You're a mom. You can do anything. (yes, even manage your money)
Start today and download my FREE Mom's Got Money starter pack!
Youโ€™ll also get updates from me.

One Lump Sum: 5 Ways To Spend It

  April 10

This post may contain affiliate links.

MoneySo, I know it’s only April and life is unpredictable, but I am on par to save just over $15,000 this year on top of my regular IRA contributions, etc.

I did this by taking part in my employer’s savings program, where they hold a percentage of my income in a tax free account, distributing it every 3 months. I’ve also been leaving $800 of every paycheck in the bank and splitting the rest into envelopes to use for my regular bills and small extras.

So far, this has worked out pretty well, and my intention for this money, keeping in par with my New Year’s Resolutions, was to put it all towards my student loans.

However, that’s a lot of money, and after talking to my most trusted financial advisor (my sweet father-in-law), there could be some other uses for that money that might be better.

Here are some of my options:

1. Pay Down My Student Loans As Intended

If I use this money for its original purpose and throw it all at my student loans, it will bring the total amount down to $22,000. This will put me right on schedule to be 100% debt free by the time the hubs finishes medical school (at which point we’ll start knocking out his debt.)

2. Pay For A Car In Cash

Nerd alert: One of my biggest goals in life is to pay for a car in cash. It must feel so awesome to go to a car lot, hand over a check, and drive away in a new (used) car. We’ll be expanding our family sometime in the near future, and I’m afraid my 11 year old car won’t last too long. If we’re lucky enough to have a baby Budget Blonde sometime over the next couple of years, I want to drive them around in a very reliable, newer vehicle sans car payments.

3. Start A House Downpayment Fund

We are even further away from buying a house. When I’m being glass-half-empty Cat, I really believe we’ll be renting apartments until we die. However, if we slowly build up a downpayment fund over the next 5-10 years, we could really have a huge chunk of change. Then, if we have to get a fixed home loan or a variable rate home loan, they won’t have to be as big, which would make our lives much easier in the long run.

4. Fund Another Graduate Degree

I know we have pretty much maxed out the education loans that should be allowed in most households, but I seriously would love to get an MFA in Writing. This would open up different opportunities than the master’s degree I have now, and it would seriously whip my writing into shape in ways I can’t do on my own. Let’s just say that if I was a millionaire without a care in the world, there would be no question that this would be my next step.

5. Throw A Wild Party

I’m kind of joking about this one, but if we caved from all the stress of ultra-budgeting and decided to say “Screw it!” and party like it’s 1999, I bet it would be epic… You would all be invited of course.

So, why don’t you weigh in? What do you think is the best option? What would you do with the $15,000 if it was you?

Photo Credit:

36 responses to “One Lump Sum: 5 Ways To Spend It

  1. So, personally, I would pay off that student loan….unless you really need a new car and I mean really mean need a new car.

    You could put some of that money away for the house but I think you could save for a house faster if you didn’t have debt in student loans.

    The party sounds nice but….kind of like throwing your money away. Maybe you could convince some of your BFF’S to do a spa day….or even do a weekend get away. A condo at the beach or the mountains is probably a months rent or better and probably more fun and everyone could chip in to make it cheaper.

    1. I like the idea of a spa day! I’m a total introvert and was definitely joking about the wild party, lol! Great point about how paying off the loans would free up other money. I’m definitely processing on that!

  2. If your loans have rates where mine were (6.8%), I’d pay those off. That’s a solid ROI, especially if you’re getting to pay if off with pre-tax money! (Is that how the savers accounts work? We don’t have one.)

    We’ve done cars in cash or cars financed, and as long as the rate is reasonable (and lots of cars are really low rates now), financing a car isn’t the end of the world unless you’re buying more car than you would if you were paying in cash.

    1. Yes, they are at 6.8%. It’s so high, and the hubs’ med school loans are at 7.9%. Good point on the ROI. Yes, the savers account is pre-tax. My employer doesn’t have 401ks like they would in the States so this is their alternative to it. It’s actually kind of nice because I started it with my first paycheck, so I am used to living on several hundred dollars less than the paycheck actually is.

      Thanks also for the point about the cars. That’s what my father-in-law said too. I can always buy a car in cash and cross it off my bucket list in the future. ๐Ÿ™‚ I think it would be good to put $200 or so aside a month or so into a car account to get used to a car payment and also to be used for a repair should mine need it. Thanks Mrs. Pop!

  3. If it were up to me I’d spend the money divided up into three things instead of spreading it lump sum. I’d pay $5,000 to student loans, $5,000 towards home down payment fund, and the last $5,000 towards to car fund. And congrats to you for saving that much!!!! That’s awesome!!!

    1. Thanks so much, Jessi. I have toyed with that idea before for sure!

  4. It’s so great that you’ve managed to save this much and have the freedom to do some of the things you mentioned. If I had that much money saved, I’d probably put it toward a down payment on a house. I’m terrified of renting…it just sounds terrible to me. Right now, I have the luxury of living at home with my family while I pay off student loans, so I think my next step will be to think about buying a home.

    1. That is nice that you’re able to live with your family! Buying a house so young would be great. That’s definitely a far off dream for me, since we have no clue where we are going to live in the future!

  5. I would tackle the student loan, but I think you can start putting a small percentage away for a car. Maybe that’s my opinion because that’s what I need to start doing…saving for a car!

    1. Good idea. I think I’ll have to start putting money away for the car for sure regardless of what I do with the rest of it!

  6. Student loan for sure, especially due to interest. Or, but a good bit towards that and then divide up the rest for other things. Every month Kelly and I calculate how much we saved, and then divide that between savings towards a house downpayment, savings for a car, savings for emergency fund, general savings, and now saving for college for out dear little Alana.

  7. I would put it towards student loans. I would even try settling for less than what you currently owe. I know debt settlements usually happen when you’re in default but I’m curious if they’d take less than the current balance on non-defaulted loans!

    1. I’ve asked before about lowering the interest rate but because it’s federal loans, they are pretty firm on how their system works. If it was a private loan it might be different.

  8. First off congrats on the $15k in savings. That’s not a small sum of money. In my situation it’s a little more straightforward…trying to address emergencies as they come up! First things first is the sewer drain-out repair, then paying down our car payment.

    In your case I would say the home downpayment fund makes the most sense. I did pay for my current car (which is also my first car) in cash and it’s been wonderful not having that monthly payment. I think you can get a loan at such a low rate these days that it would probably be worth it to put the money towards something else.

  9. Cat
    I am in the same mindset as some of the others who commented and would pay down that student loan. Especially if you have a consigner or a short term on the loan. I suffer each year with home much I owe and 15K is a serious dent. Although it wouldn’t “feel” like much in a few years it will!
    Great food for thought.

    1. Thanks Andrea! No cosigner but it still bothers me! Yeah I agree 15k doesn’t seem like a lot in comparison to how much we owe total, but I know it will help!

  10. Ouch! That’s a high student loan rate. I’d go for that among your choices. If it were at 2%, #2 or #3 might make sense. But the sooner you get rid of a 6.8% loan, the better.

  11. Just curious about the car…I may be mistaken, but aren’t you guys moving to NYC when hubby starts his clinical rotations? Do you really need a car for the next few years? I think if you can get by without that would be the most economical option.

    I’m tackling my med school loans right now, so I say try to get yours out of the way as soon as possible! Med school is so expensive and it’s nearly impossible to even make a dent in those loans while you are in residency. Sorry to be such a downer! On the bright side it’s nice that you’re working and able to provide some income for the two of you right now. Great work on the saving!

    1. Yes! We are, but it’s possible some of the jobs I am looking at will require transportation outside of the city. So, we do have the 11 year old car now, but we won’t know if we’ll need a more reliable one until we get settled next April or so! Also, good luck with the med school loans! I know. I’m hoping to make the tiniest dent when the hubs is in residency. A little bit at a time right?! Are you in residency now or all finished up?

      1. Hopefully you can avoid driving! Insurance, parking and everything else is just so much more expensive in NY. I’m in the first year of residency right now. It really helps living somewhere with a low cost-of-living during residency. You may be aware of this already, but when you two do settle down for residency you can get what’s called a “doctor loan” for a house with a great interest rate and no down payment required (and no PMI). A few banks provide these loans to doctors because docs hardly ever default on mortgages. We just bought our house with a doctor loan and had a great experience.

        1. Very cool. I have heard of the doctor loans. So glad to hear that it’s an option. ๐Ÿ™‚

  12. These are all great ideas on where to put the money. I’d put the most towards number 1, but the house fund sounds amazing, too. It’s a lot easier to get a car loan downpayment than the downpayment for a house, and you’ll probably want both when little one decides to come along. Not hating on the party idea, either! Life is all about balance!

  13. If I were in your situation I would have paid the student loans gradually and not accumulated the $15K. Too easy to dip in. Since I don’t have loans other than mortgage and don’t want to overpay that one, I would look for somewhere to invest, a downpayment on a rental property or index funds.

  14. With a blog named Student Debt Survivor, of course I’d say pay on the student loans ๐Ÿ˜‰ Nice work saving up that cash, that’s a pretty significant amount of money. Bf and I recently purchased a used car in cash. It was a great feeling to buy something and drive away knowing that it was paid for free and clear.

  15. You know what I think! ๐Ÿ™‚

    Student loans, because how awesome will it be to be DONE with those things :). And also, splurge a little. Take $250 and have a weekend of fun. ๐Ÿ™‚

  16. I’m a nerd at heart too, and have already started saving money to be able to pay for a car in cash. After throwing half of income towards my car loan, to pay it off in a year, I NEVER want to have car payments again! I can’t wait till the day I can go to a car dealership and hand over a check! Yeah!

    So excited to hear that you and your hubby are thinking of starting a family. I know this will be an exciting time in both your lives. Good luck!

    1. Oh yeah, can’t wait to hear about the day when you pay off the car. I’ll be cheering you on!

  17. 1.) Good plan.

    2.) Keep your car. 11 isn’t that old for a car. It’s the AVERAGE age of cars on the road today. Keep repairing it, and keep it going, and it’ll be good for many more years. Car expenses level out around 10 years of age. Sure, parts of it may be old, but as you replace things, those parts become new. Even an entirely new engine is going to cost you way less than a new (old) car.

    3.) Also a good idea.

    4.) A pointless and terrible idea. I’m a multi-published nationally bestselling author with novels in 8 languages, a New York agent, and New York editors. Want to know what editors think an MFA is good for? Wiping their backsides. And exactly how many successful novelists do you know, who aren’t subsidized by the university literary machine, teach fiction writing? That’s right. None. So you wouldn’t even be under the guidance of anyone who is competent to teach the subject in question. If you want to write, then write. And write and edit and write and edit and write and edit some more until you’re good at it. There is no shortcut, and MFA programs are chock full of people who will never see a bookshelf beyond their university press.

  18. My husband and I paid for a car in cash and it is SERIOUSLY THE GREATEST FEELING EVER! I felt like such a millionaire hahah….Good luck in your goal!

Comments are closed.
Copyright ยฉ Catherine Alford.  Designed & Developed with by