What would you do with $10,000 if you were a married couple, one just lost his job and the wife works part time. Their?

What would you do with $10,000 if you were a married couple, one just lost his job and the wife works part time. Their house needs repairs, new windows, updated bathroom and kitchen, etc. The husband is 61, his wife is53. What should this couple who is uneducated in investing, do with the money?

Invest for pending retirement or use towards house or keep until the husband finds another job? Asked by darann 40 months ago Similar questions: $10 000 married couple lost job wife works part time Business > Financial Planning.

Similar questions: $10 000 married couple lost job wife works part time.

Don't put the money into the house until your husband finds a new job. Based on the information you provided me, I would not put any money into the house right now. And, updating a kitchen or bath will cost you a lot more than $10,000, unless the upgrade is just cosmetic.

You may need the $10,000 to tide you over until your husband finds another job. Remember, once you put money into your house, the only way to get it back is to take a home equity loan, (difficult to do if husband is not working) or sell the house. And, for a kitchen or a bath you usually get back about 85% of what you put in.

Average bath remodel runs $3,000 to $5,000 and average kitchen runs $10,000 to $30,000. Based on you and your husband’s age, you need to stay away from high risk stock market investments for the time being. You can’t afford to take a loss and then suddenly need some of the money.

You don’t have enough time to recover. Once your husband finds a new job you may want to look at some low to moderate risk equities with about 40% of the $10,000. You probably know more about savings and investing than you think you do.

Some people think it’s too complicated, so they just can’t be bothered with it. Here is a little example to increase you savings knowledge. If you put the $10,000 in a savings account earning 5% interest, in five years you will have $12,763.

You will have earned $2,763 in interest and in a 15% tax bracket would have paid $415 in taxes for a net of $12,348. ($12,763-$415 = $12,348) Compounding of money in a taxable savings account is an inefficient way to grow money in the long term. With compound interest comes compound tax.

Here is an example: Starting Interest Annual Ending Balance Earned Tax Balance $10,000 $500 $75 $10,500 $10,500 $525 $79 $11,025 $11,025 $551 $83 $11,576 $11,576 $579 $87 $12,155 $12,155 $608 $91 $12,763 Notice as the balance increases, the interest earned compounds,(increases), the tax compounds (increases). Also notice the tax was not paid from the account, it was paid from out of your pocket. So even though you see a balance of $12,763 in your account, it is really $12,348 because you paid about $415 in taxes.

This is one of the biggest errors made by investors. They lose track of what the fees and taxes are. So they see the $12,763 balance and think that is what they earned over the five years.

They forget to net the account, (subtract the tax from the ending balance. ) Now what if we stopped the compounding. The table will look like this.

Starting Interest Annual Ending Balance Earned Tax Balance $10,000 $500 $75 $10,000 $10,000 $500 $75 $10,000 $10,000 $500 $75 $10,000 $10,000 $500 $75 $10,000 $10,000 $500 $75 $10,000 What I have done here is take the $500 of interest from the account each year and saved it someplace else tax free. Municipal bonds or municipal bond mutual funds are federal tax free and in some cases state tax free as well. Now instead of paying $415 in tax, the tax was $375,(75x5=$375).

The balance in the tax free account after five years at 5% is now $2,763. Add that to the $10,000 for a balance of $12,763. The same as the first table.

Only now the tax was only $375 not $415. We accumulated the same amount of money, but paid $40 less in taxes. In this example the amount is small, but the longer you compound the money, the greater the savings.

You can also see over a short time period you really are not going to be able to accumulate a lot of money. Even at 10% rate of return the account grows to $16,105. You will need a lot more than that to retire on.At this point in time I would also stay away from an IRA.

It is not liquid enough for you in your situation. You each can put $6,000 for 2008. $5,000 plus a $1,000 catch up if you are over 50.

In the 15% tax bracket you would get a tax refund of $1500,(15% of $10,000), but if you need the money quickly and withdrawal some from the IRA, there would be an automatic 20% withholding, so for every $1,000 you withdrew, you would only receive $800. You would have to wait till you did your taxes at the end of the year to see if you were eligible to get any of the withholding back. Plus the money would grow no faster than a 5% savings account, (assuming they both pay 5%).

The only difference you would not have to report tax on the gain in the IRA until you made a withdrawal. Since your savings is low, I would put the money in a high performance money market account until things settle down with your husband’s employment situation. If you don’t need any of the $10,000 during your husband’s job search, take the interest earned at the end of the year and start a no load Municipal bond mutual fund.

If you do not have 3-6 months of savings to cover living expenses, then bank it until you get a job It's really more important to have liquidity to handle living expenses until you find another job, but you should budget it only for that purpose, not luxuries. If you already have enough to cover 3-6 months expenses then, pay debt, or repair home, in that order Tom Schaffer Insurance and financial services professional .

Use it sparingly If you decide to invest the money, I would go with about half of that $10,000. That way, not all of your money is tied up in investments if you run into an emergency (car breaks down, etc. ). Since you want to invest it for retirement, you can do that at a bank.

They will put your money where it needs to be and educate you on how it works. With the $5,000 you have left, take maybe $2500 and put it in a savings account or something along those lines--out of sight, out of mind. Make sure that you can get to it if needed without penalties.

I wouldn't spend all of the money on house upgrades. Do things that will help first--such as the windows. Replacing the windows could save money on your electric bill because it helps keep the the house the perfect temp.

After you have the windows done, start pricing what you want to do next and evaluate your finances. See how much you can afford to spend and still have money leftover for emergency uses.As far as being unemployed goes, I'm all too familiar with that! Unfortunately, I've been out of work for the better part of a month and my last check saw it's end last weekend.

Lay out a budget--how much does it take per month to survive? Line out gas, mortgage, and utilities and whatever else you have to pay for monthly. With the wife still working part time, that's a good thing--you've still got a little bit of income to add to the pot.

No matter what you do, I wish luck to the job seeker. I hope this helps some! I know I'm kind of young, but hope that these ideas will work!

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Under the circumstances.... Considering your current status (one unemployed) I would recommend that you save that money where it is accessible to pay bills as they arrive during hubby's unfortunate unemployment. That way, you have a cushion to rely on -- in case you need it. Under a different scenario I'd recommend that before any kind of investment that you pay off any consumer loans or credit card debt.

Generally speaking, if you invest while you have unpaid credit cards, you're actually losing money by paying the interest to the CC company. If you're paying 15% or so to your credit card, and making 3 to 5% interest in some fabulous investment, you're actually netting a loss. So credit reduction would be the "next highest" priority.

If all those things were changed, then investing in home improvements OR investing in retirement accounts would be good things to do with "extra" money. Your home can be a great investment, and if you're planning to stay there after retirement, making it nicer a little at a time is a good, reasonable thing to do. Cheers.

Sources: newfietom .

While the income is down, I would not do anything with the money but sit on it - maybe put it in an interest savings account. Certainly not spend it - you may need that to live on if your husband can not get a job before he retires. The new windows (unless they are broken), bathroom and kitchen are wants you can not afford right now.

The repairs, if they can not wait without damaging the home or decreasing it's value, should wait until there is income coming in.

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Wanted to get married in the next couple of years.

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If you are retired and do not have a part time job do you find it difficult to do the daily routines that used to be...

Been with ex boyf 7 yrs - fantastic time. Wanted to get married in the next couple of years.

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