mo' money mo' problems

August 8, 2006 6:57 PM

How should I spend my inheritance?

So, I recently received a very modest inheritance from my late grandmother to the tune of ~$700. My father suggested I buy some kind of token of rememberance, but I don't really assign much importance to material possesions, so I don't want to buy a "thing". I'm also a broke-ass recent college graduate with a very modest debt (~$1000). Should I put this toward my small debt? Should I suck it up and buy some kind of diamond or something to pass on to my kids someday? I would like to donate it or something, but I'm too poor and selfish. How should I spend (or invest?) this money so as to not disrespect my grandmother's memory?

posted by greta simone to work & money (49 comments total)

Your grandmother wanted you to have that money to do what you please with, or she would have left you some kind of material object.

You should spend it responsibly, which would be putting it toward that debt.
posted by twiggy at 7:03 PM on August 8, 2006

Pay off the debt. Sentimentality is overrated.
posted by The Michael The at 7:06 PM on August 8, 2006

Your grandmother would want you to do something with that money that you would enjoy doing. If you don't attach personal feelings to possessions then don't do that.

You could buy yourself a set of pearls OR something similar you could keep forever but $700 really isn't going to get you much diamond.

If you want to pay off part of your debt then go ahead...it's your money now.

(I'd probably take a weekend trip if I had $700 sitting around though.)
posted by fluffy battle kitten at 7:07 PM on August 8, 2006

Pay the debt. There's no need to throw money away on interest.
posted by hodyoaten at 7:11 PM on August 8, 2006

I would put half into a savings account and spend the other half on something fun or nice for yourself. Maybe a trip or some new books?

I bet she would've wanted you to do something with it that would make YOU happy.

If I died and left someone $1,000 I would way rather them spend it on something cool or save it than give it to charity or pay off their small (relatively speaking) debt.
posted by click at 7:13 PM on August 8, 2006

pay the debt now. Remember the $700. In the future, when you do have disposable income, take the $700 as a gift and do with it what you will. Getting rid of the debt as quickly as possible is good, since your negative money won't cost you extra money.
posted by defcom1 at 7:15 PM on August 8, 2006 [2 favorites]

For goodness sake. Forget your very minor debt and have some fun.
posted by fire&wings at 7:18 PM on August 8, 2006

Pay the debt if that's what's important to you. Seems like it is. How much better will it feel to be $300 in debt versus $1k?
posted by FlamingBore at 7:19 PM on August 8, 2006

Stick it in the bank for an emergency cushion.
posted by konolia at 7:19 PM on August 8, 2006

If it was me I would go for the debt. Debt is a bad thing and you should get rid of it as quickly as you can. Also I think it would be worth it to send a bit ($10 or $20) to EFF and/or Wikipedia. Both do really great things are and worth the support in my book.
posted by blackout at 7:21 PM on August 8, 2006

If you want to respect her memory, get yourself something nice. Not a diamond that you're going to pass down necessarily or some other GIGANTIC SYMBOL, just something you'd like. Unless what you know of your grandmother suggests that she would really want you to pay off a small debt with it.

If you really want to, throw half of it at your debt and do something fun with the rest.

*looks up user*

Shit, just take some friends to Fearrington House or something like that, and throw the rest at your debt.
posted by ROU_Xenophobe at 7:22 PM on August 8, 2006

I understand & share a lot of people's debt aversion here, really I do, but if you're only down $1K after college that's really not bad. I mean, say you're living at home and you land a job: you can cover that in a month. If it's really itching you, halve your debt – $200 is enough to buy something fairly significant and fun.
posted by furiousthought at 7:23 PM on August 8, 2006

I would put $500 toward the debt and spend $200 on yourself, whether for a really nice dinner, some fancy clothes, a trinket to remember your grandmother by, or whatever you might enjoy. If you want to memorialize your grandmother, think of things you had in common; for example, if you both enjoyed fishing, buy a nice rod and reel.
posted by TedW at 7:24 PM on August 8, 2006

I'm sorry for your loss.
posted by baylink at 7:30 PM on August 8, 2006

I am nthing the split between debt and something for yourself. Anything from 500-200 to 200-500.

Whatever amount you set to spend on yourself, spend it on whatever makes you the happiest.
posted by utsutsu at 7:33 PM on August 8, 2006

Use some for the debt, invest the rest (even if that just means parking it in an ING account for a while).
posted by dirtynumbangelboy at 7:34 PM on August 8, 2006

Sorry, I have to chime back in again and say that the "his debt is only $1000" philosophy is exactly how credit card companies thrive, and exactly how people remain in debt for life. The interest on credit cards is really high, and a complete waste of money even on $1,000.

Don't procrastinate paying it off.
posted by twiggy at 7:37 PM on August 8, 2006

Use some for the debt, invest the rest (even if that just means parking it in an ING account for a while).

The interest lost on the debt left (probably in the range of 17-25% or maybe even worse) will be greater than the interest earned on the investment, even if it's a high return (5% or so) savings account. This makes no economic sense at all.

I'm honestly really, really surprised people are giving advice like this. Please, greta, consider the simple math.
posted by twiggy at 7:39 PM on August 8, 2006

Imagine meeting your grandmother in 5 years, and she asks you what you did with the $700. Would you feel better telling her that you used it to pay off debts (making yourself happy) or that you bought some material thing, or you spent it on cocaine, or whatever; what would you want to tell her?
posted by blue_beetle at 7:39 PM on August 8, 2006

There is a tradition in my family that upon someone's passing everyone takes part of the inheritance and purchases something which the person would likely have bought you as a gift. For example, when my grandmother died I bought a Georg Jensen watch and clock -- items I would likely never have bought (in that I am happy with a cheap-ass watch). She adored George Jensen jewelry, flatware, etc. I look at the clock every day -- and wear the watch on special occasions. Each time I think of her. Pleasant and cherished memories. I'll pass these onto my nephews -- with a story to back them up.
posted by ericb at 7:41 PM on August 8, 2006

Echoing "Put it all to the debt." Think of the interest you'll save as an additional gift to yourself. Also, when you eventually pay off the last few hundred it'll be emotionally relieving to have it finished.
posted by D.C. at 7:41 PM on August 8, 2006

Yup, pay down the debt.
posted by Quietgal at 7:44 PM on August 8, 2006

Take your immediate family to a nice (but not extravagant) dinner in her honor. My grandpa used to do that for us when he was in town.

Then put the rest towards your debt.
posted by junesix at 7:46 PM on August 8, 2006

Money doesn't know where it came from.

I agree with Defcom1, pay the debt, keep a mental reserve on the money at some later date, and buy something nice when you've got more money available. I've done this with birthday money, paid off part of my credit card debt, put that money in a mental reserve, and bought something nice when I've caught up on my debts.
posted by tomble at 8:05 PM on August 8, 2006

Take the money, pay down the debt. Eliminated debt is the gift that keeps giving. It's also the principle of the thing. If you want to be financially secure at an early age, debt repayment/avoidance is a habit to get into. It worked for me.

If you want something more tangible to remember your grandma, use some of the interest you saved and buy yourself/family a small token.
posted by storybored at 8:10 PM on August 8, 2006

On further reflection, this depends on the nature of the debt. If it's credit card debt, pay it off fast. If it's a student loan, $1000 is... well, you're in a better position than a whole lot of college graduates. I mean this is where I get to trot out that fun term "orders of magnitude." Yeeeah. It also depends on if that debt is an immediate threat or not, as in, do you have rent to worry about or anything... because, you know, people can say "think of all the interest you've saved," but the fact is, unless you're a psycho, the moments of reverie where you're gonna be thinking about all the interest you're saving, they just don't exist. Mental reserves... maybe they'll work for you. Maybe they won't and three years down the line you'll completely forget about ever having gotten the money. Happens to me all the time. And yeah I pay off my credit card every month blahdeblah.
posted by furiousthought at 8:11 PM on August 8, 2006

...or you can send it to me and i can invest it for you. GUARANTEED !20% RETURN ON POUTINE FRANCHISE. +MEDS.
posted by storybored at 8:14 PM on August 8, 2006

If not toward the debt -- if it's a federal student loan at 3-7% interest, you're better off deducting that interest and investing the cash elsewhere -- then I'd put it into an IRA. Your grandmother has thoughtfully passed on a(n admittedly smallish) legacy for your future, and you have an opportortunity to build it into something that will become a meaningful amount by the time you really need it. Also, it's never too soon to get into the habit of investing spare cash toward your future.
posted by nakedcodemonkey at 8:15 PM on August 8, 2006

What would she have done? Was she a frugal, careful person or did she like to have fun and not worry about the consequences overmuch? Take your cue from her.
posted by AmbroseChapel at 8:16 PM on August 8, 2006

On the issue of paying the debt vs. investing it:

Say that the $1,000 is on a credit card which charges 18% interest. Should you pay that off or invest the money elsewhere?

What other investment will guarantee you an immediate 18% return? Paying that debt puts an extra $15 in your pocket this month, next month, and every month for the rest of your life. That is $180 per year. There are some investments that will pay you that much, but none of them are guaranteed.

If you are 25, that means that your decision will earn you a total of $7,200 from now until you reach age 65. Guaranteed!

How can you beat that?

If you are inclined to Pay Yourself First, pay the debt. And don't let yourself run it up again.
posted by megatherium at 8:28 PM on August 8, 2006

Guns and booze.
posted by 517 at 8:45 PM on August 8, 2006

Pay off the debt.

She passed away and left you a small chunk of cash that she wants you to benefit from (?). Paying off debt relieves stress and also (retroactively) gifts you with what you wanted (by your going into debt).

Unless you had specific instructions re: what your grandmother had in mind ("missy, go get yourself smashed and sleep around with some good looking boys" or "I want you to spend the money feeding the cats at the animal shelter") - spend it on stress reduction.

Then again, if you know of something that your late grandmother cared about, spending the money (and perhaps your time) on that could be a remembrance of your relative.

Seriously, though. Pay off the debt. Paying interest = making rich people who don't care richer. Pay it off.
posted by porpoise at 8:54 PM on August 8, 2006

I'm opening up a Roth IRA with the $500 I got from my grandma's estate. Even though I'm only 20, my investment manager says its the best option, because I can take money out, penalty free, to buy a house.
posted by fvox13 at 9:04 PM on August 8, 2006

Chiming in on the pay the debt love parade. It's not that much money; it's not that much debt. Start a little savings account and chuck some of your spare cash in there after you've paid down the debt. Once you've got $700, go nuts.

But pay off the debt first.
posted by fuzzbean at 9:21 PM on August 8, 2006

I've always wanted to buy a cow. I'm a little too selfish (and it's a little too boring) to simply cut a check to a charity and not know whether it's going to pay for office supplies or for a new coffee pot for the break room. But literally sending an animal to a family that will have their entire lives changes because of my gift.. well that appeals just enough to my egotistical nature.
posted by Ugh at 9:21 PM on August 8, 2006 [1 favorite]

Experiences (apparently) are what make us happy. Your grandma would want you to be happy. Buy an experience - lessons, a balloon ride, a spa weekend.

It should be something you've never done before, and something you'll always want to remember.
posted by b33j at 9:41 PM on August 8, 2006

I was in a similar situation to you when I was 20. And I initially felt a bit guilty about wanting to spend the money on something practical, but then I thought about my nanna and how the things she valued most were education and travel.

So I spent my inheritance from her on a computer for uni and part of an overseas trip. I'm sure that would have made her happy.
posted by Lucie at 10:01 PM on August 8, 2006

Blow it on a weekend of fun. Don't buy any consumer goods, just get out there, fly somewhere, see some things. Go crazy.

You have you entire life to pay off debt (mortgage, divorce, etc.)

Plus, when you turn 35 you're going to slouch over an internet screen and tell another young college student 'pay the debt!' while your baby is crying in a soiled crib behind you, the neighbors are getting arrested outside and you can't remember how it feels to be in love anymore.
posted by The Jesse Helms at 10:04 PM on August 8, 2006

A musical instrument, if you play one or wanted to learn, might be a nice option.

My grandma liked music and played piano. I used the $500 I inherited to buy a pretty good acoustic guitar.

It's a great way to remember her by and I think she would be stoked. (though not if she actually heard me play :) )
posted by shakobe at 10:35 PM on August 8, 2006

Grandma-themed tattoo.
posted by box at 10:36 PM on August 8, 2006

Debt is something you're always going to have to manage. Hopefully it won't ever become something that overwhelms your life. Sure, it makes sense to use every opportunity to relieve your financial debts when fortune or circumstance presents itself, but conversely, it's also important to enjoy yourself, and the pleasures that money and life can offer, when they come your way.

If you feel crushed by the debt you have, and it weighs heavily upon you, by all means, use the money to lessen the burden. If the debt is something you don't mind holding on to for a little while longer, use the money how you see fit. If you can't decide, then split it down the middle. Half goes to debt, half goes to you for something else.

In my experience money comes and goes. There are financial ups and downs, like everything else in life. When I'm up, it would make sense to use the opportunity to clear my record and get out of the hole, and most often I do, but I'm not always that clinical of a thinker. When I'm down I may curse myself for not using my money more responsibly when I had the chance, but I also know that before long, I may be up again.

I enjoy good food. Taking a little cash and going out to a great meal with some close friends is one of the best things that I can imagine spending money on, and one that I rarely regret. For someone who also doesn't necessarily put much importance on material things, at the end of the day I don't need to have something to show for myself and my expenditures, other than knowing I had a great time and enjoyed myself with pleasures I don't experience on a regular day-to-day basis.

Equally as important as prudent financial planning is knowing how to take pleasure from life, in the way you see fit, when fortune comes your way. That isn't to say that money has much, if anything, to do with happiness, but it certainly does afford opportunities that aren't always accessible.
posted by scallion at 10:42 PM on August 8, 2006

If the debt is on your mind a lot, or if it's at a ruinous interest rate, pay it down.

Otherwise, take at least some sizeable chunk and do something, or buy something, that will remind you of her.

Since we have a lot of people in favor of paying off the debt, here's the argument for the other side: If you're reasonably responsible, you *will* pay off the debt within a couple of years -- just like you will manage to find enough money to pay the bills and keep the car running.

But you may never -- in the course of the month-to-month grind -- find $300 to buy yourself a really special thing... piece of jewelry (something that you will wear on job interviews and formal occasions? - pearls are actually a great idea because they go with everything), or Oxford English Dictionary, or beautiful comfy chair, or nice pot-and-pan set, or a piece of real framed art or pottery that inspires you, etc... something that you will still want to keep, once you are out of the broke post-college furniture-from-goodwill phase. Something that you would not normally get for yourself now, but that you will love every time you see it. In my own life, I have found that special things like this are really important, and your grandmother has given you one of those rare chances to get something special.

Or, if you are not a "thing" person, is there an experience you wouldn't normally be able to do, but which would make a wonderful memory for you? Going to a Broadway show, or swimming with the dolphins, or taking a furniture-making class?

If you do pay off the debt with it, maybe take just a bit of the money and get a houseplant (philodendrons or wandering jews are good because they're really hard to kill) that will be with you for years. You could also take enough to get one really great bottle of wine, and set it aside for some future big occasion -- wedding, getting a PhD, etc. -- that she would have wanted to celebrate with you.

Whatever you do with it, it should be a source of good feelings, a reminder of the good things she wanted for you, etc. Don't become concerned that you're going to do the "wrong" thing with it -- she obviously trusted your judgment and gave you a wonderful opportunity here.
posted by LobsterMitten at 11:07 PM on August 8, 2006

Plus, what scallion said.
posted by LobsterMitten at 11:12 PM on August 8, 2006

buy a piece of jewelery with the money if you will attach that jewelery to your grandmother as a "gift from her".

the debt is not alot- if you got $10,000 from grandma and you had debt of $15,000 i'd then say pay it down...
posted by Izzmeister at 11:59 PM on August 8, 2006

Pay the debt, if that's what you want to do with the money.

I inherited $AU 1,000 from my grandmother some ten years ago. I don't really remember what I did with it (I know I spent some of it on clothes - I was a poor student at the time). I don't regret it at all. My memory of my grandmother is completely separate from the money she left me, and I can think of her any time I want - it's not connected to something I might have bought with the money she gave me.

I recently inherited a much larger amount from another relative, and you can bet I will be spending/investing that more wisely. But with relatively small amounts, and for people like us who perhaps don't place that much value on material objects, you can spend the money and enjoy your memories of the loved one.
posted by different at 2:15 AM on August 9, 2006

Debt.

An 'emergency cushion' isn't, if you're in the red overall.

Blowing it on recreation will only buy you the privilege of paying a third party more money out of your soon-to-exist salary.

Remember that it was $700, and when you are in a salaried job and have actually paid the debt, not just acknowledged that you now earn enough to do so, then blow $700—or even $700 plus a little self-paid interest—on whatever you want.

Take it from me, a broke recent college graduate who is using $700 worth of graduation and birthday gift money to make it to the first paycheck from a new, exciting job overseas. No, not the Marines. "Travel the world. Meet fascinating people. Kill them."
posted by eritain at 4:16 AM on August 9, 2006

Invest in a Roth IRA or buy a Certificate of Deposit that will mature in a short time and you can throw into an IRA or a Treasury Bill.

Seriously, put that money away and don't spend it on stupid stuff.
posted by onepapertiger at 6:04 AM on August 9, 2006

Pay off the debt - then each month take the money you would have been spending on interest, and buy yourself a little present.

Repeat monthly for the 2 - 5 years it would have taken to pay off.
posted by Lanark at 12:25 PM on August 9, 2006 [1 favorite]

If you want to pay off your debt, do so. And always remember that your grandmother helped you start on the road to debt-free living.

And what Lanark said.
posted by acoutu at 2:18 PM on August 9, 2006