‘I get 150k inheritance, should I pay off my house or buy a condo?’ Facing a dilemma on how to wisely invest a windfall. What should I do?

Hi Money Minder,

So, here’s the deal – got 450k in student loans (under pslf with about 7 years left), paying about 300 a month this year and probably looking at 2000 a month next year. Then there’s the 530k house, mortgage and taxes totaling about 4400 a month (30 year fixed).

My income is currently around 260k per year for two years, but I’m hopeful it will increase to 325k+ after that. Now, if I end up getting a 150k inheritance, should I chuck it all into the house to lower my mortgage, save up a bunch, and use some of those savings to snag a condo in the 200k range? Or should I use the inheritance to buy the condo, rent it out, and use that rental income to pay off the house quicker?

My plan is to ease into retirement with a three-day workweek in 7 years, pay off the house as fast as possible, and ideally own a second property. What do you think? Let me know if you need more info.

Farewell from Dreaming Big

Response from THE MONEY MINDER:

Hello There,

Hello,

I appreciate you reaching out for advice on your financial situation. It seems like you have a lot on your plate with student loans, a mortgage, and plans for the future. Firstly, congratulations on being proactive about your financial wellbeing.

Given your circumstances, receiving a $150k inheritance presents an opportunity to make a significant impact on your financial stability. In this case, a practical approach would be to allocate a portion of the inheritance towards your mortgage and savings. Considering your ultimate goal of owning a second property and transitioning to part-time work in the future, here is a suggestion:

Allocate a portion of the inheritance towards paying down your mortgage to reduce the overall debt burden. This can help you save on interest payments in the long run and potentially shorten the time it takes to pay off your house. Additionally, consider setting aside a portion of the inheritance into savings or investments that can grow over time to support your future plans, such as acquiring a condo for rental income or achieving your goal of working less in the future.

It’s essential to strike a balance between paying down debt and saving for future plans. By strategically using the inheritance to reduce debt and build your financial foundation, you can work towards your goals with more financial flexibility and security.

I hope this provides a helpful perspective on how to approach the decision regarding your inheritance. If you have any more information to share or specific questions, feel free to reach out. Remember, financial decisions require careful consideration, and it’s important to align them with your long-term goals. All the best from THE MONEY MINDER.