I Need Your Advice!

Things are going relatively smoothly these days, despite L starting kindergarten in a different school than expected, my starting a new job, commuting as a family for two hours a day, going through the process of selling a house, and navigating the process of renting a new house. (Let’s not even discuss packing right now, ‘k?)

In the process of moving to this new job, the HR folks told me that certain types of Leave days don’t transfer, though others do, since I’m moving from one state institution to another. I jumped through the required hoops, and the HR folks from my former job confirmed that I’ll be receiving a paper check at the end of the month with my pay-out from those days that didn’t transfer. I figured it was at least worth checking if they knew a round-about number of what I should expect in that check. DUDES. $3000+! 

Cue the cheering.

Now cue the head-scratching.

What to do with it?

My first instinct was: “Put it in my Roth IRA!”

After all, that’s why you save your leave days when you’re working – you want them to pay them out when you retire so that your annual salary goes up in that last year, which (supposedly, and from what I understand) then makes your retirement larger. So, it makes sense that put this where it belongs – in retirement.

I’ve already complained about my retirement in the past. I have two accounts: one is a TIAA-Cref Roth IRA (which I opened when I rolled over my retirement from another state when we moved back in 2004 or whenever that was) and one is my state retirement fund. 

TIAA-Cref Roth IRA: 19,765.
State Retirement: 15,440.

These are not great numbers, and I’ve been wanting to max out my Roth – and that was a goal on my list.

But……. Now I’m second-guessing it.

We have big plans to go to a conference in Strasbourg, France in July 2015. That’s not a whole lot of time to save up $5,000 (or more – I’d rather have more than we need saved up than come up short, natch). (I did just open a travel card with Chase for this purpose, and they gave me a huge credit limit! Yowza. More on this in another post!)

Other big savings plans include:
– downpayment (we’d like to have 20% or a similarly high number to get a good rate – and if we didn’t have to pay PMI, that would be icing on the cake)
– new (used) car (H wants a Tesla! I laughed at first, but I have to admit I may have been mistaken. After watching Cosmos…. well.)
– emergency fund

Those are far in the future, of course (except for the emergency fund), and we have TONS of student loan debt still!

So:
Option 1: put all of the $3300 in my Roth IRA. (No worries about maxing out my contributions for the year – I seriously only put in $30 a month!)
Option 2: put it all towards the largest student loan we have to minimize interest
Option 3: put it all in savings (divide it up as needed – perhaps putting it all in the travel fund to not worry about eventually having to fund part of the trip with credit cards) – this would have the added benefit of helping us out when we clear out a lot of our savings to move in a few weeks (deposit on rental, first month rent, paying the movers)
Option 4: Divide it up in some way between those options

I feel like probably the safest method is to divide it up (option 4) BUT THAT IS SO UNSATISFYING. Not the smartest, but the safest. Especially since it would involve saving the money to have if needed.

It’s basically “found money,” though, and I think the “smartest” method would be to either invest it in the Roth so it can grow for me (the earlier the money goes into the investment account, the better and smarter it is!) or pay down some of the student loans. Then it disappears into the abyss and it’s almost like it was never here at all. At least it gets us closer to accomplishing a goal.

Why is it that if you do get a windfall, it never seems like enough when you are in debt and behind on saving? I’ve read one or two blog posts recently that reference the challenge of debt-freedom stress. One might assume that without debt, you’d feel free and happy; however, whether it’s due to a feeling of needing to play catch-up with retirement and savings since debt pay-off has been your financial focus or just the fact that the kind of people who tend to work really hard to pay off debt are going to be very focused and aware of money (no matter whether it’s debt payments or growing investments), people tend to still fret over money.

Now, I implore of you…. please tell me: what would you do with that $3300 if you were in my position (given what you read above)?

P.S. When we make a little money off the house sale (maybe $6K?), that’s already earmarked for saving for a downpayment again. We won’t be investing it because we’re not looking at a super-longterm time (or, at least, we’re not sure if we are, so that’s reason enough not to put it an investment fund). We may look for a 1% interest rate savings account online, though. Any suggestions there, either?

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5 thoughts on “I Need Your Advice!

  1. debtor says:

    if i were you, i’d put $1000 in my Roth and the rest to the loans. I think whatever you had planned for your france trip should be what you stick to. I wouldn’t want to lose out on the IRA compounding but since you have debt you dont really have the luxury to take full advantage. $1000 seems like a good compromise

    Liked by 1 person

    • You make a good point about not having the “luxury” to take advantage of IRA compounding. You are absolutely right – and that’s so well-put! Thanks for taking the time to give me some advice!

      Like

  2. 1000 in your Roth. And the rest to add onto your home down payment to eliminate having to pay PMI. If purchasing a house wouldn’t be for another 2-3 years, I’d say just put the remaining $2.3k on your student loans; esp if it’s a 5% interest rate.

    Congratulations on the found money 🙂

    Liked by 1 person

  3. Great point about the timing of a home purchase – we probably wouldn’t be looking to buy for at least another two years, because it would take us at least that long to build up a sizable downpayment. Thanks for giving me your advice! (And I think my husband’s loans are at 6%… so it looks like putting the 2300 there would be the right idea!)

    Like

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