I want to pay off debt with my $60,000 inheritance. My husband wants to invest it. Which of us is right?
This week, a reader received a large inheritance and can't decide how to spend it.
Our columnist says the amount is large enough to justify balancing several priorities.
Got a question for our columnist? Write to For Love & Money using this Google form.
Dear For Love & Money,
My grandmother died last year and left me an inheritance of $60,000. I want to use it to pay off debt: We have a $12,000 car loan, $5,000 in credit card debt, and $20,000 in student loans. I would like to put $10,000 in emergency savings, and the rest toward our mortgage principal.
It won't be much, but it's something, and I think it's worthwhile to chip away where we can.
My husband disagrees. To his credit, he is very respectful about this being my inheritance and my decision, but maybe it's because of this that I want to feel like he's happy with my choice.
He agrees with most of the debt payoff, but he thinks $13,000 will be a meaningless drop in the bucket of our mortgage, and he's never understood why I get so stressed about our student debt.
He thinks we should set aside at least $10,000 for a vacation, invest $20,000, and keep the rest in our savings account to use as needed.
So, which is better? Having fewer payments or more cash on hand?
Sincerely,
Champagne Problems
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Dear Champagne Problems,
Champagne problems indeed! Although I'm not sure the word "problems" applies here. Not just because we're talking about how you ought to spend $60,000, but also because while you and your husband aren't in agreement, you are approaching one another's opposing opinions respectfully. I've been writing about money and relationships long enough — and have been married long enough myself — that I know how rare that is.
It is so easy to view disagreement as disrespect. Recognizing that another person's ideas and opinions are theirs and not about you at all is often more difficult than it should be. You and your husband have done an excellent job at this. He knows what he thinks, but he accepts that it is your call; you know what you want to do, but you respect and value his opinion.
Stay grounded in your devotion to one another. Remember, while $60,000 is a significant amount of money, you're both worth much more than that, as is your relationship.
That said, who is right? Should you clear out your credit card debt and student loans, or should you invest, travel, and keep cash on hand? The answer is — whichever feels right for your family.
The answer might be a bit of both. I suggest you hire a certified financial planner to help you decide what that should look like for you.
And don't dismiss your husband's idea of taking a trip. Unfortunately, you'll likely always have bills. There will always be a dozen boring ways you "should" spend your money, but you may never receive $60,000, no strings attached, again. Make the most of this!
Three years from now, when your inheritance has long since been distributed throughout your life and your car breaks down to the tune of $5,000, you may curse the sky, curse your bank account, and feel sick over being $5,000 poorer than you were the day before. But I doubt you'll look back on your fabulous trip to Santorini or Bali in 2025 and think, "Man, that was dumb. If I hadn't gone on that trip, I would have the money to fix my car."
People rarely do that kind of math when it comes to travel. Probably because the money is gone anyway, and the experiences become a part of our stories. Find a travel rewards credit card, and you can use this trip to pay for another.
So yes, take this inheritance, pay off some debt, and make your life easier. Do the smart, practical thing and invest, but also have fun. Use some of the money to build on the story of you and your husband's life. You may never have another chance to pay for the kind of trip this opportunity affords you. Don't miss it.
For Love & Money
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