Unexpected 'gift'

[Theadyn]

Have you ever been the recipient of unexpected money? And, if so, if you knew then what you know now, what would you do with it?

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My personal story on this.

I am 43 years old. I have nothing saved for retirement. Am widowed, my late hubby fought cancer for two years and lost. They pretty much took everything, all our saved up money was used to pay all the multitude of things insurance did not cover while fighting this horrid thing. I cashed in what little retirement he had after he passed to live on, to pay for funeral stuff, catch up on bills and house payments, and get by while I had broken wrist and unemployed. The courts allowed me to keep a house (which was mortgaged and way more than I could afford, and too big anyways, it's sold now), a car (which thankfully was paid for) and furnishings. The debtors could come after me for anything else, but they couldn't touch his retirement money or the small life insurance policy that his company had on him. I paid off the remaining debt I had (surgery on said broken wrist), money down on smaller house, which has since been sold (the proceeds of which I bought the rv with), and lived on between jobs.

I get a letter in the mail from a place I used to work. I worked there fulltime for 4 years, left it in later 2011 to move here. I fully expected yet another bill that I had to refute, cause he had his major abdominal surgery there in 2010, but to my surprise it was a letter to me about their Cash Balance plan and I had something in it. Well, it's taken me a month of back and forth and calls and being on hold for 45 minutes and such, but come to find out, I had a small retirement amount in my name. I didn't even know about it. It took the bill collectors no time to find me, yet the retirement people it took them 3 years to find me after I left them. Hmm..

Anyways, after feeling like I was having to get in to Fort Knox for info to see what exactly it was, and fully expecting it to be something like 'Your balance is $45' or some such, come to find out it's about $7k after taxes. As they haven't even let me know, ever, how it's invested, I cashed it out and will be receiving a lump sum, taxes already taken out. Money I didn't even know was mine.

I know the 'normal' thinking peeps would say just roll it over into a IRA. But, me.. I'm wondering, would a better plan be to use a small part of it to find and outfit a van as cheaply as possible? Which scenario would do me the most good? Are we sure there isn't another economic crash on the horizon? Seems like times are getting worse every day. I need to quit reading the news.

I already fully expect SS to be non-existent when I reach retirement age. And I know I will need to save some for later. But what about thinking my 'saving some' is geared more towards 'not needing as much'? The less I will need the less I will need to save for later on. Learn to live on not much. Outfit a van to be as self sufficient as possible, now, while these unexpected funds are available. Then while the expenses are so low I can save up for later years. Or not even worry about later years because I've learned to live cheap and found ways to earn money that's not the norm.

Would you look at this as a gift? Or just stick it into an IRA?

 

[Luisafernandes]

Hi.
If you still work and want to buy and live in a van, but don't have the money, maybe you should use that new found cash to fund the van. If you don't, that money one way or another may disappear and you still won't have a van.
Then while living in the van you can save a lot more than if you were paying rent. Why give your money to someone else, when you can keep it yourself?
Be well[emoji4]

 

[Almost There]

Maybe do some of both!

When you're used to living from check to check (no matter the source) having an emergency fund is a wonderful gift of mental freedom.

If you save it all for a rainy day, the rainy day may never come. OTOH, if you spend it all right now, even on setting up a van, an emergency becomes a monumental mountain to be overcome.

I've lived both ways and I can tell you without a doubt that knowing you have an emergency cushion feels really good.

 

[SoulRaven]

I agree with Loisafernandes, I would consider it 'Found"money and invest it in your van or RV. You may or may not be in the position to have 'extra' funds anytime soon.

When I got my settlement with The Veterans Admin. I put half in savings and bought my van, finished paying on my youngest daughters car and was debt free. Go for it.

Bob J.

 

[SweetMarie1965]

Personally, I would save some for contingencies, I like credit unions, and then use the rest to outfit a van or RV and become independent.

The rules for IRA's and other plans keep changing. We lost over $30,000 in a plan at work that wasn't supposed to be a retirement plan. This was back in the 80's. The government changed the rules; money in work savings plans had to be considered "retirement" savings. The 401K was born. We'd been saving for a house and were ready to buy at the time. What to do? We needed the house, so we had to pay a huge penalty just to access the money. It wasn't until a couple of years later that they allowed money to be withdrawn without penalty if it was used for a house. No recompense was made for those who were caught in between the rules change. We paid a large penalty for withdrawing from a plan that wasn't supposed to be a retirement plan in the first place. To add insult to injury, the housing market later dropped at the time when we were needing to sell, so we lost money again. There had been family pressure to be to buy a house. Before that we had a van that we loved and traveled and lived in for a time. But we came off the road to be "responsible". My ex-husband's father had been hounding him all the time telling him it was shameful not to have a house; the he was a failure. So we believed the "you can't lose money in real estate" lie. You can't lose only if luck and time is in your favor; but they don't tell you that.

I'm wary of financial schemes now - the last few years have more than proved that financiers can't be trusted, not by a long chalk. And government changes to the rules can happen at any time. Tax avoiding plans raise a red flag for me.

Thinking back to the "advice" through money managers and the like that you read about it all the time in magazines, on money web sites and hear about on news programs on television... I'd like to get a hold of a few of those people now. I know a lot of people who lost big in the Wall Street and housing crashes. For those of us who are older, it was devastating. Everything we worked for evaporated in an instant. I trust God now and forget the "normal" voices. I listen to my own still small voice; it's much wiser. I received an unexpected gift of $1500 this week. It's going toward a van so I can get back to a lifestyle I loved.

 

[Terry]

Save as much as you can for "THINGS THAT HAPPEN". I believe you have an RV that you live in? Fix what need fixing. A van is a BIG step down and your getting close to an age when some comforts will make a world of difference. I believe your either into or looking into alternative "JOBs" or self employment. If you already know what you want and can work/live with doing, get some of the tools necessary to make that work easier.
Another thing I would do is weld/have someone weld a fire proof lock box somewhere to the frame of you RV where you can get to with little difficulty. If collectors are after you, cash is the best way to have savings. Either that or a safe deposit box somewhere.

 

[rvwandering]

I agree with DTFuqua. Keep your RV, fix anything that needs fixing and stash the money. You may need it more in the future.

 

[Seraphim]

Anything you want to save, I would not recommend an IRA. Might be a small tax break, but a %10 penalty for early withdrawal if you need the money.

Consider a taxable account with Vanguard, and a blended fund such as Wellington or Wellesley. Very low Annual maintenance fee -about .20%, I think. No fee to open. No fee to buy or sell. It can all be handled online. Then if you need cash, it's a phone call or 5 minutes online, and the money is deposited in a checking account within two days.

I would not put any money into a tax deferred account unless you were 100+% sure you will not need it before 59.5 (age).

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One question which begs t be asked, and I can understand if you don't want to answer, is if the debt collectors are still after you? If yes, you may want to call an attorney and ask about the protected status of that money, since it comes from a retirement account.

Personally, I would not keep cash in a vehicle. An accident where you're taken to the hospital, and the vehicle is towed or demolished... You may not be conscious to get money out, or an employee of the wrecker service finding the box...

Just my .02

 

[IGBT]

Actually rolling the money over into a Roth IRA if it can be done with no taxes (if OP has little earned income) would not be a bad idea because after five years there is no penalty for withdrawing the original contribution/rollover. Actually there is no tax either.

Sounds like the OP has already taken the cash though and paid taxes so not sure if that can be undone.

Things like cancer taking you out at 43 (I am 44!) is one reason why we are going forward with adventures/early retirement instead of waiting until we have "guaranteed enough". I do not want to slave and save another 10 years only to find out then I have 6 months to live.

 

[Theadyn]

Thanks all for the replies!! It's interesting to get the different points of views, thanks!

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Just for my personal situation, here goes. Nope, the collectors are no longer after me after probate went through the courts. They had their chance, if they didn't show up and state their claim, they can no longer ever come after me, I'm good there, no worries. I still get the occasional doh-doh who bought a bad debt from a hospital or such and try to come after me, to which I send them a copy of court papers showing that it's gone through the system, was settled, and 'sorry you bought a bad debt'.

I do have an RV, there isn't anything wrong with it or that needs fixing. However.. I do not live in it full time. It's way too big. And gets 8mpg. Stealth, forget it! Either needs hookups (ie. camping fees) or a loud generator going to power most of the inefficient things put in it. It's fine for weekend trips and in an immediate pinch, could use it for housing if needed. For now, living in a house. Looking more towards the future, though. I've seen how things can change in an instant. Just thinking towards hedging my bets. Thinking of possibly selling RV in the spring to recoup the cost. My thoughts were:
-will have $7k coming in next few weeks.
-spend no more than $2k to buy cheap van and outfit with repurposed items, slowly adding things as extra cash allows.
-sell RV in spring, hopefully getting back close to what I spent, $9k (if not a little more due to new transmission last July)
-currently have extra vehicle for sale, looking to get $4-5k from it.

At present, I'm not working. I am taking some online courses (already paid for). Zero debt, zero bills. I live with bf who has an older RV, should we feel the need for one. Am trying to work towards making money from home, remotely. I do get wanderlust fairly often and have on occasion camped by myself. Truth be told, I've camped alone since 2001, I get the bug often. It's kind of inefficient to take my gas guzzling big rv very far, though.

Extra monies would be split, some in a savings account for emergencies (have an online one that is attached to my checking account) and the rest either a ROTH or other IRA with Vangaurd for later. Other perks, for now, is there is a wood working shed here at the house, along with a big insulated shop for working on things. I think the bf might enjoy helping outfitting the inside, if not, I know my dad would. (I'm secretly hoping to get him interested in vandwelling, shhh...)

Then use the van for camping or getting away, testing it out, tweaking it. Then if needed, it's there and ready. Some people have no time and throw it together out of need. I feel like this is my time, I can plan it out, shop for deals, take my time, and do it right while there is no rush. And I may get a little emotional on this part, but sometimes I feel my late hubby is guiding me to this, to allow my true nature to come out, telling me to be real to myself. He always knew, and liked, that I didn't just follow the sheeple. Why I kind of wonder if this isn't a 'gift' after all.

Bah, enough blubbering, lol. All boils down to people are gonna do what they are gonna do. Just wondered, what would YOU do?

Cheers all!

 

[Queen]

Lets see, $7000. I'd buy a van and do a basic set up, stash at least $3000 for my emergency fund, then hit the road.

 

[Seraphim]

Sounds like you already have a sound plan: you're immediate needs are taken care of, the past can't come back and bite you in the rear, you're taking action on your future with education, you have a supporting partner, and you have assets to use to make your van happen.

You're rich, compared to many.

Now, just do it.

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What would I do?

Sell the RV as soon as possible. $10k into an investment account as I mentioned above, $6k in a credit union savings and short term (3 month) CDs. Assuming you get $9k for the RV. Take your time finding the right van. Once you have it, you can use it, and slowly decide what changes to make to turn it into your second home. Spend as little out of the 6k as possible on the refit.

Be nice to your BF lol. He sounds like a very understanding soul.

 

[akrvbob]

How tied into your plans is the BF? The reason I ask is very few people can live happily in a van as a couple. Some do, but they are the exception. If your BF is a factor, then wouldn't your newer RV be a better choice since it is trouble-free?

If it were me, I'd sell everything, get all the savings I could for an emergency find, and hit the road. But that's just me.
Bob

 

[offroad]

Take a $100 course on how to live dirt cheap. Did this recently and downsized in a major way. Excepting medical cost now think I could live on $15,000 or less a year. Not easy but can be done. This is a valid professional done course with great reference from a person who lives this way

http://www.cometcamper.com/e-courses/

 

[IGBT]

Take a $100 course on how to live dirt cheap. Did this recently and downsized in a major way. Excepting medical cost now think I could live on $15,000 or less a year. Not easy but can be done. This is a valid professional done course with great reference from a person who lives this way

http://www.cometcamper.com/e-courses/

Reminds me of the $20 book on how to get rich. The first chapter tells you not to waste money buying $20 "how to" books.

(I think you can live cheap too and all the information is on this forum if you spend some time researching. $100 might be reasonable though if you have more money than time)

 

[offroad]

Time equals money. Did I get ten hours of mcdonalds minimum wage $10 per hour for $100? Yep I saved ten hours worth of research and made contact with a new community who are interested in this lifestyle. Worth it. Plus sold $100 worth of clothing and other goods that I would have given away. The course taught creative selling skills in a used market, that many do not use.

 

[Scott_1776]

Whatever you do, don't invest in the stock market right now! If you must, wait for another big correction (predicted in 2015). Then when all the talking heads are saying the world is ending and people are loosing their minds, buy blue chips (google Dogs of the Dow) and get a few at a bargain and within a month or two you'll see a huge return. Plus, if you hold them the dogs return a nice dividend annually as well if you pick right. Personally, I use the money to lower my cost of living, if that means using it to get a van and stop paying endless rent, that's money we'll spent!

 

[Seraphim]

Whatever you do, don't invest in the stock market right now! If you must, wait for another big correction (predicted in 2015). Then when all the talking heads are saying the world is ending and people are loosing their minds, buy blue chips (google Dogs of the Dow) and get a few at a bargain and within a month or two you'll see a huge return. Plus, if you hold them the dogs return a nice dividend annually as well if you pick right. Personally, I use the money to lower my cost of living, if that means using it to get a van and stop paying endless rent, that's money we'll spent!

When you speculate and try to time the market, you have to guess right twice: when you buy and when you sell. Just because the market is in correction doesn't mean an individual stock will be down. If you can read cash flow sheets and understand the financial reports a company puts out, you can still guess wrong.

If you plan to use the money in less than five years, don't put it in the market. Period. I've been investing for 36 years and I'm certainly not about to time the market. I have no crystal ball, and I do have access to daily market analysis, information, and I track several indexes daily. Mostly just for fun anymore. I'm no longer in the accumulation phase, but still..

Investing in the market is a long term commitment - not a chase for hot stocks or market timing. Speculative trading, such as Scott suggests, is also expensive, as you pay a fee to sell and you pay a fee to buy. Buying a few blue chip stocks also offers no protection from diversity.

The funds I mentioned have no fees for buying or selling. They have no loads whatsoever. They are blended funds - owning both equities and fixed income. They own a large selection of stocks and bonds across all asset types and all sectors. There is a high level of diversification to moderate volatility and offer protection of one part of the market or economy suffers difficulty. The bond portion offers regular income and the fund pays dividends as well. I'd go with the Vanguard fund which offers a 65% stock and a 35% bond allocation. I think that's the Wellesly fund. It might be the Wellington fund.

Now is an acceptable time to put long term money into funds. If wait for an allegedly predicted correction, you'll probably lose out on several years of returns waiting. I've been waiting a couple years for interest rates to rise, bonds to drop and yields to increase. What happened? Intermediate bonds have returned over5% YTD lol. But it's no big deal for me. Just shows that timing the market is unpredictable, even for someone who's been investing for decades.

Ignore the daily/monthly and generally yearly fluctuations which is only caused by the nervous concerns of speculators. Those are not the dips and peaks on which to base decisions. In the long run, they aren't that that significant. Look to the future and long term. If you can't do without the money, again, for at least five years, don't invest it. You'll probably lose. If you wait for the next correction it'll possibly be three to five years. The market is slightly overvalued, but not much. And no savvy investor is going to all fussed about a simple correction - no 'world ending' or 'people losing their minds'.

But key in on one thing Scott DID say - IF you pick right. And if I pick the right ten numbers, I'll win the lottery.

Just offering my opinion.

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Sorry Scott, but so many people lose their money on that type of speculation.

 

[Scott_1776]

I guess I was too vague, I didn't suggest she "speculate" at all, but I follow trends and other technical analysis as well. I suggest she choose a high dividend, blue chip stock like Verizon or Merck and wait for a "market" depression, as the Dow is at an all time high, it not a great idea to buy at such inflated heights, but wait for an opportunity and buy when the market goes lower and all ships rise and fall with the tide generally, and get in and "hold them" for the high dividends they pay (nice cash flow). You don't have to be an "expert" to play the game. Personally, I 'd go the reduce expenses route I recommended first.

 

[Seraphim]

Scott

You're suggestion was not vague. I understood completely. That type of investment is speculation; as opposed to a longer term buy and hold strategy, and has many risks. Trends are generally short lived because they eventually show their faults as conditions change. Tragically, for many investors who never really understood the field.

The indexes are at all time highs, but they does not mean they are overvalued to the point they're due for a correction. They are not 'such inflated heights'. They are slightly over valued. Indexes constantly reached all time highs - they must, eventually. When they fail to do so, the market is in permanent trouble.

And not all ships 'rise and fall' with the tide. Individual stocks - even blue chips - fall hard and/or fail, or just lose money, for numerous other reasons. It's why one diversifies across sectors and asset class.

And now you're suggesting to wait for a depression, not a correction. I'm curious if you completely understand the difference. No insult intended.

It's the OPs choice *shrug*. I've said my piece. Everyone can't be successful in the market or it wouldn't work. For those who beat the index, there must be people who fall below it. Most often the losers are those who jump into investing with no knowledge and follow trends, expecting quick returns, which generally fail to happen.

NM. I've offered a warning most educated investors would offer a new investor - same basic advice Warren Buffett offered to the vast majority of individual investors - and I'm done.