Came into a little money, need advice

I am currently 27 years old and recently been gifted 35k and need advice on what to do with it. Currently I make 62k and contribute 6% with 60% matched
to my 401k which currently has 2,500 in it, only made 3% so far this year. I also have a retirement account through my work which is fully employer contributed currently at 2,200 making national bond average percent. Additionally I have a little money in a stock account which is also around 2,200 currently, only put in 1,500 2 years ago to play around and learn the market. My wife makes about 40k with no savings, and together we have around 10k in credit card debit currently at 0% for 6 months then will be around 12%. We also "own" a house bought at 141,500 and currently have 121,500 invested, 86%.
My initial thoughts were to pay off the cc debt, put money into the house to avoid paying PMI, put a little more into my play stock account, and put the rest into a low risk investment that is accessible next year for a down payment on a new house, possibly a CD. I am second guessing the decision to pay of the cc right away as this money may be better somewhere else why the cc is still at 0%. Also I do not know what is the best low risk investment that can be accessible when I decide to move.
Thanks in advance for any advice.
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Pay the debt and pay down the house to at least 80%. That will take about half. Next, start fully funding all of your retirement options. Then put about $5K in a high rate of return money market with your broker or bank. Invest the rest in mutual funds. Get rid of the stock, stop playing, and add that to your mutual funds.
You really need to take a look at how you are living life. You two earn over $100K, which only a small fraction of Americans do, yet you are broke and in debt up to your eyeballs. That must be the modern American dream. The only mistake you haven't made is to go out and buy $90,000 worth of cars on credit.
-john-
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John A. Weeks III 952-432-2708 snipped-for-privacy@johnweeks.com
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I will second the advice to pay down the cc. 10k is a considerable amount, and once 0% teaser rate expires, it's possible this amount could grow out of control.
I would first look at the following:
1) what will taxes be on 35k? I would set this amount aside right now. 2) I would pay off the 10k in cc debt. This will free up the minimum payment on the cc. 3) I would then take whatever the cc payment was and fund an IRA (probably a Roth-if you qualify) each month 4) I would then make sure you have 1-3 months expenses "in the bank" for emergencies. 5) I would then spend some and save the rest.
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How much is on your CC and how long will this zero interest last? The best low risk investment for you would be a bank CD.
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First, pay off that credit card $10K invested for 6 months compared to keeping the CC for 6 months at 0%... The difference is only $200 or so and that just isn't worth the risk of missing that 6 month deadline and having to pay the 12% interested back dated for the 6 months.
Second (assuming you don't have any other debts,) pay down your house so you can get the PMI off.
Put the left over $17K or so in a MMA (some earn 5% and more!) for a beginning emergency fund (you didn't mention having one.)
Frankly, with a $100K/year household income, $35K isn't a life changing event. I wouldn't even think of moving just because the cash came in.
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B wrote:

Buy a $10K CD for 6 months, to come due when the card 0% expires. Then pay it off. Don't charge up more than you can pay off in full each month. Check with the bank exactly how to get rid of PMI. Some will require an appraisal if you pay against the principle (i.e. if you make any extra payment such as this). It should only take $8K to get you up to 80% if I understand your numbers, and it would be worth a $250 appraisal to get rid of PMI if that's what it takes. The rest should be kept in CDs or money market, as this represents your emergency money.
Given your situation, you should not be 'playing the market' in individual stocks. You first need to find the money to improve your retirement savings, 15% is a good target for someone earning $100K as a family. You can certainly review your spending and find a way to bump your 6% to 8 or 10. Then, put 1/2 of your annual raises into retirement savings. After the 401(k) matching money (the 6%), your best bet is the Roth IRA. 4K/yr for you and 4k/yr for your wife. That's where the next 8K should go. Into index funds, not individual stocks.
BTW, there are no taxes due on a gift to the recipient. If any tax was to be paid, it's by the person giving you the money. JOE
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Some states do impose state taxes on large gifts such as $35k.
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Elle wrote:

Ooops. I missed that. Connecticut, Louisiana, North Carolina, Tennessee, or Puerto Rico seem to be the ones that have a set of rules different than Federal. JOE
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I know of at least two others where gifts this size may cost the recipient state taxes. Folks should just check their state 1040 etc. instructions.
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