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Al3xK said:   I'm 27, is there any actual reason for me to buy life insurance now??

Many employers offer basic life insurance for $50k or something, do you have a plan like this through your job?

If so, I'd say no, since you say that you don't have any dependents. If you don't have it through work, I'd say maybe, but only enough to cover funeral costs and such.

atlbrv31117 said:   TheDiggler said:   StevenColorado said:   Make sure to calculate the tax bite before doing anything with it.Sounds like the OP received a $13K "gift" from his Grandfather, where $13K is the current annual exclusion to the Gift Tax (per donee).

From the hyperlink above:
How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, and $13,000 on or after January 1, 2009, the annual exclusion applies to each gift.


OP,
As your granfather is still alive, you did not "inherit" $13K. You appear to have received a "gift" from him, likely to reduce the value of his net worth now so that upon his death, the taxable portion of his estate will be reduced/eliminated.


Unless his grandfather lives another 3 years, the $13,000 will be included in his estate and will be fully taxable.

http://www.law.cornell.edu/uscode/text/26/2035


Read the whole thing including the exceptions.

Al3xK said:   I'm 27, is there any actual reason for me to buy life insurance now??

Yes. If you are healthy, it is dirt cheap. We are healthy until the day that we are not. Buying it now guarantees that you will have it when you knock up that girl on your golf cart two years from now. Just to give you an idea, $500,000 of coverage for a healthy 27 year old male guaranteed for 20 years would be about $21/month/ $240/year.

JTausTX said:   Al3xK said:   I'm 27, is there any actual reason for me to buy life insurance now??

Many employers offer basic life insurance for $50k or something, do you have a plan like this through your job?

If so, I'd say no, since you say that you don't have any dependents. If you don't have it through work, I'd say maybe, but only enough to cover funeral costs and such.


If it wasn't so common for people to have changes in health that cause their rates to significantly increase, I would agree with you. However, since it is common and life insurance is dirt cheap for healthy people, I disagree. The difference in cost between $50,000 and $500,000 is about $11/month ($115/year). For that price difference, most people would rather purchase something significant.

Invest in AR-15s

OP, back to your original question...

I am no super expert, but I do agree that 13K is not enough to make alter your life trajectory. However, IMHO, it is a kick in the pants to start living the FWF way....

I would not pay off your current debts. I would figure out how to refinance them at lower interest rates (BTOs, Penfed auto loan, etc.)

I would consider putting this money (or the max allowed by law) into a retirement plan (Roth IRA, etc.) that could be borrowed against for future home purchase. There may be tax benefits and it may preserve some amount of liquidity for a future home purchase.

I would consider a home purchase IF you are educated enough, motivated and have the skills to buy a fixer-upper, get some work done on it and get it refinanced. That said, there are a lot of pitfalls to this plan, so tread carefully. I did exactly this when I was about your age and did profit on the house. Sadly, lack of discipline and sloppy refinancing left me upside down at closing when I sold.

Last, but not least, I had similar income and debt at your age, and $13K would have seemed like a pretty major windfall and I would have probably been overly anxious to do SOMETHING with the money. It may not be a bad idea to just stick it somewhere (savings, CD, etc.) for a few months until you get over the initial rush of finding some extra money. You may make more rational decisions after a brief "cooling off" period.

Buy this tax lien, foreclose on the property and own it F&C.

SUCKISSTAPLES said:   Al3xK said:   I'm 27, is there any actual reason for me to buy life insurance now??
To preserve insurability . You're healthy now but may not be 5 years from now. If something happens you wouldn't be able to get cheap insurance


So it's "insurability insurance". But I agree.

suckisstaples said: The family is probably on a mad dash to get assets out of grandparents name.

Precisely, my point. And if true, suggests he will be receiving either more of these gifts in the near future (January?) or a larger actual inheritance.
Should take that into consideration before making financial decisions.

Here's what I would do. Sounds like your grandfather was fiscally responsible. As such, I'd use the money in a way tha honors him.

Assuming car loan is 4.x% or higher, I'd pay it off. Next I make a contribution to my Roth IRA for 2012. Put the rest of the money into an IRA contribution for 2013.

Save about $500 and do something nice for yourself and enjoy what your grandfather had.
---

Wife had a similar thing at one point when we were first married. She bought our dining room set to do we can have a lifetime of memories at the table and put the rest in her IRA. But we didn't have any debt except the mortgage.



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