself, who instead of answering my questions or concerns, attacked me directly without knowing the full story.

I have paid her Laywer Fees = $10,000
I have paid her Car Payments = $24,000
I incurred $20,000 in Credit Card Debt to support us both over those two years, all of which I paid back on my own by saving dilligently.
I have paid her Medical / Therapy = $15,000

It sucks that I can't get help on this Forum without being attacked directly and judged. I am a good person and I did more for her than most would. I sacrificed a lot, even dropped out of college to work full-time and held two full-time jobs at one time. I worked crazy hours. Thanks for your understanding. I greatly appreciate it.
I suspect your wife did not ask for whatever led to this settlement to happen to her. Yet you seem very put upon and seem to think we should be heaping praise on you for supporting her during her time of need. Reality check: you were just doing what anyone would expect a loving spouse to do. Frankly, you sound too immature to be married.

As far as the debt goes - money is fungible. So if you hadn't spent WAY to much on your car then you would not have had to go into debt to cover basic expenses when your wife couldn't work. Don't blame your lack of savings on her. You bear responsibility that you seem very unwilling to acknowledge. Had you done so you would not have gotten "attacked".

BarbBrooklyn
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by BarbBrooklyn » Sun Aug 11, 2019 4:24 pm

I'm going to try to give you a kind response here that incorporates your good heart, that of your wounded wife and your financial picture.

You don't have to answer these questions here. Just think about them.

Is the settlement the result of something that caused your wife not to be able to work and to need therapy? Should those monies be paid back to the person doing the funding ? (You).

Does she NEED the Tahoe? Why can't she drive small Honda? (Hey, there may be a reason).

It sounds like you both use things to stand in for happiness; you have some sense of future needs, while she has none.. This is a life issue that wants fixing, certainly before you have kids. Have you considered behaviorally based marriage therapy?

Stick around here and learn the metrics of affordability, i.e., it's not how much car payment you can afford that drives what car you buy. It's not the HCOL metric that drives what home you purchase.

You would both benefit from Dave Ramsey to get the basics sorted.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

Robdac
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Robdac » Sun Aug 11, 2019 4:28 pm

You have a financial windfall. Maybe similar to winning the lottery. The problem with the lottery is that it's mostly played by broke people with no financial education. After they win they quickly go back to being broke. They never change how they think about money.

What you should do with the money is obvious and already well explained by others.

But, you are at a crossroads. There are some serious decisions that need to be made about the way you are going to live your financial life going forward. Other posters are upset because they don't want you to be a typical lottery winner. I don't either. Make the hard decision. Make it now. Good luck.

MotoTrojan
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by MotoTrojan » Sun Aug 11, 2019 4:30 pm

TomatoTomahto wrote:
Sun Aug 11, 2019 11:25 am
You folks are living too large. The settlement fortunately or unfortunately will bail you out, but presumably you can’t count on those every year or two.

It’s time for you both to grow up!!! Effectively zero retirement savings. Expensive automobiles. Sheesh.
While they may be overspending, the OP is 24... retirement savings are probably in the 99.9%-tile.

Payoff that absurd 22% loan, that’s truly insane.

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smithbt2
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 4:33 pm

cherijoh wrote:
Sun Aug 11, 2019 4:14 pm
smithbt2 wrote:
Sun Aug 11, 2019 12:02 pm
Northern Flicker wrote:
Sun Aug 11, 2019 11:44 am
I supported her and paid all costs - including her vehicle - for two years while she did not work. At the time she had a Chevy Tahoe (more expensive than my sports car!) She lives in my house and does not pay any bills, not even Internet or utilities. As a result I have saved very little.
You made a bad financial decision to buy a car costing about 3x or 4x the cost of a car that is just reliable transportation (costing even more once the cost of repairs etc are factored in) and you are trying to blame your low savings rate on your spouse?
I am defending myself from people such as yourself, who instead of answering my questions or concerns, attacked me directly without knowing the full story.

I have paid her Laywer Fees = $10,000
I have paid her Car Payments = $24,000
I incurred $20,000 in Credit Card Debt to support us both over those two years, all of which I paid back on my own by saving dilligently.
I have paid her Medical / Therapy = $15,000

It sucks that I can't get help on this Forum without being attacked directly and judged. I am a good person and I did more for her than most would. I sacrificed a lot, even dropped out of college to work full-time and held two full-time jobs at one time. I worked crazy hours. Thanks for your understanding. I greatly appreciate it.
I suspect your wife did not ask for whatever led to this settlement to happen to her. Yet you seem very put upon and seem to think we should be heaping praise on you for supporting her during her time of need. Reality check: you were just doing what anyone would expect a loving spouse to do. Frankly, you sound too immature to be married.

As far as the debt goes - money is fungible. So if you hadn't spent WAY to much on your car then you would not have had to go into debt to cover basic expenses when your wife couldn't work. Don't blame your lack of savings on her. You bear responsibility that you seem very unwilling to acknowledge. Had you done so you would not have gotten "attacked".
I bought my new car in May... not when I was financially stretched.

fru-gal
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by fru-gal » Sun Aug 11, 2019 4:37 pm

I've only read about half the responses.

OP, people including me were criticizing because some stuff you're doing is just plain not financially sound and other stuff you didn't explain initially.

You seem to have two problems. Bad judgment, ex: the cars, and a spouse who is financially irresponsible.

You can do something about the former. I don't know what to suggest about the latter except some counseling, psychological or financial, or a divorce.

newenglandpat
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Re: How should my Spouse and I handle a $300,000 Settlement?

Post by newenglandpat » Sun Aug 11, 2019 4:52 pm

I am not going to make any judgments here, consider the following:

let's say after you pay off some debt and taxes you are left with $200,000. Invest it in total stock market index funds and that pot should double 4-5 times by the time you are 65. so $200,000 would turn into between 3.2 million and 6.4 million(nominal)

take that $50,000 car. If you buy a Toyota for 25k the other 25k invested turns int between 400 and 800,000 at retirement. That is the opportunity cost of buying the more expensive car!

you are my kid's ages. I try and guide their choices as tradeoffs/opportunity costs. Their choice. I didn't buy a luxury car until 5 years ago and I still won't park it where there are chances to get door dings....

BarbBrooklyn
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Location: NYC

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by BarbBrooklyn » Sun Aug 11, 2019 4:57 pm

"I bought my new car in May... not when I was financially stretched."

See, here's the thing, OP. You earn 90K per year. And you bought a car that costs half your salary. That you were not able to pay cash for.

A car is a depreciating asset. You don't borrow money to fund a depreciating asset (well, actually, if you need a car to get to work, then perhaps in some situations you do a loan for a Civic or a Corolla. But not something that costs 50K.)

Do you see what Boglehead philosophy is? Live BELOW your means.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:01 pm

MotoTrojan wrote:
Sun Aug 11, 2019 4:30 pm
TomatoTomahto wrote:
Sun Aug 11, 2019 11:25 am
You folks are living too large. The settlement fortunately or unfortunately will bail you out, but presumably you can’t count on those every year or two.

It’s time for you both to grow up!!! Effectively zero retirement savings. Expensive automobiles. Sheesh.
While they may be overspending, the OP is 24... retirement savings are probably in the 99.9%-tile.

Payoff that absurd 22% loan, that’s truly insane.
Unfortunately I was not there to see the loan terms. My credit cards have lower rates, if I were to keep a balance. I would be maxing a 401(k) right now if I could, hopefully 2020.

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:03 pm

newenglandpat wrote:
Sun Aug 11, 2019 4:52 pm
I am not going to make any judgments here, consider the following:

let's say after you pay off some debt and taxes you are left with $200,000. Invest it in total stock market index funds and that pot should double 4-5 times by the time you are 65. so $200,000 would turn into between 3.2 million and 6.4 million(nominal)

take that $50,000 car. If you buy a Toyota for 25k the other 25k invested turns int between 400 and 800,000 at retirement. That is the opportunity cost of buying the more expensive car!

you are my kid's ages. I try and guide their choices as tradeoffs/opportunity costs. Their choice. I didn't buy a luxury car until 5 years ago and I still won't park it where there are chances to get door dings....
It's actually much worse than that. OP works from home, yet he seems to have 2 or more cars just to his name (NOT counting his wife's Tahoe with the 22% interest rate!).

From OP's Oct 2018 thread: "I have a 2017 Honda Civic, which is a great car. I have 8k miles since I barely drive it. Purchased May 2017, according to KBB the value is $20-21K, so I am not under. My other auto loan is a different story, I have a 09 BMW M3 w/ 95k miles and the KBB value is roughly $18-20K. I love this car and I do not really do anything "fun" but I can't really justify two car payments at nearly $1K total per month. The Civic is a fantastic car w/ 120k/8 year warranty, fully loaded, so I won't get rid of this one. I do know I need to make a change here though. Civic is 435 per month and BMW is 510."

Now he tells us he has a MY 2015 car that he bought certified, which would've been $90K new. Unclear if he has gotten rid of the Civic or the M3 (probably not, given how much he owes). If not, that's 3 cars to his name. But in any case, OP, you have a problem. :oops:

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:06 pm

BarbBrooklyn wrote:
Sun Aug 11, 2019 4:57 pm
"I bought my new car in May... not when I was financially stretched."

See, here's the thing, OP. You earn 90K per year. And you bought a car that costs half your salary. That you were not able to pay cash for.

A car is a depreciating asset. You don't borrow money to fund a depreciating asset (well, actually, if you need a car to get to work, then perhaps in some situations you do a loan for a Civic or a Corolla. But not something that costs 50K.)

Do you see what Boglehead philosophy is? Live BELOW your means.
I understand. Though my stock options are worth money (far more than the cost of my car). I don't want to sell them or give up my voting rights in the company, though, at this time.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:07 pm

02nz wrote:
Sun Aug 11, 2019 5:03 pm
newenglandpat wrote:
Sun Aug 11, 2019 4:52 pm
I am not going to make any judgments here, consider the following:

let's say after you pay off some debt and taxes you are left with $200,000. Invest it in total stock market index funds and that pot should double 4-5 times by the time you are 65. so $200,000 would turn into between 3.2 million and 6.4 million(nominal)

take that $50,000 car. If you buy a Toyota for 25k the other 25k invested turns int between 400 and 800,000 at retirement. That is the opportunity cost of buying the more expensive car!

you are my kid's ages. I try and guide their choices as tradeoffs/opportunity costs. Their choice. I didn't buy a luxury car until 5 years ago and I still won't park it where there are chances to get door dings....
It's actually much worse than that. OP works from home, yet he seems to have 2 or more cars just to his name (NOT counting his wife's Tahoe with the 22% interest rate!).

From OP's Oct 2018 thread: "I have a 2017 Honda Civic, which is a great car. I have 8k miles since I barely drive it. Purchased May 2017, according to KBB the value is $20-21K, so I am not under. My other auto loan is a different story, I have a 09 BMW M3 w/ 95k miles and the KBB value is roughly $18-20K. I love this car and I do not really do anything "fun" but I can't really justify two car payments at nearly $1K total per month. The Civic is a fantastic car w/ 120k/8 year warranty, fully loaded, so I won't get rid of this one. I do know I need to make a change here though. Civic is 435 per month and BMW is 510."

Now he tells us he has a MY 2015 car that he bought certified, which would've been $90K new. Unclear if he has gotten rid of the Civic or the M3 (probably not, given how much he owes). If not, that's 3 cars to his name. But in any case, OP, you have a problem. :oops:
I sold the Civic and the old M3. I now have an M4. I only have one car to my name.

She does not have the Tahoe anymore. I stopped paying for it and she let the bank take it, because she could not afford the vehicle and it was worth far less than she owed. She bought a Jeep with an outrageous interest rate after I sold the Honda.

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:10 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:07 pm
02nz wrote:
Sun Aug 11, 2019 5:03 pm
newenglandpat wrote:
Sun Aug 11, 2019 4:52 pm
I am not going to make any judgments here, consider the following:

let's say after you pay off some debt and taxes you are left with $200,000. Invest it in total stock market index funds and that pot should double 4-5 times by the time you are 65. so $200,000 would turn into between 3.2 million and 6.4 million(nominal)

take that $50,000 car. If you buy a Toyota for 25k the other 25k invested turns int between 400 and 800,000 at retirement. That is the opportunity cost of buying the more expensive car!

you are my kid's ages. I try and guide their choices as tradeoffs/opportunity costs. Their choice. I didn't buy a luxury car until 5 years ago and I still won't park it where there are chances to get door dings....
It's actually much worse than that. OP works from home, yet he seems to have 2 or more cars just to his name (NOT counting his wife's Tahoe with the 22% interest rate!).

From OP's Oct 2018 thread: "I have a 2017 Honda Civic, which is a great car. I have 8k miles since I barely drive it. Purchased May 2017, according to KBB the value is $20-21K, so I am not under. My other auto loan is a different story, I have a 09 BMW M3 w/ 95k miles and the KBB value is roughly $18-20K. I love this car and I do not really do anything "fun" but I can't really justify two car payments at nearly $1K total per month. The Civic is a fantastic car w/ 120k/8 year warranty, fully loaded, so I won't get rid of this one. I do know I need to make a change here though. Civic is 435 per month and BMW is 510."

Now he tells us he has a MY 2015 car that he bought certified, which would've been $90K new. Unclear if he has gotten rid of the Civic or the M3 (probably not, given how much he owes). If not, that's 3 cars to his name. But in any case, OP, you have a problem. :oops:
I sold the Civic and the old M3. I now have an M4. I only have one car to my name.

She does not have the Tahoe anymore. I stopped paying for it and she let the bank take it. She was able to get a loan for a Jeep, but with an outrageous interest rate.
Let me get this straight: Within the past year, as a couple with no children, you've had five different cars? Holy ...

cherijoh
Posts: 6579
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by cherijoh » Sun Aug 11, 2019 5:14 pm

smithbt2 wrote:
Sun Aug 11, 2019 12:44 pm
02nz wrote:
Sun Aug 11, 2019 12:35 pm
Nobody is saying you're a bad person. But good people sometimes make bad financial decisions. You and your wife need to work as a team, and that will require changes on your part and hers. If you cannot both make those changes, that list above will only keep growing, to include - I'm being serious - divorce lawyers.

Oh, and "saving diligently" does not include taking on $50K of debt for a car that is not even used for commuting.
I am still saving $2,500-3,000 per month right now... I think I am doing OK. I have automatic weekly transfers setup. I am 3 months ahead on my auto loan. My next mortgage is not due until Oct 1. I am better off than most people who live paycheck to paycheck, as I do not live paycheck to paycheck.
So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.
My Auto Loan - $923 per month with a remaining balance of $47,591 - 3.49% APR, 60 Months
Spouse's Auto Loan - ~$568 per month with a remaining balance of ~$21,000 - 21.99% APR, 60 Months (horrible rate, I know...)
Student Loans - $4,800 Remaining at ~4%
Retirement

My SEP IRA: $1,156.11
My Roth IRA: $9,199.98
My Rollover IRA: $7,909.76

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:15 pm

02nz wrote:
Sun Aug 11, 2019 5:10 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:07 pm
02nz wrote:
Sun Aug 11, 2019 5:03 pm
newenglandpat wrote:
Sun Aug 11, 2019 4:52 pm
I am not going to make any judgments here, consider the following:

let's say after you pay off some debt and taxes you are left with $200,000. Invest it in total stock market index funds and that pot should double 4-5 times by the time you are 65. so $200,000 would turn into between 3.2 million and 6.4 million(nominal)

take that $50,000 car. If you buy a Toyota for 25k the other 25k invested turns int between 400 and 800,000 at retirement. That is the opportunity cost of buying the more expensive car!

you are my kid's ages. I try and guide their choices as tradeoffs/opportunity costs. Their choice. I didn't buy a luxury car until 5 years ago and I still won't park it where there are chances to get door dings....
It's actually much worse than that. OP works from home, yet he seems to have 2 or more cars just to his name (NOT counting his wife's Tahoe with the 22% interest rate!).

From OP's Oct 2018 thread: "I have a 2017 Honda Civic, which is a great car. I have 8k miles since I barely drive it. Purchased May 2017, according to KBB the value is $20-21K, so I am not under. My other auto loan is a different story, I have a 09 BMW M3 w/ 95k miles and the KBB value is roughly $18-20K. I love this car and I do not really do anything "fun" but I can't really justify two car payments at nearly $1K total per month. The Civic is a fantastic car w/ 120k/8 year warranty, fully loaded, so I won't get rid of this one. I do know I need to make a change here though. Civic is 435 per month and BMW is 510."

Now he tells us he has a MY 2015 car that he bought certified, which would've been $90K new. Unclear if he has gotten rid of the Civic or the M3 (probably not, given how much he owes). If not, that's 3 cars to his name. But in any case, OP, you have a problem. :oops:
I sold the Civic and the old M3. I now have an M4. I only have one car to my name.

She does not have the Tahoe anymore. I stopped paying for it and she let the bank take it. She was able to get a loan for a Jeep, but with an outrageous interest rate.
Let me get this straight: Within the past year, as a couple with no children, you've had five different cars? Holy ...
I admit I have a car problem, but I have gotten better... believe it or not. Between the age of 16 and 19, I went through a ton of cars. Lexus RC F, Acura, (2) BMW M3s, BMW M5, Audi, I can't even name them all at the moment. I kept the last M3 and Civic for two years, which is a record.

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:17 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:15 pm
I admit I have a car problem, but I have gotten better... believe it or not. Between the age of 16 and 19, I went through a ton of cars. Lexus RC F, Acura, (2) BMW M3s, BMW M5, Audi, I can't even name them all at the moment. I kept the last M3 and Civic for two years, which is a record.
Why not just rent them? It'd be heck of a lot cheaper. You're not keeping them for that much longer than a rental.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:19 pm

cherijoh wrote:
Sun Aug 11, 2019 5:14 pm
smithbt2 wrote:
Sun Aug 11, 2019 12:44 pm
02nz wrote:
Sun Aug 11, 2019 12:35 pm
Nobody is saying you're a bad person. But good people sometimes make bad financial decisions. You and your wife need to work as a team, and that will require changes on your part and hers. If you cannot both make those changes, that list above will only keep growing, to include - I'm being serious - divorce lawyers.

Oh, and "saving diligently" does not include taking on $50K of debt for a car that is not even used for commuting.
I am still saving $2,500-3,000 per month right now... I think I am doing OK. I have automatic weekly transfers setup. I am 3 months ahead on my auto loan. My next mortgage is not due until Oct 1. I am better off than most people who live paycheck to paycheck, as I do not live paycheck to paycheck.
So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.
My Auto Loan - $923 per month with a remaining balance of $47,591 - 3.49% APR, 60 Months
Spouse's Auto Loan - ~$568 per month with a remaining balance of ~$21,000 - 21.99% APR, 60 Months (horrible rate, I know...)
Student Loans - $4,800 Remaining at ~4%
Retirement

My SEP IRA: $1,156.11
My Roth IRA: $9,199.98
My Rollover IRA: $7,909.76
I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.

Thegame14
Posts: 1482
Joined: Mon May 07, 2018 11:53 am

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Thegame14 » Sun Aug 11, 2019 5:23 pm

smithbt2 wrote:
Sun Aug 11, 2019 11:11 am
JGoneRiding wrote:
Sun Aug 11, 2019 11:08 am
No way as your wife would I pay for your ridiculously expensive toy! So I would remove that option.

Your wife should pay off HER. Car and then in exchange for a quit claim she should pay off the PMI and then I personally would save 100% of the remainder. With that big of a jump start she can be set for future retirement.
I supported her and paid all costs - including her vehicle - for two years while she did not work. At the time she had a Chevy Tahoe (more expensive than my sports car!) She lives in my house and does not pay any bills, not even Internet or utilities. As a result I have saved very little.
sounds like an employee more than a spouse.... maybe she should use the money to pay off her car, then hire a lawyer and get a divorce.......

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:24 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
I can take the car to CarMax anytime without being under.
Think again. Cargurus shows dozens of 2015 M4's in my area ... the asking price on the most expensive one (which is of course more than CarMax will give you) is less than what you owe on yours.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:25 pm

02nz wrote:
Sun Aug 11, 2019 5:24 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
I can take the car to CarMax anytime without being under.
Think again. Cargurus shows dozens of 2015 M4's in my area ... the asking price on the most expensive one (which is of course more than CarMax will give you) is less than what you owe on yours.
Mine has less than 10,000 miles, has been garage kept since day one by the original owner, has a clear bra (paint protection film) over most of the car, ceramic coating (opti-coat pro), plus other upgrades. Anyhow, I don't plan on getting rid of the car, so I am not going to fret about the market value right now. You might as well subtract $900 from what I owe, because I requested to cancel the gap coverage. But that doesn't really matter.
Last edited by smithbt2 on Sun Aug 11, 2019 5:29 pm, edited 1 time in total.

Olemiss540
Posts: 1300
Joined: Fri Aug 18, 2017 8:46 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Olemiss540 » Sun Aug 11, 2019 5:28 pm

OP,

Get your investments in order. You are not AT ALL concerned about the depreciation you are facing with a leveraged M4 but wont invest the money from your spouse's recent windfall due to your personal projection of stock market and bond market turbulence?

That money is for 30 YEARS from now. Worry about what the market will be priced then, not what some talking head on the TV is telling you.

I am afraid if you do not dig out of your debt hole yourself (and your spouse), you will end up in the same place 10 years later. Invest ALL proceeds into a taxable account and then work with your spouse and Dave Ramsey on a plan to get out of debt and start your own life. Your marriage will end up in a better place through a partnership approach getting out from under your hill.
Last edited by Olemiss540 on Sun Aug 11, 2019 5:30 pm, edited 1 time in total.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Bacchus01 » Sun Aug 11, 2019 5:28 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
cherijoh wrote:
Sun Aug 11, 2019 5:14 pm
smithbt2 wrote:
Sun Aug 11, 2019 12:44 pm
02nz wrote:
Sun Aug 11, 2019 12:35 pm
Nobody is saying you're a bad person. But good people sometimes make bad financial decisions. You and your wife need to work as a team, and that will require changes on your part and hers. If you cannot both make those changes, that list above will only keep growing, to include - I'm being serious - divorce lawyers.

Oh, and "saving diligently" does not include taking on $50K of debt for a car that is not even used for commuting.
I am still saving $2,500-3,000 per month right now... I think I am doing OK. I have automatic weekly transfers setup. I am 3 months ahead on my auto loan. My next mortgage is not due until Oct 1. I am better off than most people who live paycheck to paycheck, as I do not live paycheck to paycheck.
So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.
My Auto Loan - $923 per month with a remaining balance of $47,591 - 3.49% APR, 60 Months
Spouse's Auto Loan - ~$568 per month with a remaining balance of ~$21,000 - 21.99% APR, 60 Months (horrible rate, I know...)
Student Loans - $4,800 Remaining at ~4%
Retirement

My SEP IRA: $1,156.11
My Roth IRA: $9,199.98
My Rollover IRA: $7,909.76
I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.
$7200 in closing costs? Continually making bad choices. Slow down. Get a plan. Then move forward.

Thegame14
Posts: 1482
Joined: Mon May 07, 2018 11:53 am

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Thegame14 » Sun Aug 11, 2019 5:29 pm

umfan11244 wrote:
Sun Aug 11, 2019 1:28 pm
1) kill the student loan payment, both car loans, and escape PMI.

2) you speak about your wife like she’s a burden to you. Treat her like a team member and see if you can’t take on the world together.

3) I get liking cars. I plan on buying a Porsche 911 GT2 or GT3 RS one day. That one day I finally do... I’ll have a NW upward of $6m. You bought the car prematurely.

Good luck. I hope it all works out for you.
GREAT advice, +1

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Bacchus01 » Sun Aug 11, 2019 5:30 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:25 pm
02nz wrote:
Sun Aug 11, 2019 5:24 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
I can take the car to CarMax anytime without being under.
Think again. Cargurus shows dozens of 2015 M4's in my area ... the asking price on the most expensive one (which is of course more than CarMax will give you) is less than what you owe on yours.
Mine has less than 10,000 miles, has been garage kept since day one by the original owner, has a clear bra (paint protection film) over most of the car, ceramic coating (opti-coat pro), plus other upgrades. Anyhow, I don't plan on getting rid of the car, so I am not going to fret about the market value right now. You might as well subtract $900 from what I owe, because I requested to cancel the gap coverage. But that doesn't really matter.
Literally none of that gives you a premium when you sell to Carmax. Except the miles, and they usually will lowball a low mileage car because it’s not where they play.

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:31 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:25 pm
Anyhow, I don't plan on getting rid of the car, so I am not going to fret about the market value right now.
Your track record suggests otherwise ...

JGoneRiding
Posts: 1929
Joined: Tue Jul 15, 2014 3:26 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by JGoneRiding » Sun Aug 11, 2019 5:31 pm

smithbt2 wrote:
Sun Aug 11, 2019 12:51 pm
Sandtrap wrote:
Sun Aug 11, 2019 12:44 pm
1 pay off both car loans
2 pay off student loan
3 balance in Emergency fund, High yield accounts, CD's, etc.
225,000 - 47591 - 21000-4800 = 151609

less Mortgage payment: 45,900

= 105709 (balance)

Can you open a retirement account for your spouse?

j
Yes. I am going to help her open up a Traditional IRA through Fidelity. I have my accounts with Fidelity. Her employer offers a 401(K) Plan but the fees are outrageous. I actually told her not to contribute until they start matching 5%, which they do after a year of employment.
Because it sounds like the 300k is going to he taxed as ordinary income I would go ahead and max her 401k this year. Its doubtful the fees are 35%

I would also max your sep or whatever you decide . You are going to need to stop your Roth this year and may need to in fact do a backdoor if you want that space.

This needs a long discussion with your spouse possible with a mediator so that she doesn't just try to blow it all

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:32 pm

Bacchus01 wrote:
Sun Aug 11, 2019 5:28 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
cherijoh wrote:
Sun Aug 11, 2019 5:14 pm
smithbt2 wrote:
Sun Aug 11, 2019 12:44 pm
02nz wrote:
Sun Aug 11, 2019 12:35 pm
Nobody is saying you're a bad person. But good people sometimes make bad financial decisions. You and your wife need to work as a team, and that will require changes on your part and hers. If you cannot both make those changes, that list above will only keep growing, to include - I'm being serious - divorce lawyers.

Oh, and "saving diligently" does not include taking on $50K of debt for a car that is not even used for commuting.
I am still saving $2,500-3,000 per month right now... I think I am doing OK. I have automatic weekly transfers setup. I am 3 months ahead on my auto loan. My next mortgage is not due until Oct 1. I am better off than most people who live paycheck to paycheck, as I do not live paycheck to paycheck.
So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.
My Auto Loan - $923 per month with a remaining balance of $47,591 - 3.49% APR, 60 Months
Spouse's Auto Loan - ~$568 per month with a remaining balance of ~$21,000 - 21.99% APR, 60 Months (horrible rate, I know...)
Student Loans - $4,800 Remaining at ~4%
Retirement

My SEP IRA: $1,156.11
My Roth IRA: $9,199.98
My Rollover IRA: $7,909.76
I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.
$7200 in closing costs? Continually making bad choices. Slow down. Get a plan. Then move forward.
Yes. It was actually $8,100 before I questioned the price of what the title company wanted to charge me for closing. I paid $720 for points (3.75% to 3.625%) plus $450 and $350 for the Maryland Mortgage Certificate, which provides a 25% Federal Tax Credit of Mortgage Interest for the life of the loan, capped at $2K. It is worth the added cost. I don't plan on upgrading to a bigger house or moving. Locking in a lower rate was the best choice for me. I will continue to pay $2,050 toward my mortgage and pretend like the payment did not change.

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Bacchus01 » Sun Aug 11, 2019 5:33 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:32 pm
Bacchus01 wrote:
Sun Aug 11, 2019 5:28 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
cherijoh wrote:
Sun Aug 11, 2019 5:14 pm
smithbt2 wrote:
Sun Aug 11, 2019 12:44 pm


I am still saving $2,500-3,000 per month right now... I think I am doing OK. I have automatic weekly transfers setup. I am 3 months ahead on my auto loan. My next mortgage is not due until Oct 1. I am better off than most people who live paycheck to paycheck, as I do not live paycheck to paycheck.
So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.
My Auto Loan - $923 per month with a remaining balance of $47,591 - 3.49% APR, 60 Months
Spouse's Auto Loan - ~$568 per month with a remaining balance of ~$21,000 - 21.99% APR, 60 Months (horrible rate, I know...)
Student Loans - $4,800 Remaining at ~4%
Retirement

My SEP IRA: $1,156.11
My Roth IRA: $9,199.98
My Rollover IRA: $7,909.76
I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.
$7200 in closing costs? Continually making bad choices. Slow down. Get a plan. Then move forward.
Yes. It was actually $8,100 before I questioned the price of what the title company wanted to charge me for closing. I paid $720 for points (3.75% to 3.625%) plus $450 and $350 for the Maryland Mortgage Certificate, which provides a 25% Federal Tax Credit of Mortgage Interest for the life of the loan, capped at $2K. It is worth the added cost. I don't plan on upgrading to a bigger house or moving. Locking in a lower rate was the best choice for me. I will continue to pay $2,050 toward my mortgage and pretend like the payment did not change.
Good lord, what are the rest of the fees? That’s really high.

And that rate isn’t even that great.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:34 pm

02nz wrote:
Sun Aug 11, 2019 5:31 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:25 pm
Anyhow, I don't plan on getting rid of the car, so I am not going to fret about the market value right now.
Your track record suggests otherwise ...
I love BMWs. I have owned various cars and I keep going back to BMWs. My M4 is equivalent to the E92 M3 I owned. The difference being this one does not have 100,000 miles. I'd still have the old one, but an oil analysis suggested the rod bearings were going bad and I cut my losses instead of paying $5K to have the engine partially rebuilt.

MtnTraveler
Posts: 221
Joined: Thu Jun 12, 2014 7:32 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by MtnTraveler » Sun Aug 11, 2019 5:34 pm

You don't have 300k. It sounds like this is going to be taxable so you are looking at 120k. With that in mind I'd recommend the following
1. Pay off her car.
2. Pay off your student loans.
3. Budget it so all her remaining salary for the year goes toward her 401k. Honestly the advice that the ER is high so she shouldn't contribute is the worst advice I've seen this year. Seriously, turn your back on a tax break especially when you have a windfall to pay tax on? Oh my...
4. Dave Ramsey course - no if ands or buts
5. Stop prepaying on mortgage and your car payments!!! Especially since it sounds like you aren't making extra principle payments you are making extra payments.
5. Individual counseling (both of you) and couples counseling. (20k minimum). Both of need to show your individual counselors this thread.
6. Max ira contribution for your wife.
7. Put the rest in a CD ladder for an emergency fund.

Honestly I would be extremely careful dumping this money into things that will benefit you. The reason I listed individual and couples counseling is because your marriage will end in divorce without action. Her divorce lawyer will have a field day if you apply this settlement toward your car loan or retirement accounts. The advice for her not to fund her 401k is also going to be used against you. You are setting yourself up to support her regardless of marriage or no marriage for a very long time. You supporting her for two years while this lawsuit waged on is going to look like what married people do, support each other in good times and bad. You will not be able to use that against her.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:39 pm

Bacchus01 wrote:
Sun Aug 11, 2019 5:33 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:32 pm
Bacchus01 wrote:
Sun Aug 11, 2019 5:28 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm
cherijoh wrote:
Sun Aug 11, 2019 5:14 pm


So you have assets in addition to the retirement funds listed in your original post?

Because based on what you originally posted, it looked like you had more auto/student loan debt than savings/investments (excluding the recent settlement). By a VERY large margin. The picture your original post painted was of someone living paycheck to paycheck.



I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.
$7200 in closing costs? Continually making bad choices. Slow down. Get a plan. Then move forward.
Yes. It was actually $8,100 before I questioned the price of what the title company wanted to charge me for closing. I paid $720 for points (3.75% to 3.625%) plus $450 and $350 for the Maryland Mortgage Certificate, which provides a 25% Federal Tax Credit of Mortgage Interest for the life of the loan, capped at $2K. It is worth the added cost. I don't plan on upgrading to a bigger house or moving. Locking in a lower rate was the best choice for me. I will continue to pay $2,050 toward my mortgage and pretend like the payment did not change.
Good lord, what are the rest of the fees? That’s really high.

And that rate isn’t even that great.
What? Mortgage rates are nearing an all-time low right now. 3.625% is excellent for a 30 year mortgage?

I believe these closing costs are pretty standard, or even less than what some may be paying.

Image

Litfury
Posts: 38
Joined: Sat Aug 10, 2013 8:43 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Litfury » Sun Aug 11, 2019 5:41 pm

Read alot of the responses but not all of them. I just wanted to remind people here that this guy is only 24 years old. Let's think of some of the stupid things most of us did at 24. At least he is here looking for some answers and like me when I was young this site can change his direction for good. I agree he should listen to dave Ramsey debt management advice, he could benefit from it. Him and his spouse. Lots of good points here, but let's not beat this guy up too much or he wont come back.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:42 pm

MtnTraveler wrote:
Sun Aug 11, 2019 5:34 pm
You don't have 300k. It sounds like this is going to be taxable so you are looking at 120k. With that in mind I'd recommend the following
1. Pay off her car.
2. Pay off your student loans.
3. Budget it so all her remaining salary for the year goes toward her 401k. Honestly the advice that the ER is high so she shouldn't contribute is the worst advice I've seen this year. Seriously, turn your back on a tax break especially when you have a windfall to pay tax on? Oh my...
4. Dave Ramsey course - no if ands or buts
5. Stop prepaying on mortgage and your car payments!!! Especially since it sounds like you aren't making extra principle payments you are making extra payments.
5. Individual counseling (both of you) and couples counseling. (20k minimum). Both of need to show your individual counselors this thread.
6. Max ira contribution for your wife.
7. Put the rest in a CD ladder for an emergency fund.

Honestly I would be extremely careful dumping this money into things that will benefit you. The reason I listed individual and couples counseling is because your marriage will end in divorce without action. Her divorce lawyer will have a field day if you apply this settlement toward your car loan or retirement accounts. The advice for her not to fund her 401k is also going to be used against you. You are setting yourself up to support her regardless of marriage or no marriage for a very long time. You supporting her for two years while this lawsuit waged on is going to look like what married people do, support each other in good times and bad. You will not be able to use that against her.
The ER for S&P 500 Index Fund and a Bond Fund are 2-3%. Target Date Funds are as well. It's awful.

02nz
Posts: 3902
Joined: Wed Feb 21, 2018 3:17 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by 02nz » Sun Aug 11, 2019 5:43 pm

OP, I think you might be losing sight of the forest in all the back and forth about closing costs and clear-coat protection. Take a break from the thread to reflect. Maybe discuss with your wife if she's ready. Think of some actionable things from the many good suggestions here that you're willing to undertake. Then come back to the thread.

MtnTraveler
Posts: 221
Joined: Thu Jun 12, 2014 7:32 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by MtnTraveler » Sun Aug 11, 2019 5:48 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:42 pm
The ER for S&P 500 Index Fund and a Bond Fund are 2-3%. Target Date Funds are as well. It's awful.
O.k. but still that would be 33% tax saver for you this year. Helping her succeed in retirement will benefit you in a divorce because that money she has won't be used against you.

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:52 pm

MtnTraveler wrote:
Sun Aug 11, 2019 5:48 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:42 pm
The ER for S&P 500 Index Fund and a Bond Fund are 2-3%. Target Date Funds are as well. It's awful.
O.k. but still that would be 33% tax saver for you this year. Helping her succeed in retirement will benefit you in a divorce because that money she has won't be used against you.
Could she open an SEP IRA or Solo 401(k) and contribute towards that as well, since it will be 1099?

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 5:54 pm

Litfury wrote:
Sun Aug 11, 2019 5:41 pm
Read alot of the responses but not all of them. I just wanted to remind people here that this guy is only 24 years old. Let's think of some of the stupid things most of us did at 24. At least he is here looking for some answers and like me when I was young this site can change his direction for good. I agree he should listen to dave Ramsey debt management advice, he could benefit from it. Him and his spouse. Lots of good points here, but let's not beat this guy up too much or he wont come back.
:thumbsup

longleaf
Posts: 290
Joined: Sun Nov 26, 2017 4:13 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by longleaf » Sun Aug 11, 2019 6:01 pm

Spouse needs to be on the same page financially.

Realize how luxuries consumed at a young age impact retirement.

Pay off high interest loans.

Throw remaining money into Vanguard PAS and IRA's because there is no apparent discipline.
Frugality, indexing, time.

BarbBrooklyn
Posts: 633
Joined: Fri Aug 24, 2018 9:33 am
Location: NYC

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by BarbBrooklyn » Sun Aug 11, 2019 6:05 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:06 pm
BarbBrooklyn wrote:
Sun Aug 11, 2019 4:57 pm
"I bought my new car in May... not when I was financially stretched."

See, here's the thing, OP. You earn 90K per year. And you bought a car that costs half your salary. That you were not able to pay cash for.

A car is a depreciating asset. You don't borrow money to fund a depreciating asset (well, actually, if you need a car to get to work, then perhaps in some situations you do a loan for a Civic or a Corolla. But not something that costs 50K.)

Do you see what Boglehead philosophy is? Live BELOW your means.
I understand. Though my stock options are worth money (far more than the cost of my car). I don't want to sell them or give up my voting rights in the company, though, at this time.
Live BELOW your means.

You are not going to convince Bogleheads that what you are doing is smart.

I'm curious what your family " money history" is like.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

Topic Author
smithbt2
Posts: 38
Joined: Fri Oct 05, 2018 8:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by smithbt2 » Sun Aug 11, 2019 6:14 pm

BarbBrooklyn wrote:
Sun Aug 11, 2019 6:05 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:06 pm
BarbBrooklyn wrote:
Sun Aug 11, 2019 4:57 pm
"I bought my new car in May... not when I was financially stretched."

See, here's the thing, OP. You earn 90K per year. And you bought a car that costs half your salary. That you were not able to pay cash for.

A car is a depreciating asset. You don't borrow money to fund a depreciating asset (well, actually, if you need a car to get to work, then perhaps in some situations you do a loan for a Civic or a Corolla. But not something that costs 50K.)

Do you see what Boglehead philosophy is? Live BELOW your means.
I understand. Though my stock options are worth money (far more than the cost of my car). I don't want to sell them or give up my voting rights in the company, though, at this time.
Live BELOW your means.

You are not going to convince Bogleheads that what you are doing is smart.

I'm curious what your family " money history" is like.
Here's a hint: I ignore every phone call from my father, because he only calls to ask for money. I haven't seen or talked to my mom since my grandfather passed on April 1. She never has money, either.

Herekittykitty
Posts: 707
Joined: Wed Apr 16, 2014 8:11 pm
Location: Flyover Country

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Herekittykitty » Sun Aug 11, 2019 6:23 pm

Dave Ramsey's Financial Peace University: Attend it with your wife. It can help get you and your wife get on the same page, help prioritize spending, help set financial goals and a plan to reach them. It is hokey - don't let that put you off. It can help you and your wife.

https://www.daveramsey.com/store/produc ... J4EALw_wcB

Read Managing a Windfall on the Wiki:

https://www.bogleheads.org/wiki/Managing_a_windfall

Read The Millionaire Next Door by Thomas Stanley. It is a quick and easy read and worth it for perspective. Can be purchased, but likely in your library.

Read If You Can by William Bernstein. A quick and easy read, maybe a couple of hours the first time through. Available for sale (cheap), or you can read the PDF free:

https://www.etf.com/docs/IfYouCan.pdf

The greatest challenge I see for you is that you and your wife are not on the same page financially. FPU can help with that. If you and she are not on the same page in significant other areas especially if causing stress in the relationship, get some counseling, individually or together, either from a professional counselor or if you have a place of worship perhaps they can provide this or give recommendations for where to go. This is a stressful time for both of you, and many would want such help. I would.

Finally: I wish I had thought of asking the questions you are asking when I was your age and even a couple of decades older. I didn't know who to ask or where to go to ask and there was no Internet. I like to think I would have taken good advice, but who knows.

You are young (You could be my grandkid.) You have skills, a good job, and assets. You also have some challenges. Play your hand well and you can do very well indeed.

Best wishes.
I don't know anything.

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Bacchus01 » Sun Aug 11, 2019 6:45 pm

smithbt2 wrote:
Sun Aug 11, 2019 5:39 pm
Bacchus01 wrote:
Sun Aug 11, 2019 5:33 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:32 pm
Bacchus01 wrote:
Sun Aug 11, 2019 5:28 pm
smithbt2 wrote:
Sun Aug 11, 2019 5:19 pm


I refinanced on Friday and paid $7,200 in closing costs (from savings). I purchased my townhouse in December. And, I have been furnishing the house, as I had no furniture of my own. I am back to saving each month, as things have settled down. Oh, and I did put $10K down on my new car purchase. I can take the car to CarMax anytime without being under.
$7200 in closing costs? Continually making bad choices. Slow down. Get a plan. Then move forward.
Yes. It was actually $8,100 before I questioned the price of what the title company wanted to charge me for closing. I paid $720 for points (3.75% to 3.625%) plus $450 and $350 for the Maryland Mortgage Certificate, which provides a 25% Federal Tax Credit of Mortgage Interest for the life of the loan, capped at $2K. It is worth the added cost. I don't plan on upgrading to a bigger house or moving. Locking in a lower rate was the best choice for me. I will continue to pay $2,050 toward my mortgage and pretend like the payment did not change.
Good lord, what are the rest of the fees? That’s really high.

And that rate isn’t even that great.
What? Mortgage rates are nearing an all-time low right now. 3.625% is excellent for a 30 year mortgage?

I believe these closing costs are pretty standard, or even less than what some may be paying.

Image
That is a historically good rate. It’s not currently competitive especially considering paying points. Again, slow down.

That $7200 you quoted included escrow, which most would not include. I don’t escrow. Escrow is giving someone else a loan for free.

$4200 in closing costs is not bad, but it’s also not ultra competitive. Those bank fees are high.

Planner01
Posts: 175
Joined: Mon Dec 26, 2016 2:44 pm

Re: How should my Spouse and I handle a $300,000 Settlement?

Post by Planner01 » Sun Aug 11, 2019 6:49 pm

Herekittykitty wrote:
Sun Aug 11, 2019 6:23 pm
Dave Ramsey's Financial Peace University: Attend it with your wife. It can help get you and your wife get on the same page, help prioritize spending, help set financial goals and a plan to reach them. It is hokey - don't let that put you off. It can help you and your wife.

https://www.daveramsey.com/store/produc ... J4EALw_wcB

Read Managing a Windfall on the Wiki:

https://www.bogleheads.org/wiki/Managing_a_windfall

Read The Millionaire Next Door by Thomas Stanley. It is a quick and easy read and worth it for perspective. Can be purchased, but likely in your library.

Read If You Can by William Bernstein. A quick and easy read, maybe a couple of hours the first time through. Available for sale (cheap), or you can read the PDF free:

https://www.etf.com/docs/IfYouCan.pdf

The greatest challenge I see for you is that you and your wife are not on the same page financially. FPU can help with that. If you and she are not on the same page in significant other areas especially if causing stress in the relationship, get some counseling, individually or together, either from a professional counselor or if you have a place of worship perhaps they can provide this or give recommendations for where to go. This is a stressful time for both of you, and many would want such help. I would.

Finally: I wish I had thought of asking the questions you are asking when I was your age and even a couple of decades older. I didn't know who to ask or where to go to ask and there was no Internet. I like to think I would have taken good advice, but who knows.

You are young (You could be my grandkid.) You have skills, a good job, and assets. You also have some challenges. Play your hand well and you can do very well indeed.

Best wishes.
EXCELLENT advice!! You are young and can turn this around. Please take the time to take the time TOGETHER with your wife to read the “Millionaire Next Door” and take the Financial Peace University from Dave Ramsey. It will change your perspective on money and vastly improve your marriage. Money is the #1 reason why couples get divorce. You must get on the same page to become a team who play did the same league. This windfall can change the course of your life if and only if you change your money behaviors. Otherwise it’s just a bandaid to a problem that will return.

Locked