The Moneyist

Dec. 5, 2021, 5:30 p.m. EST

My wife and I are in our 50s. We lost our house in 2008, declared bankruptcy and finally bought another home. We will inherit $200K. How should we invest it?

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By Quentin Fottrell

Dear Quentin,

My wife and I have struggled for years financially. She is disabled, and I’m the main source of income for our family. I’m 59 years old, and my wife is 58 years old.

During the 2008 housing crisis, things got worse and we lost our home. We lived three years in an apartment trying to recuperate from this financial disaster. 

In 2014, we were able to purchase our current home, but we had a sizable down payment and had to finance the balance through a private lender (individual) at 8% interest. The down payment was $50,000 (we worked hard to save) and we financed $105,000.

This went well until 2015, when I lost my job and we filed for bankruptcy. We paid the entire bankruptcy off, and were released in April this year. This prevented us from refinancing our home.

As we had a private mortgage, we did not include our home in the bankruptcy and continued to make our payment. We have no other debt and have an annual household income of $98,500. I’ve been in my current job for six years and plan to retire here (God willing).

Thankfully, the home has appreciated in value, and it is currently appraised at $205,000. Unfortunately, our financial struggles continue to challenge us and we have only set aside $40,000 in our 401(k). 

Recently, a close relative passed away and left my siblings and me her entire estate, estimated at about $1 million. I have three sisters and one brother.

After the estate settles, we anticipate receiving about $200,000 each. My uncle worked, saved and lived a frugal lifestyle for many years, and I want to honor this gift and use it wisely.

The question now: Do I pay off my home ($82,000 left on the mortgage) and invest the balance for retirement, or invest the entire amount and try to refinance my home? I’ve been told it could take two years to get a refinance after bankruptcy. 

Again, this is such a blessing for my family. I want to make the right choice. I’m planning to work until I’m 65 and will be contributing the max allowed to my 401(k) for the next five years.

Blessed, but Confused

Dear Blessed,

Your letter gives me hope.

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