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What do I do with my Bonus?

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  • What do I do with my Bonus?

    I am a sole parent of 7 and 3 year old; 39M, 275K/yr academic subspecialty, 3 years out of fellowship, 3 years out of a messy divorce and started with a net worth of -45k. No child support and no alimony. However, I do have constant legal expenses as a result of random petitions filed by my ex. I have no debt(no car loan, no mortgage, no credit card debt, no student loans), childcare expenses in the range of 30k/yr post tax. I do not own a house and live in a MCOL town. I max out 401k, backdoor Roth, HSA. I have 65k in liquid savings, 50K in taxable index funds, 50 k in 529. I have term life of 2 mil and a will. Now the fun part: I got a bonus of 72k post tax at the end of the year.
    I do want to buy a house at some point but I wont spend >450k. I do have downpayment for that. I do need two cars as the nanny drives and picks up my kids etc etc plus I love cars- not a particular car any car(dream car- E63 AMG S wagon). Right now, I really want a Shelby GT350 however am leery of taking 60k debt and leery of spending so much cash on a ************************ car.
    So, I aint buying anything; what do I do with the money?
    1) Invest spread over the span of a year in index fund/s.
    2) Treasury note/bonds/bills?
    3) Buy the ************************ car financing 50k at 1.99%?
    4) Buy the ************************ house? My rent is low-> the house that I am renting is not in my budget to buy.
    5) Procrastinate forever?

    I am on O1 visa, if that matters at all.

    Please feel free to comment especially about car choices.

    Current cars
    Lexus GX 2016- will keep forever
    Tacoma 4X4 off road- stickshift- leased at a deadly deal.
    27
    Invest spread over the span of a year in index fund/s.
    66.67%
    18
    reasury note/bonds/bills?
    11.11%
    3
    Buy the damn car financing 50k at 1.99%?
    14.81%
    4
    Buy the damn house?
    7.41%
    2

  • #2
    How much are these ongoing legal expenses? You sound hesitant to get the car and it doesn’t sound like you’re ready to buy a house.

    Do you have a proper emergency fund? I’d probably just invest it but I don’t think I’d spread $60k out over a year.

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    • #3
      Put it in a HYSA until you decide what you want to do. It sounds to me like your financial life is already pretty well set up. I agree with CordMcnally that an emergency fund would be appropriate. But of your choices, I’d look to a house before going into debt for a car. If you are looking to investments, then I think the equity index fund v. Bonds/treasuries question is a simple function of your preferred AA. Buy whichever rebalances to the goals set in your investor policy statement. https://www.whitecoatinvestor.com/ho...nal-statement/

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      • #4
        I would also make sure I had an adequate emergency fund. Anything left over would go into the 529s for your children.

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        • #5
          Do you plan to apply for a green card? I would be very hesitant to buy a house until you were on an eb1 visa

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          • #6
            you are not in any position to be buying another nice car. you already have one really nice one, you do not need 2. you're in a messy situation and you need liquidity and sound, conservative financial planning.

            nanny doesn't need to drive a massive lexus for 2 kids that age. if you feel that she does, then a used Taco is fine for you.

            for perspective i also provide a car for my nanny (so i can control safety, upkeep, etc) and it is much less vehicle than you are choosing.

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            • #7
              The censorship makes it hard to understand your post, but I agree that you do not need to be purchasing a 50K nice car with financing if you have a negative net worth. I'm not sure why you would be considering financing if you have the cash, I guess if your emergency fund is not up to par maybe just use the bonus as an emergency fund. Once you have an emergency fund and a down payment for a house and are certain you are not going to move for 5 years, maybe look at the purchasing a house. I clicked on purchase a house, but now that I think about it, you should probably wait until you have a good sized down payment and a well funded emergency fund before purchasing. You don't want to be stuck if the roof starts leaking or something.

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              • #8
                No more cars. Please. Don't waste money. You are a single parent and have responsibility for 2 young children. You have enough number of cars.

                Invest in index funds.. Not spread over a year but as a lump sum right now. You will come out ahead.

                Make sure that you have a large EF to take care of the legal expenses.

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                • #9
                  And no house till you are approved for a green card.

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                  • #10
                    Thank you for the responses.
                    A few clarifications:
                    1.I do not have a negative net worth now. I started with a negative net worth.
                    2. The Lexus, I agree is a lot of car for the nanny, but is paid off and has no issues. I drive it a lot with the kids. ( two cross county trips in 2020- just me and kids), so its not just a nanny car. The Tacoma was a lease at 0( (real zero) down <200 bucks including taxes with an 88% residual and MAX MSDs which will end in 4 moths so, I will need a car. That is where the car idea is coming from. The 65K liquid is my emergency fund. My monthly expense is 6k or so.
                    3. I agree on the house and green card/EB1. I have a few job offers from Canada with an academic license and I do toy with Canada every now and then. No house yet.
                    4. Legal expenses 10-15k/ year.

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                    • #11

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                      • #12
                        Originally posted by MPMD View Post
                        a used Taco is fine for you.
                        Back in the day I owned a '95 Tacoma. I've seen them referred to as a taco here, but I never used that lingo. Is this new terminology or have I always been out of the loop?

                        Comment


                        • #13
                          "The Car will not love you back." You heard it here first.

                          The car is a silly purchase, IMO. Invest money, put money in HYSA, buy house, give more money to ex, set money on fire, etc. are all better options than buying the car. Okay, maybe not all, almost all.

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                          • #14
                            I vote for the Jelly of the month club

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                            • #15
                              Originally posted by Closinggates View Post
                              Thank you for the responses.
                              A few clarifications:
                              1.I do not have a negative net worth now. I started with a negative net worth.
                              2. The Lexus, I agree is a lot of car for the nanny, but is paid off and has no issues. I drive it a lot with the kids. ( two cross county trips in 2020- just me and kids), so its not just a nanny car. The Tacoma was a lease at 0( (real zero) down <200 bucks including taxes with an 88% residual and MAX MSDs which will end in 4 moths so, I will need a car. That is where the car idea is coming from. The 65K liquid is my emergency fund. My monthly expense is 6k or so.
                              3. I agree on the house and green card/EB1. I have a few job offers from Canada with an academic license and I do toy with Canada every now and then. No house yet.
                              4. Legal expenses 10-15k/ year.
                              what is your net worth?

                              like i said if you already have a sweet ride you don't need two. just buy like a $12k honda accord for cash and keep moving forward.

                              you don't need two nice cars, you don't even need one and you already have one.

                              i just bought myself a nice car, i'm not opposed to nice cars, you're just not in a good position to buy one. i think nice cars start around NW $1M for me. if you've got a million in the kitty and you want a Tahoe, get after it.

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