I Inherited $20K and Grew It to $70K. Should I Keep Investing or Pay Bills?

Speaker A00:00:00

$20,000 Turned into $70,000 thanks to stock advice from someone she isn't with anymore. Now she's got to decide what a windfall like this is actually for. And the first thing she needs to hear has nothing to do with the stock market.Going to be a great discussion today and make sure you stick out till the end. I've got a very special announcement of what's going to happen with the show starting tomorrow. Hey, friend. Ralph Estep Jr. Here.Welcome to the last day of financially confident Christian. We'll talk more about that in a little bit, but we're going to continue breaking that cycle of financial shame with confidence.And today we're talking about an inheritance that's tripled, a relationship that ended, and bills that are due right now. It's that feeling of having money and still feeling stuck. And it's more common than anybody admits. So let's get right to today's listener question.Listener writes this myth. My aunt left me $20,000 last year, and I put it into the stock market based on advice from someone I was dating at the time.That relationship is over now, but the money's still there. And it actually grew to about $70,000. Now. Hold that thought. 20,000 To 70 in a year. We're going to come back to that.Part of me feels strange keeping it invested since the advice came from him. Part of me needs money for bills. What do I actually do with this now that it's mine to manage? What a great question.And I want to come to that growth because that's part of this answer. Here's the thing. I want you to understand. This was never his money. And it isn't a moral question. It's your money to manage.And the real question isn't to invest it or spend it. It's what job does each dollar have? So today I'm going to give you five steps that's going to help you make that decision. So here's the first step.You got to separate the money from the man. $20,000 Came from your aunt and this dude was in the room. That's all he was. He was a dude in the room. He gave you some advice.But good advice doesn't become bad advice because the relationship ended. So many people think, well, this person gave me that advice. I got to throw it out. Like the baby with the bathwater. Bad choice.But it doesn't obligate you to him either. That relationship has ended. I get it.So don't make a $70,000 decision being reminded of someone here's the thing I want you to do practically this week. Change the account passwords. Remove any authorized users or shared access. Update the beneficiary.And if the account came through an advisor or his broker, move it. It's really that simple. Clean ownership on paper and is what's going to make it feel like yours. Remember where the money came from, the origin of it.It came from your aunt. He was just there standing nearby. It's your money. But here's the second part. Now I'm going to go into that 20 to 70 thing.Find out what's actually you're selling and what it would actually cost. You got to understand what you actually own if you had a $20,000 become $70,000.I'm worried that is a very concentrated investment and that runs risk in many direction. The inherited money you had isn't taxable income. You get what's called stepped up basis.So whatever your aunt left you when you invested it, that is the basis. But the growth of that is where you're going to pay taxes. That is roughly $50,000 in gains.Now if you've held it for more than a year, it's taxed differently than if you sold it within that year. So this is your time. Talk to a tax professional before selling a big chun chunk of it, not afterwards.So many people come to me after they've made a decision and I can't do much for them. Cashing it out in one move or cashing it out over time can be two very different tax bills.So before you sell a single dollar of it, find out what the tax on that growth looks like. But then number three, I want you to give every dollar a job in order. Windfalls like this rarely gets spent all at once.What I've seen in my life, what I've seen working with people for 30 years. Most people who don't give a job to these things. This money leaks away in small withdrawals that nobody planned. So here's the thing.I'm going to encourage you to do the first job of this right now with that money that you've got is to build a real cash cushion in a high yield savings account. This is separate from the brokerage account. And I want you to put three to six months of your expenses in that account.That's the first job I want you to do. Put that money in a separate account. Second job, wipe out that high interest debt. You mentioned you had credit card debt.I don't know if you've got credit cards, payday loans Anything that's charging you double digit interest, wipe that out with this money right now. Third job, what's left stays invested and keeps working for your future. That order answers your question. It was never to invest or pay bills.It's both in sequence. If you've got a windfall right now, without assignments, it's going to get spent. So give every dollar a job before you need it.Now I want to go on to know something else you mentioned. I think you're not telling us the whole story there. I want to tell you to fix the leak, don't just fund it.One of the things you said, which is a tell and I do this for a living, you said in there, part of me needs money for bills. And that is the most important line in your letter. And I wanted to ask you. I wish I could talk to you.This is why this new show we're going to be launching tomorrow is going to be so great. We're going to talk about that at the end. But I want to ask you, is this a temporary gap?Is this something a few months is going to go by or is your income simply not enough to cover your lifestyle? Because that's a really important difference. If you've got a structural issue, $70,000 isn't going to solve it.It's just going to pay for it until it's gone. If you draw from it, it's going to be a set amount on a set schedule for a set number of months in running. Do that.But if it's just a defined bridge and you can see an end, that's not an open account that you dip into whenever it's tight. So you got to understand, if the money, monthly money, doesn't work, $70,000 isn't going to fix it. And that's what I'm worried about.When you said that it might cover my bills, it might just fund it for a while, but now you got to get your own counsel as well. You said one of the things is your boyfriend was a friend of yours, helped you. Well, guess what, guess what, Tag, you're it.You're the manager of the money now. And that's not a burden. That's good news. So here's one thing I'm going to encourage you to do. Sit down with a fee only fiduciary advisor.That's somebody who's paid by the hour or a flat fee, not by what they sell you. A lot of people go into these income under assets, go pay somebody for their guidance.Ask about diversifying some of this thing, the thing that worries me about this is you got a huge return on your investment in a very short period of time. I got a feeling your boyfriend was betting on winners.Well, the problem with betting on winners is those things can become sour losers really quickly. So ask an advisor about how to do that. Bring those tax questions. Talk about the overall bridge plan in that same conversation.That advice you pay for and understand beats advice you inherited from some relationships. You don't need his advice anymore. You need your own advice from somebody paid to give you your answer straight.Now I want to go a little deeper, because there's a strange grief in money like this. Your aunt is gone, and what's left is a number on a screen. The man who helped you grow is gone, too. You've also. You almost had two losses.And every time you look at that balance, I guess you're probably seeing both of them standing there. And that's why this feels heavy. Because it isn't just money for you. It's a memory.And so many of us who have inherited money or a relationship came to an end have felt this. And you said you feel strange about it. That doesn't mean you're doing anything wrong.Faith doesn't promise us that the market keeps cooperating or that the right move will feel obvious to us. And it doesn't promise us that grief lifts on a schedule. I Love what Matthew 25:21 says.Faithful in it with what's being entrusted, not perfection with it. The servant is commended for stewarding, not for being uncertain. Your aunt gave it to you. That's not a version of you who has it all figured out.God isn't asking you to be flawless with this money. He's asking you to be faithful with it. So manage it with open hands and a clear head and let it be what your aunt meant it to be.A help given in love to her. Feeling unsure with $70,000 in the account is not a failure. It's not some personal fail on your part. It's the weight of a real decision.You didn't get lucky and lose the right to manage it. You inherited and it's yours. And that plan doesn't have to be perfect this week. It just has to be your plan. So here's your win for today.I want you to do that this week. Take full ownership of that money on paper. Change the passwords, remove any shared access, and update the beneficiary.Then open up that High Yield Savings account and move that emergency cushion out of that brokerage company. The Moment the account is fully hers, that decision stops being about him and starts being about you. Well, let's get right to our Bible verse.We mentioned Matthew 25:21 and this is what it says. It says and this one is used in, in context with something else.But I thought this was perfect for today and it's actually kind of perfect for the decision I'm going to make or the, the, the boy I'm struggling. It. Oh, it's going to be perfect for the announcer I'm going to make later. And this is what Matthew 25:21 says. Well done, good and faithful servant.You've been faithful with a few things. I will put you in charge of many things. And I love this one. The money's already multiplied once through someone else's decision.Now the question is whether it keeps growing under wise, faithful management or gets spent down without a plan. And you have the ability to do that. How about we close in prayer?Heavenly Father, I just want to thank you for this listener's aunt and for the love that they thought about ahead of time. And Lord, our listener, comfort her in the grief that still sits underneath of this gift.Heal what that ended relationship left behind and free her from carrying him in her new decisions. Give her wisdom to steward what she's been given, Lord. Encourage to ask for good counsel.Meet the real numbers on the table right now, the bills that have her name written on it and let her provision be a blessing that lasts, Lord, not a weight she's afraid to touch. I just ask that you would establish her steps, Lord, as she takes charge of this for the first time. And give her courage and confidence, Lord.And I ask this in Jesus name, Amen. Remember this, the money came from your aunt. His advice doesn't own any part of it. So know the tax costs before selling.Give every dollar a job, build that cushion, remove that debt and plan for growth. And if the money math is broken monthly, fix the leak instead of trying to fund it. And get your own financial counsel from here on.All right, now I promised you I was going to share some news with you and I'm going to share it right now. Before we go. Today's the last day before everything changes around here. You're going to notice something.Tomorrow we're going to have a brand new show. It's going to be called Becoming Financially Confident.It starts tomorrow at 11:30am Eastern and it's going to be a brand new live show and it's going to be live every weekday at 11:30am for a full hour. You're going to meet my co host. We're going to have two voices, not some lecture.We're still going to talk about real bills, real estate, real numbers. No jargon and of course, no shame. And here's my favorite part. The live chat is part of the show.You'll be able to get your questions answered live on the air in that moment. But here's what's not changing. It's going to be the same mission, my same heart. We're just going to do it together in real time.And if 11:30am doesn't work for you, don't worry about it. We're going to go live at 11:30 Eastern and then the whole show is going to get released as a podcast episode later that same day.So you can choose to be with us live some days or live with us every day, or you can catch it on your drive home. Again, that starts tomorrow at 11:30am Eastern. So come join us at becomingfinanciallyconfident.com again.That's becomingfinanciallyconfident.com I would love to see you there. So thank you for joining me today. I want to encourage you, as I always encourage you, stay financially savvy. May God bless you.And we'll see you tomorrow on Becoming Financially Confident. Have a great day.