[quote=Feanaro’s Wife]OK, here is the situation. When hubby comes back from Afghanistan he will have a lump sum of money.
We have a mortgage (21 years left on it).
We have a 1994 Geo Metro that we are needing to replace.
We do not have credit card debt.
We do not yet have any children.
We live off of one income…I am disabled.
We do not have any savings.
We do not have any investments.
What would you do in our situation? We are leaning towards a vehicle because we could never take one on payments. We would like to have a safer more reliable vehicle for any future children.
We have until next summer to make a decision. As someone pointed out, it is not a lot of money. We would like to do the “smartest” thing with it and i am looking for advice.
If you have no savings or investments, that’s what you should put it towards–in SAFE investments. Start reading up on safe investments so you have a plan. I don’t know how it is Canada, but in the U.S. we have CDs (Certificate of Deposits), different kinds of U.S. Savings Bonds, various bank and credit union savings accounts, money market mutual funds, stock mutual funds, and bond mutual funds. Anticipating $15,000 and having no other savings or investments, stick with safe and short to medium term investments. Don’t waste your money getting an investment advisor. You should be able to get good sound investment advice from books, magazines, and newspapers.
The rule of thumb is to put 6 months of your expenses first into a very safe, very liquid investment (such as savings or money market mutual fund). That money is your safety cushion against your husband losing his job or becoming disabled. (If your husband is career military, you probably don’t need a full 6 months. In the U.S., the advice would be 3 months emergency savings for a career military member.) Since you will probably buy a new car soon, you should consider keeping the money you will spend (as downpayment or as cash) also safe and liquid.
So when you consider these priorities, you probably won’t have much left to invest. But if you can buy a cheap or used car, then you should try to invest a small amount in longer term, higher yielding (though safe, not risky) investments. The big key is to add a little bit to long-term investments every paycheck. For example, most people can afford $100 a month which if saved regularly can add up quickly.