How should I prioritize inherited money?
I am 71 years old and recently received $300,000. Should I pay off my house, credit cards, or hide money in a CD for my kids? I'm not sure which comes first.
That is really a planning question based on how you want to take care of what makes you feel comfortable. First, if the money you received is taxable, make sure you reserve enough to cover the tax bill. Second, I would suggest the credit cards be paid if they are all revolving debt. That means accrued interest on a daily basis on the outstanding balance. Third, on the home, that requires a little more thought since it really involves cash flow and your current situation. Usually I don't currently recommend that immediately if there is a need for other areas. On your CD idea, you are probably used to seeing that as a savings vehicle. Unfortunately, the traditional CD right now is a substandard vehicle for keeping up with basic inflation and it may lock your money up for a time that you may need it. Without knowing your personal situation, I would recommend talking to a CERTIFIED FINANCIAL PLANNER(TM) to help you make your decision.
I would prioritize paying off any high interest debt that you have. If the credit cards you mentioned currently have a balance on them that is subject to interest, they should be your first priority. This should include not just credit cards, but any high interest debt you are carrying. Secondly, I would look at what your current income and expenses are. Without the inheritance, are you able to comfortably pay your bills and live the lifestyle you want to live? If not, you may want to look at using the inheritance to help increase your current income levels, through purchasing an annuity or investing in an income producing portfolio. If you are able to comfortably meet your expenses and are confident that your current income will continue to meet these needs for the rest of your life, only then would I start looking at gifting any amount of money to your children. I recommend meeting with a financial planner who can help analyze your current situation and give you some confidence on how to move forward.
If you have credit card debt, you definitely need to pay that off first.
Regarding the house, it depends on your cash flow needs when viewed in combination with your other income sources, like pension, savings accounts, etc.
Also, depending on your specific situation, you should be able to decide on savings vehicles (one of which could be a CD), but depending on your time horizon, you may not want to lock the money in a long-dated CD. Also, interest rates are very low for these types of instruments, and if you depend on the money to generate income for your living expenses, then you should allocate the money to a diversified portfolio of different asset classes.
I would recommend calling a couple of Certified Financial Planners (TM) in your area and engage one you feel is a good fit for you. He or she should take a holistic view at your individual situation and make the recommendations you are looking for, http://www.letsmakeaplan.org/choose-a-cfp-professional/find-a-cfp-professional?
There is no straight shot answer on this since there are a few unknowns here. But, certainly one of the worst financial situations is having credit card debt. Pay off your credit card debt first assuming you are paying high interest rates. Have a thorough understanding of what your cash flow needs are going forward. You may want to meet with a certified financial planner professional, try going to the website, http://www.letsmakeaplan.org/choose-a-cfp-professional/find-a-cfp-professional, to find someone in your area.