Financial plan on how to use $37k

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I got a 30k bonus this year. Usually, it's only half of this much. Not sure what to expect next year (or the year after that). I also expect about a $7000 tax return (IRS)

I have about $15,000 in debt (no kidding). I am inclined to cut that down to $4k. I am dedicated to a debt-free life (getting rid of the debt forever).

I need to get my wife an engagement ring (2 carat or higher only). My best guess is that a good quality ring will be $15,000. (She didn't get one when we got married because she wanted 2 carat...and still does). Too many years later, I really need to resolve this.

I need to save about 60k for college tuition for child (6 years left until college) (and I should probably have money in savings anyway...all depleted)

I have this problem every year. I don't know what the best way is to deal with such a windfall.


Any advice? If I pay off all of my debt and buy the ring, I will have $7,000 left. If I leave about $4,000 in debt, I can have $4,000 toward savings. Maybe the question is whether $4000 would be better to get rid of all my debt or put into savings to increase savings amount?

Edit: I also have employment related resricted shares of stock that I am looking to cash out on any day now. I expect to cash out on those around $30k or so (which would probably go toward child's college education)

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You make an interesting point (3rd comment). I am a bit lost on the whole college tuition thing. I went to college bac... (more)

pwdbyndroid (Apr. 01, 2013 @ 10:26a) |

We are about the same.

pwdbyndroid (Apr. 01, 2013 @ 10:28a) |

The monopoly money was a representation of hard cash in the bank. He had recently received an inheritance and had decid... (more)

LCH59 (Apr. 02, 2013 @ 3:05p) |

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Pay off ALL debt, buy a cheaper ring, she will understand.

How much money do you make? Why do you have a negative savings rate?

pwdbyndroid said:   I got a 30k bonus this year. Usually, it's only half of this much. Not sure what to expect next year (or the year after that). I also expect about a $7000 tax return (IRS)

I have about $15,000 in debt (no kidding). I am inclined to cut that down to $4k. I am dedicated to a debt-free life (getting rid of the debt forever).
Why would you keep any debt when you will have more than enough to pay it off?
I need to get the significant other an engagement ring (2 carat or higher only). My best guess is that a good quality ring will be $15,000.
Diamonds are for suckers... To even think about buying a diamond rather than paying off debt is the dumbest thing I have heard.
I need to save about 60k for college tuition for child (6 years left until college) (and I should probably have money in savings anyway...all depleted)
You should look towards your own retirement etc. before you go promising a kid a free ride (though this sounds suspiciously like it might be part of a divorce agreement in which case you probably don't have a choice.
I have this problem every year. I don't know what the best way is to deal with such a windfall.


Any advice? If I pay off all of my debt and buy the ring, I will have $7,000 left. If I leave about $4,000 in debt, I can have $4,000 toward savings. Maybe the question is whether $4000 would be better to get rid of all my debt or put into savings to increase savings amount?
Where is all your money going? You have debt despite getting $15k bonus a year and still can't fulfil your debts when that bonus is doubled. I think you need to reconsider your lifestyle and live within your means.


The final question is how much have you saved for retirement? Given the kid is 12 or so and you are clearly high income I would say that amount should probably be in at least the 1/2 million dollar range at least at your age. It sounds suspiciously like you are living paycheck to paycheck (or not even that... more like bonus to bonus).

woowoo2 said:   Pay off ALL debt, buy a cheaper ring, she will understand.

Cheaper ring not an option. She says she'll wait. I guess another option would be to take $10k and put it into special ring savings account. Add 5k more next year and she gets her ring.

Spent it all recently on the house. I walk away with about $400 in savings a month (going forward)

Quikboy4 said:   How much money do you make? Why

do you have a negative savings rate?


Spent it all recently on the house. I walk away with about $400 in savings a month (going forward)

Demanding a $15k ring is pretty ridiculous. Especially from someone who she knows is in debt. What is your income?

Yeah, reconsider the 2-carat ring. If she's *demanding* a 15K ring, reconsider her.

Pay off all your debt, put aside emergency savings and fund your retirement.

woowoo2 said:   Pay off ALL debt, buy a cheaper ring, she will understand.not this one. she better be worth it, pics?

lol any women demanding X carat diamond would get her ass dumped so fast... clearly she has zero financial sense if she both demands the diamond, which is a horrible investment, and also demands the diamond when her fiancee is broke as hell.


The only answer here is: pay off all debt, save closer to 2k/mo not a laughable $400/mo, and find a new wife, or no wife. The kid can get a scholarship. If you have 50k or so set aside for it, you've done your job as a parent.

With a 12 year old and a job that can create a 30k/year bonus Im going to guess your income is ~6 figure mark, in which case you should have about 250,000 dollars saved at a bare minimum.

pwdbyndroid said:   I need to get the significant other an engagement ring (2 carat or higher only). My best guess is that a good quality ring will be $15,000.

pwdbyndroid said:   Cheaper ring not an option. She says she'll wait.

Quikboy4 said:   How much money do you make? Why do you have a negative savings rate?

Quikboy4, I think he answered this in the OP & the second quoted post above. First thing you should do OP is to think long and hard before you buy a ring for a woman who is basically demanding a 2ct+ ring. She will be demanding BMWs, big houses, expensive vacations, expensive clothes, jewelry, etc... whether you have the money for them or not. If a girl like that says she'll wait, what's the hurry to dump money on an expensive ring?

The answer to your question is that you should pay down all debt, then accumulate savings--postpone the ring if need be. Why borrow $ at a rate > what you will earn in a savings account? You would simply be pissing away money on interest.

You significant other is demanding a 2 carat ring or higher. What's next on her demands list? First the ring, then the designer purses, then designer clothing to match, throw in a swiss timepiece. Oh, and she will need a Benz to drive in. What does she bring to the table?

Agree with other comments regarding paying off that debt completely first.

BTW, what's your real username? (hey someone had to ask!)

raringvt said:   pwdbyndroid said:   I need to get the significant other an engagement ring (2 carat or higher only). My best guess is that a good quality ring will be $15,000.

pwdbyndroid said:   Cheaper ring not an option. She says she'll wait.

Quikboy4 said:   How much money do you make? Why do you have a negative savings rate?

Quikboy4, I think he answered this in the OP & the second quoted post above. First thing you should do OP is to think long and hard before you buy a ring for a woman who is basically demanding a 2ct+ ring. She will be demanding BMWs, big houses, expensive vacations, expensive clothes, jewelry, etc... whether you have the money for them or not. If a girl like that says she'll wait, what's the hurry to dump money on an expensive ring?

The answer to your question is that you should pay down all debt, then accumulate savings--postpone the ring if need be. Why borrow $ at a rate > what you will earn in a savings account? You would simply be pissing away money on interest.


Time to dump her. Assuming she know you are in debt and she's not okay with a cheaper ring....she's also not going to be happy with just any 2 carats. A decent 1.8 carats will set you back $20K just for the stone.

You will be in a much better position financially dumping her now.

pwdbyndroid said:   woowoo2 said:   Pay off ALL debt, buy a cheaper ring, she will understand.

Cheaper ring not an option. She says she'll wait.

Well, she can wait....
(Forever)

When I married my wife, she demanded that I NOT get her a ring, she wanted the money to go to our new home.

One option you have is to have her pick out the nicest setting she wants and then put moissanite in instead of diamond. Unless you have a tester or are good with a jeweler's loupe, you can't tell the difference. A 2 ct. equivalent stone will set you back $650. Then, use the rest of of the money to pay off the debt.

If you don't like lying to her about the stone, tell her that this is just going in until you guys can afford to "upgrade" to a 2 ct. diamond. Unless she changes her approach to finances and your relationship, you'll be divorced and upgrading to a better woman long before you need to worry about upgrading that stone.

Just one clarification. I am married. The wife never got a ring because she wanted 2 carat and I could never afford it (I was in school when we got married and you can imagine how quickly school loans and other debt made it difficult to get a ring when I started working after college). She always gets back-handed comments from her so-called friends and I always feel bad about it.

pwdbyndroid said:   I got a 30k bonus this year. Usually, it's only half of this much. Not sure what to expect next year (or the year after that). I also expect about a $7000 tax return (IRS)
I hope it is 30k after taxes (assuming they are withholding an amount that will cover your tax bill come April 2014). If not, set some aside for Uncle Sam.
If you have 15k debt (or even otherwise), dont loan Uncle Sam 7k, interest-free.

uutxs said:   pwdbyndroid said:   I got a 30k bonus this year. Usually, it's only half of this much. Not sure what to expect next year (or the year after that). I also expect about a $7000 tax return (IRS)
I hope it is 30k after taxes (assuming they are withholding an amount that will cover your tax bill come April 2014). If not, set some aside for Uncle Sam.
If you have 15k debt (or even otherwise), dont loan Uncle Sam 7k, interest-free.


That's after taxes.

If she values a diamond right more than a nice car or emergency savings, who are we to judge? I'm sure plenty of people here have spent an extra $15k on a decent car rather than a beater that runs perfectly fine. Different people are happy with different types of things and most people are perfectly willing to sacrifice certain luxuries for others. My wife wears cubic zirconium, but also owns a $4,000 massage chair. That doesn't mean someone else wouldn't get more out of the diamond ring than a massage chair.

Most engagement rings lose most of their value immediately, but with something as high-end as a 2 carat diamond, you may be able to find something with decent resale value. The actual ring and setting are going to cost pocket change compared to the diamond itself (under 10% of total cost), so it doesn't really matter if you start with a full ring or the loose diamond. You will probably want to find something that's been worn before to minimize depreciation, but that's a total guess, I'm not a diamond expert.

pwdbyndroid said:   Just one clarification. I am married. The wife never got a ring because she wanted 2 carat and I could never afford it (I was in school when we got married and you can imagine how quickly school loans and other debt made it difficult to get a ring when I started working after college). She always gets back-handed comments from her so-called friends and I always feel bad about it.

Note that 15k consumes all of your $400/mo savings across three years. Ask her what's more important: a nice holiday annually for 3 years (with money left over), or a piece of depreciated carbon.

She needs new friends, not a new ring.

pwdbyndroid said:   Just one clarification. I am married. The wife never got a ring because she wanted 2 carat and I could never afford it (I was in school when we got married and you can imagine how quickly school loans and other debt made it difficult to get a ring when I started working after college). She always gets back-handed comments from her so-called friends and I always feel bad about it.

If she's getting it to impress her friends, a fake diamond is absolutely the way to go. Moissanite, fancy hand-cut cubic zirconia, etc, are indistinguishable from diamonds, and real diamonds aren't actually very rare. Their supply is just mostly stockpiled by DeBeers to keep the prices up. If that stockpile ever opens up, there's no reason diamond will be worth more than something like Tanzanite, which is far more rare.

That doesn't mean someone else wouldn't get more out of the diamond ring than a massage chair.
They just haven't sat in the chair

It sounds unanimous that the ring should wait until I/we are in a better financial position to take that on.

Couple of questions:

(1) While I despise debt and vowed not to take on any more debt (especially for a ring), is there any way to finance a ring at low interest (my only debt going forward other than college loans). Credit score is around 680.
(2) At what point (what point in my savings) should I go ahead and get the ring if I don't get it now?
(3) Should I consider cashing in on my restricted shares of stock for the ring payment?

Heh, I just find it silly to criticize someone for wanting a diamond, when I myself have spent thousands on computer parts over the years.

A coworker always tells me a story of back when he was in the army and wanted to buy a 200 megabyte hard drive that cost $2000. He gets back home where he finds his wife had just spent the $2000 on a grandfather clock. He was mad at the time, but now 30 years later they still have that clock and the hard drive would have long been worth nothing.

Use the money to pay off all the debt. Create a 529 account for the child and contribute to it monthly by having it be taken out of your bank acct.

Put the other 30K in a high yield account (either MMA or throw it into some mutual funds) for the next few years.

If your wife will be happy with the ring, buy it for her but shop around.

pwdbyndroid said:   It sounds unanimous that the ring should wait until I/we are in a better financial position to take that on.

Couple of questions:

(1) While I despise debt and vowed not to take on any more debt (especially for a ring), is there any way to finance a ring at low interest (my only debt going forward other than college loans). Credit score is around 680.
(2) At what point (what point in my savings) should I go ahead and get the ring if I don't get it now?
(3) Should I consider cashing in on my restricted shares of stock for the ring payment?

If you are up to it, it would help out to lay out your full financial picture. Income, debt, savings, retirement accounts, obligations (e.g., College fund), age, monthly expenses etc.
At the face of it, looks like someone making well into six figures but has trouble saving a decent chunk of it and has no significant (in relation to income) assets saved. Look at the bigger picture than the 15k ring.

I thought about responding to the issues in this post, but the whole wife demanding a 2-ct ring is f'ing ridiculous.

Whats ur budget and specs for the diamond? A bunch of friends and myself have gone through diamond shopping lately. I would expect to pay around 20k for the stone and setting. Of the 4 C's, my order of preference is Size, Cut, Color and Clarity. You will notice the size right away but my fiance and i still both struggle to find the flaw even after looking at the cert. Because the diamond is the majority, 90% of the cost. I would suggest you go to a dealer in NY or another large city where you can buy and view many loose stones side by side.

Settings: While shopping, i discovered that my jeweler also makes custom settings. It takes longer but costs much less than what i was expecting.

Overall, she loves the ring, and loves that its a product of my relationships and friends. Yes, women are irrational and it goes far against any financial sense, but so is luxury car shopping, one of a kind watches, couture anything. If you can afford it, if she's worth it to you, then do it and get it over with, because it will occupy alot of mental energy. If at the moment, you have lots of other great uses for that money, eg: paying off high interest CC debt, investing in a project with a huge rate of return, or traveling to someplace and creating memories; do those first. If you're going to squirrel it in a bank account earning <1% and if you and your wife are both financially stable, buy the ring and get it over with.

walletfart said:   I thought about responding to the issues in this post, but the whole wife demanding a 2-ct ring is f'ing ridiculous.
I think folks here are getting hung up on the "demanding" part. I am by no means advocating spending 15k on something with OP's debt.

But looks like this is a "long term" request from wife. OP presumably has a 12-year old and he got married/engaged while he was still in school and OP didn't buy her a ring then. So this is something that is brewing over several years. This is not a love-stricken situation or a "gold digger" or whatever else one might characterize it as.

Why are you even puzzling over not paying off $4k of your $15k of debts? You've got $37k. Whats the nature of the debts? Are we talking about any 0% promo deals or something?

I'm puzzled why you wouldn't just pay them all off step 1.

2c diamond engagement rings could be had for far less than $15k. You can find 2c round diamonds for $9k and a great setting for $900. If you shop smart, you won't have to keep that $4k debt hovering over you.

I have a friend who is a diamond broker, his cousin's ex husband insisted on buying a ring from tiffany's and paid $35k for it. well, you know they eventually divorce and she looks to sell the ring and asks her cousin, my friend, to sell the ring for $35k. He tells her there is no way a tiffany ring will ever fetch its retail cost, after inspecting the ring, he informs her that she may be able to get $15k max via private sale for it just because it's from tiffany's.

What the hell do you make to get a $30k bonus, yet have assloads of debt (non-college/education related) - yet also want to buy your wife a ring with strict guidelines. This is the most odd-ball story I've ever read on someones finances.

For anyone that doesn't know, diamonds (regardless of if for suckers) are something women will never understand, nor care to understand.

A 1 carat rock can range from $500 to $15k+ Why? Because the price isn't in the size, and your wife (or yourself) is a dumbass if all she cares about is size. Might as well be the equivalent to whipping out cock sizes with your male friends.

Guys, she wants a diamond ring. I've spent money on more foolish stuff for women. Ease up.

OP, there's something wrong. You need to get a grip on your spending. If you have a job with a $30K aftertax bonus, you're earning big bucks, but you seem to just sopend it at least as fast as it comes in. Late model cars, cool clothes, eating out, vacations, I don;t know. Try to track it and control it.

And have a talk with your kid about who pays for what when college comes. It's a time of limited independence, and financing some of it through scholarships and work is not unreasonable.

Try eBay or other wholesalers for the ring. Of course get it appraised. Op you seem like every Jeweler's dream customer. Both times I've bought a ring I took it to a local pawn shop chain, and asked them what they would give me for it. Both times was well over 50%, so I assume we didn't do too badly.

We paid $500 for a ~.75 carat and the ladies working at Jarad wanted to buy it from us.

Green for Op. I'm in disbelief that he has the guts to post on Fatwallet that his wife is blackmailing him by refusing to wear any ring (Meaning people will assume she's single. Does she at least wear a wedding band?) until she has a 2 carat ring. I've done my best to refrain from saying very ugly things about this situation, I expect others will make up for it.

Assuming that OP is going to proceed with purchasing a ring regardless of the above comments, I would shift the discussion toward getting the most bang for the buck with the diamond/ring.

If you don't know anything about diamonds, take some time to educate yourself about clarity, color, and cut; you will likely save yourself thousands of dollars purchasing a stone+setting as I recommend.

Number one thing you can do to get a big stone at a low price is to seek a lower-quality diamond. Ring-quality stones range in color from D-J, and clarity ranges from Flawless (F) - SI2 (slight inclusions). Get an excellent or very good cut stone. Certification is also important (GIA or AGS only; I've read that EGL doesn't have consistent standards). My wife and I went looking at local jewelers before I purchased the stone online and she couldn't see any difference between a D/IF stone and a J/SI2 stone with her naked eye, and she didn't care what it looked like under a microscope. So I proceeded to source a J/SI2 stone online.

I bought a loose stone from a jeweler who showed up using pricescope.com -- a price search engine for loose diamonds.

ETA: I checked each stone I was considering purchasing with the Holloway Cut Advisor tool, http://www.pricescope.com/tools/hca, to increase the likelihood that the light return, fire, scintillation, and spread would be ideal. This is what gave me confidence in buying the right stone sight-unseen.

Once I bought the right stone, I then went shopping with my wife at local jewelers to find a setting she liked. Assuming she's cool with it, look for small jewelers that buy from estate sales. We got a setting that the jeweler purchased from an estate sale, and it was less costly and classier-looking than any of the modern stuff being produced.

Seconded to buy a SI2 or worse stone. After the first week, zero people will ever, ever look at the ring under a scope.

How is that we go this many posts and no one even bothers to ask what interest rate the debt is at? It should have been the first post, 2nd post and 3rd post.

Next does the OP have any capability to refinance debt down to a low enough interest rate where it no longer makes sense to pay it off?

I also noticed the OP talking about 'money' going to the house. You paid cash for a house? You didn't finance it? So that you keep student loans going? There is a term for this...'financially dumb'.

If you have a paid off house cash out refi the whole thing and pay off the student loans. Your income will produce a high deduction against your mortgage and give you an effective 3% interest rate on your mortgage. If you can't beat 3% over the next 30 years basically doing anything with your investments short giving it to some college kid for a start up you've done something seriously wrong. Let's put it this way I would never in a million years lend someone money at 3% for 30 years in this environment even if I was guaranteed to be paid back. So if the lender is stupid to give it a person why wouldn't it be smart to be on the other side as the borrower? 3% debt can be easily devalued away.

Start there and when you have no student loans, a mortgage like every other financially astute person here, and a hell of a lot more excess cash to invest than you can come on and ask about investing that money in something safe and a hell of a lot smarter than paying cash for a home.

If I got my understanding of your situation wrong(that you don't own a home or something) than let me know.

As to the wife's ring. She has been patient. If it's been the only big thing she's asked for in 12 years I would say she has probably earned it. If she's the type that will have another request to hound you about afterward then delay it just the point before you think she'll get very pissed. Just remember child support and alimony are likely more expensive than the engage ring. You know the saying "You have to spend money on your wife, to save half your money."

Although the "2 carats or nothing" attitude is off-putting, why is it surprising that his wife wants a ring with a big diamond? The vast majority of women in the US want that. Tell her that before you buy her one, you would like her to read this article:

http://blog.priceonomics.com/post/45768546804/diamonds-are-bulls...

At that point you may at least be able to temper her expectations to something more reasonable.

Aside from that issue, can't really give much advice without more specifics (type of debt, interest rate, whether you have other tappable liquid assets, etc.). I can say that 1) if that $15k is credit card debt, pay it off immediately and 2) if your savings are really "depleted" and you have no other source of cheap cash (e.g. HELOC) then save the $37k in cash or a liquid investment vehicle.

Skipping 26 Messages...
stm69 said:   LCH59 said:   On our 25th wedding anniversary, my husband gave me $10,000 in Monopoly money so I could pick out a two-carat diamond ring.

Wtf I'd like to see what classifies as "real" money then For my next anniversary all I was thinking about was a "congrats you survived 15 years of me" t-shirt.


The monopoly money was a representation of hard cash in the bank. He had recently received an inheritance and had decided to spend some of it on a luxury item for me. ( He's usually extremely thrifty so it was a very big surprise to me.) OP's $30K bonus seems like an unexpected windfall that he should want to share with his significant other without her having to ask for it. Yes, you have to buy insurance on the ring but I still have it and wear it daily, and it is still worth about the same that I paid for it five years ago. Maybe more.



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