Smart Money: It’s not wise to count on inheritance money
DEAR BRUCE: I have always been told that I would inherit lots of money from my grandmother. I know that my mom is the beneficiary of several large trust funds. Grandma passed away and left some money to some second cousins that I’ve only met twice in my life. Now I need some serious help in getting my house in order. I’m 32 and married with two children under 4.
My husband makes $60,000 and I stay home by choice. We have no savings and have minimal contributions to a 401(k) and $11,000 in old credit card debt. We were counting on an inheritance. What would you suggest? — M.R. via e-mail
DEAR M.R.: Inherited money is all very well but as you have demonstrated you can’t always count on it. Many times people string others along with how much money they are going to leave them to curry their favor and then, when they die, you find out they were blowing smoke, which is their privilege. You mentioned that you have a $60,000 income, which is above average. The first thing to do is to get yourself on a budget. That is easily said, not so easily done. Unless you choose to add to the family income by going back to work, which apparently you don’t wish to do, I don’t know any other way to get your house in order other than to first decide what must be paid and what discretionary spending is currently being enjoyed. It’s not easy but then who said it should be easy.
DEAR BRUCE: My husband just sold off one of his horses for $15,000. We have a little extra money for the first time in our lives. Our mortgage is 6.75 percent. I have thought of paying it down partially. Would you suggest this or sock it away in a growth-oriented investment? — Alicia via e-mail
DEAR ALICIA: The 6.75 percent interest rate is a tad high. You might wish to consider refinancing and, at this writing, you should be able to get it down about a point if your credit is in order and your income sufficient. Over a period of time this results in considerable savings.
In your letter you indicated you have young children, so may I conclude you are relatively young? I would be far more comfortable putting the windfall into a long-term, growth-oriented area. While the day-to-day fluctuations may make your stomach churn, over a 10 to 20 year period I think you’ll be very pleased.