“I’ve never had to plan around this much at one time so talk to me like I’m dumb”: I’m receiving a large inheritance but need advice on saving it for a future home purchase. What should I do with the money?

Hi Money Minder,

I’m about to pocket some inheritance in the next few months. I’m thinking of smashing out my student loan, waving goodbye to my credit card debt, and using it for my monthly bills. Gotta boost that credit score, ya know?

With about 70k USD hanging around, I’ve got my eye on a house. But I don’t wanna fork out more than my current rent. Houses in my hood usually go for 250-300k.

I thought it might be smart to stash that 70k somewhere it can grow while I work on my credit. Should I go for a 1 year CD?

Got any ideas on what I should do with this windfall? I’ve never had this much to play with, so just keep it simple for me.

Catch you later,

Budget Buddy

Response from THE MONEY MINDER:
Hello There,

Congratulations on your upcoming inheritance! It sounds like you have a solid plan in place to use part of it to pay off your student loan, eliminate credit card debt, and improve your credit score. Considering the amount leftover, it’s wise to think about how to make that money work for you. Placing it in a 1-year CD could be a good move if you want a safe, low-risk option that offers some growth while you work on improving your credit score and planning for a future home purchase.

With regards to purchasing a house, it’s commendable that you want to avoid exceeding your current rent amount. Given the average house prices in your area, a 250-300k budget seems realistic. To make the most of your inheritance, you might want to prioritize maximizing your down payment to secure a favorable mortgage rate. This could involve a combination of saving from your leftover funds and potentially exploring other long-term investment options that align with your risk tolerance and time horizon.

One thing to consider is consulting with a financial advisor to discuss your specific goals, risk tolerance, and timeline. They can help you create a comprehensive financial plan that includes investing your inheritance wisely while keeping your long-term objectives in mind. Remember, building wealth takes time and careful planning, so approaching this situation with a clear strategy will set you on the right path.

All the best from THE MONEY MINDER.