The other day my Mother & her husband gave me & my siblings a gift each of $**,***.**. TOTALLY UNEXPECTED!
I am awaiting as I type a call back from our accountant verifying my thoughts on keeping this VERY generous gift tax free for years to come. I'm thinking of my state's municipal tax bonds, and not co-mingling it with any other monies currently so as to always know where any income it generates came from.
I do believe it will soon be enough to pay my house taxes each year if I let it compound and grow (assuming we stay in the same house).
THANKS MOM & HUBBY!!!
edited to add: The accountant says since we aren't in a high tax bracket to begin with it doesn't really matter if we pay taxes on it or not. Hmmmm, I just hate paying taxes, and currently my state's municipal bonds are paying a nice interest considering the economy. I haven't checked their ratings yet, but I'm still going to mull over my options. If you've any good ideas, pipe up, I'd love to hear them. I could conceivably put this money inside my Roth and finish fully funding it for 2008, all of 2009 and some of 2010 when we get to that point. For today, I'm taking it to the bank to deposit then moving it to a savings vehicle until I make a final determination as to what to do. I'm thinking NICE & CONSERVATIVE on this pile. Of course, there is a tithe to be returned on this, so after paying that I may have to add some of our other funds in to meet some of the bonds purchase price.
And, I'd like to hear any ideas on what extra special thoughts should be included on the thank you note I'm currently writing.
Please, let me hear your thoughts...I'm open to everyone's ideas.
February 20th, 2009 at 06:26 pm 1235154363
What a nice problem to have... where to stash the windfall. ;-) I definitely vote for a conservative place, where your principal remains intact even if it means getting a smaller rate of return.
February 20th, 2009 at 07:11 pm 1235157112
This is a wonderful gift: I know it meant as much to your Mom to give it as it does to you to receive it.
I've been in the investment business for over 30 years. (Even though I am a woman....insert a big smile and a small sigh---interesting business for a woman). Anyway, be very careful with muni bonds now. Even if the rating is currently good, ratings can change and are changing. If that is the route you go, you might want to make sure it is a General Obligation municipal which is backed by all of the taxing authority of that goverment rather than one specific part of the government income.
Good luck!
February 20th, 2009 at 10:40 pm 1235169616
February 20th, 2009 at 10:50 pm 1235170233
Our real freedom came when we paid off our mortgage. You have time, so think about it.
February 20th, 2009 at 11:23 pm 1235172196
Aleta's idea of the mortgage is nice...you owe less than $16K!
What a wonderful gift! How do you show appreciation for such a nice gift? It seems like thank you is just not enough, but I doubt they want you to buy a thank you gift. I think conveying the joy or freedom you feel because of the gift, might bring them joy of knowing it was appreciated.
February 20th, 2009 at 11:34 pm 1235172875
Although I live in a community property state my Mom would ideally like me to keep it separate for myself rather than co-mingle it with Hubster & my's joint funds. She loves him dearly just wants to make sure I'm okay into my golden years. Understandable. It's a moot point really. He's okay with me keeping it separate, but I'll be listing him as first beneficiary on anything I do most likely anyway, so, whatever! It's all our money anyway, if we need it to live on, guess what? I'll be digging it out for us to live on. This way it just comes way down on the list of $$'s to withdraw from first.
I would love to pay off the house. BELIEVE ME. Financially wiser to keep it mortgaged according to Edelman, but still - I'd love it paid for. That's just me. Hubster is fine with us having the cash to pay it off if we want to, OR having that cash available for whatever else we want to spend it on. It's a nice option/position to be in, but like I said I have an opinion, one I've voiced loudly and long over & over but he gets the final vote here and we're going with his decision at this time. Should God forbid something happen to him? I'm paying that sucker off post haste!
February 21st, 2009 at 02:03 am 1235181824
February 21st, 2009 at 03:01 am 1235185303
February 21st, 2009 at 03:47 am 1235188032
February 21st, 2009 at 03:53 am 1235188394
February 21st, 2009 at 05:20 am 1235193606
You didn't tell me what kind of taxes you hate to pay. The I-bond is federal tax deferred, no state tax. If you use it for education (books and tuition), no tax. Right now the fixed rate is .7%, variable 4.92%, 5.64% total.
The interest rates won't that nice in May, we definitely have deflation according to the CPI-U - but if the fixed rate is good then, its something to consider.
And for laughs, if you are thinking Mad Max apocalyptic, there's always gold and bullets.
February 21st, 2009 at 02:02 pm 1235224950
What my Mom did was to use her savings to pay off the house and then she paid back her p & i each month into a separate account. Her mortgage was only about %18,000 when she started and I think paid if off at about $13,000. She was paying more than $1,000, a year in interest but wasn't making that much on her bank interest. I'm glad that she did this because she now has alzheimers and it has made everything so much easier for the family to deal with her finances.
February 21st, 2009 at 08:31 pm 1235248311
February 26th, 2009 at 07:00 pm 1235674806
NJDebby, we already vacation yearly quite nicely via our timeshare exchange. BUT, I can't imagine spending that much money on a vacation! GAAA, my frugal butte would pucker beyond all enjoyment that might be garned from the sightseeing!
February 27th, 2009 at 09:58 pm 1235771894
I just wanted to add that Aleta's mom's plan would not fly in a community property state, which I am sure you are well aware of. You can't make income, earned while married, become separate property. Likewise, using the money to pay the mortgage would make it joint property. Pretty lose-lose if you use the money to pay the mortgage. It's really difficult to maintain separate property in community property states.
February 27th, 2009 at 10:50 pm 1235775027