Question: I am lucky enough to receive some extra money from my parents for loans they took out in my name to help pay for my college education. I have about $30k in students loans (master’s and bachelor’s degree). About a third of that is what I am receiving from my parents.
My question is what should I do with it? I have almost no credit card debt, installment payments on a car loan and student loans but I am able to make those easily. However, I have very little liquid savings. Is this money something I should actually use to pay for my student loan debt? I would like to buy a house someday should I save it for that? Should I invest it in retirement? Or is something just to hold on to? The other option is always just have a very fun weekend in Vegas!
Any advice you would have on what to do with extra money in this economy/housing market would be greatly appreciated. Thanks! Chris, Madison WI
Answer: Las Vegas, huh? Well, let’s put that option to one side. Now, all your thoughts about what to do with the money are good. You really can’t go wrong.
But if I were you I would get rid of your small credit card debt, and then I would invest the rest of the money in a conservative money market mutual fund with a brand-name financial institution. For one thing, it’s always a good idea to build up a reservoir of emergency savings, and the extra money from your parents lets you do that in one fell swoop. For another, investment bargains open up during tumultuous times like this, and you’ll have a pool of cash to tap if an opportunity comes your way. These days, Cash is king.