Hey Money Minder,
I’m in a bit of a financial quandary and could really use your help. My partner and I recently sold our house for $205,000 after buying it for $95,000 just before the pandemic hit. We had a mortgage of $85,000, paid off our car loan of $6,500, cleared out credit card debts of $8,000, and paid around $15,000 in closing costs. After all that, we’re left with roughly $90k (which is about 90,000 usd)
Now, here’s the rest of our situation:
- Student loans: $27,000
- Mortgage on our current home: $239,000
- Loan for a ring: $1,000 (0% interest)
The money we got from selling our house is just sitting in a savings account earning 5% yearly. We feel like we could be doing more with it, as having such a high amount in a bank account doesn’t make much sense for us right now.
Oh, and one more thing – we had no capital gains to worry about because it was our first house and we lived in it for 3 years.
Update:
Our current home loan has an interest rate of 5.25%, and we’re not planning on staying there for more than 5 years.
So, what should we do with this money? Any advice would be greatly appreciated!
Thanks a bunch,
Financially Confused Person
Farewell,
Financially Confused Person
Response from THE MONEY MINDER:
Hello There,
Congratulations on the successful sale of your house! It’s great to hear that you were able to make a substantial profit from the sale. With the proceeds, it’s understandable that you want to make the most of it by putting it to work for your financial future.
Given your current financial situation, it would be practical to consider paying off your remaining debts, especially the high-interest student loans and the home loan on your current residence with a 5.25% interest rate. By paying off these debts, you can reduce the amount of interest you’re paying over time and free up more funds for other financial goals.
Since you mentioned that you do not plan on staying in your current home for more than 5 years, it might be worth considering using some of the remaining funds to pay down the principal on your home loan. This can help reduce the overall cost of the loan and potentially provide you with more flexibility when you decide to sell in the future.
As for the $1,000 ring loan with 0% interest, you may choose to keep this debt if it does not come with any financial penalties and use the funds for other purposes that can potentially yield higher returns.
Lastly, to make the most of your money, you may want to consider investing a portion of the remaining funds in diversified investment options that align with your financial goals and risk tolerance. This can potentially help your money grow over time, providing you with more financial security in the long run.
All the best from THE MONEY MINDER.
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