I had a money miracle happen to me recently and I’m excited to finally share about it here today.
My grandpa (my mom’s dad) died this past January. When he died, the thought of him having money left behind to pass down to me never even crossed my mind because 1) he and I were not close and 2) I’d assume anything left behind would go directly to his two sons (my uncles).
I was totally wrong about this.
As it turns out, my grandpa stated in his will that if any of his three children are deceased by the time he dies, the money that would normally go to his children will go to the his childrens’ children. Since my mom is deceased, the money that she would have inherited from her dad was divided by four and given to me and my three siblings. See what I mean? A money miracle!
I was so shocked when my uncle handed me and my siblings our inheritance checks a few weeks ago. I never expected this at all after my grandpa died! My siblings and I were never close to him when we were growing up, so why would he leave us anything? My shock quickly turned into appreciation: because he generously included me in his will, I would be able to alleviate a lot of financial stress thanks to my windfall.
Now, my portion of the inheritance was not a ton (it was only 1/4 of what each of my uncles inherited), but it was still enough to help me get rid of some of my debt! After careful consideration, the first thing I did with my inheritance money was…
PAY OFF MY STUDENT LOANS!!!
Yup, that’s right. $9,000 of debt GONE. Out of my three debts (credit, auto, and student loans), I decided to pay off my student loans first because they were my largest debt and the ones with the highest interest rate. (My student loans ranged from 4-6%. I recently refinanced my auto loan to 2.8% and transferred my credit card balance to a no-interest credit card.) Plus, I wanted to get rid of my student loans because I know I will never accrue student loan debt again in the future since I have no desire to go back to school. As for a car payment, I’m sure I will have to buy another car in the future after my current car’s life span runs out. As for credit card debt, I’m hoping to not accrue more which actually brings me to my plan for the rest of my inheritance money…
PUT A HUGE CHUNK IN MY EMERGENCY FUND.
Since I started reading personal finance blogs almost two years ago, I’ve learned how important it is to have an emergency fund equal to 3-6 months of expenses. I have been trying to build a substantial emergency fund for the past two years, but like I’ve said before: it’s hard to aggressively save and pay off debt at the same time. I think the most I was ever able to save in my emergency fund was $2,000 (only 1-2 months of expenses), but then I put a big dent in it earlier this year with Otis’ stomach surgery and paying an unexpectedly large amount in taxes just two months later. Now that I’ve been working at a lower paying job since July, I’ve struggled to build my emergency fund back up while still putting money towards my debt.
Not only have I been reading on PF blogs how important it is to have an emergency fund, I’ve experienced this lesson first hand over the years: supporting Chris while he was unemployed, dealing with unemployment myself, two surgeries for Otis in one year, etc. Because I didn’t have much of an EF (or any savings at all) when all of these events happened, it caused me to turn to my credit cards to help cover the expenses, which has deterred me from getting out of credit card debt. I’m hoping now that I have a substantial EF, I won’t have to turn to my credit cards for help anymore when times get tough.
Thanks to my grandpa’s generosity, I’m feeling a lot less stressed about money these days: I have one less debt to worry about and a good chunk of money in savings to turn to in case of an emergency. Since my finances are in better shape, I also feel like buying a house and starting a family in a couple years is a lot more feasible!
Now that I’ve announced the exciting news of paying off my student loans, it’s time to celebrate! I think I’ll keep it frugal by buying a bottle of cheap champaign at BevMo. Gotta maintain that “broke millenial” lifestyle. 😉
If you received an inheritance, what would you do with it? Pay off debt? Save? Go on a shopping spree? How will you celebrate once your student loans are paid off?