How Should I Budget This Mini Lump Sum?

Seeking Advice Forum
1

Hi! So I just withdrew all of my state pension. I talked to my financial advisor, and he let me know that unfortunately, because I am moving across states, this pension does not transfer to my new state. I was able to withdraw about $9,000 after taxes. I want to hear some different perspectives on budgeting it.

I want to set myself up financially for success but I’m also not looking for a long-term investment right now. I’m 27, my partner and I just bought our first home together, and both our accounts are drained. Here’s my plan:

  • $4k for my credit cards ($2k each to lower monthly payments)
  • $1k in stocks
  • $1.5k in my retirement account (403b or a secure savings account)
  • $1k in our joint household savings
  • $1.5k in my personal savings/emergency fund

Thoughts?

2

I would pay off the $5k card, cut it up, and then focus on paying down the larger card. Save $2k as an emergency fund and use the rest as needed.

3

Focus on paying off the credit cards first. Look into the financial order of operations for guidance. For investing, check out r/bogleheads.

4

What are the interest rates on your credit cards? I’d suggest paying off the $5k card and putting $4k into a high-yield savings account as an emergency fund. Consider a 0% balance transfer for the $12k card if possible.

5

Your budgeting plan sounds balanced. Paying down debt will relieve monthly pressure, and having an emergency fund is wise. Look into low-risk savings options if stocks seem overwhelming.

6

Check the interest rates on your credit cards. Paying them off should be your priority, as you’re likely paying more in interest than you could earn from investments. Consider using a debit card to avoid future debt.