Properly Using the Blessing
Ida is a single mom. Her mom passed away, and Ida stands to inherit about $400,000. She makes $50,000 a year. Dave helps Ida make a plan to use her money wisely.
QUESTION: Ida in Los Angeles is a single mom. Recently, her mom passed away, and Ida stands to inherit about $400,000. She doesn’t own a home, and homes in L.A. are expensive, so she’s considering moving somewhere more friendly to her budget. She makes $50,000 a year. Dave helps Ida make a plan to use her money wisely.
ANSWER: If you’re willing to be on a budget and never borrow money again under any circumstances, the first thing I would do is pay off all the debt and cut up the credit cards. You’ll be debt-free with $350,000 in the bank. I would set that money aside and not touch it. Then you go back to your normal life with no payments and live on the money you make.
If you make the decision to move, then you can take some of that money and pay cash for a home in some areas. It might be tough to pull that off in Los Angeles, but you may be able to. It would be pretty cool to have a paid-for house.
Once you make that decision, say if you’re not going to move and want to look for property, then you can try to do it with cash there where you are, even though that’s a stretch. If you are going to move, try to buy a property with cash and have some money left over, depending on where you move.
For today, you’ve got the grief of the loss of your mother, and you don’t want to do something stupid. So keep your hands off that money and pretend you don’t have it. Don’t sneak over and spend a little of it, because you’ll look up one day, and it will be gone.
Set it aside in an account that’s not at your bank. If you go in that other bank, all sorts of warning bells like guilt, shame and others will go off if you go into that bank. You’re not supposed to go over there to get the money unless you’re doing something really, really smart with it.
As you develop your plan, then that will tell you what to do with the rest of it. Don’t pay off the debt unless you’re going to get on a budget and quit borrow money. Don’t go back in debt again.