Getting an inheritance

Sorry if this is the wrong category... I'm not sure where this belongs.

My dad died. He was thrifty and we kids are getting a share of the house when it sells.  So, I expect, conservatively, to get about $50k. This will go a long way to pay off non-mortgage debts and we'll have some left over. 

The question: How do I set this up in YNAB? Do I take a portion and just not even tell YNAB about it since it will be going into savings? 

My head is kind of swimming with possibilities and questions, so for this audience, I'm looking at how YNAB fits into all this.

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    • QC
    • HaplessFinanceProfessional
    • Queenofcoin
    • 1 yr ago
    • Reported - view

    Firstly, my condolences on the loss of your father.

    If you're using the inheritance to pay debts listed on your YNAB budget, you'll need to record the income and categorise it as TBB.

    If you have part of it in a savings account it is your choice whether to have the account on or off budget.  My personal choice is to have it on so I can see the difference it makes in my net worth.  Going that account goes my net worth which I'm very interested in doing.

    Adding it all to your budget either as TBB or savings will help you see the difference his legacy can make in your life.  It will also add a level of accountability which would be helpful for a one-off opportunity such as this.

    • Patzer
    • Retired at age 60. Thank you, YNAB!
    • Patzer
    • 1 yr ago
    • 8
    • Reported - view

    Condolences on the loss of your father.  Life looks different when you are suddenly the oldest generation in your family.  Independent of the YNAB issues, I'd urge you to set the inheritance aside and not make any instant decisions on how to use it before you process some of the grief.  To that end, I'd initially put it in a savings account external to YNAB.

    When you are comfortable with a decision on how to use the money, what you do depends on your decision.  If you use it to pay off debt that is part of your YNAB budget, it will need to flow through the budget.  If you decide that some portion of it should be used to start an investment account, that account probably does not belong in the budget.  (You may or may not wish to record an investment account in YNAB as a tracking account; there are pros and cons to deciding either way.)

    From a budget perspective, the conservative thing to do would be to continue to live on your regular income, and when you decide the purpose of the inheritance use it for that purpose.  If that purpose is part of the budget, I'd recommend matching whatever part of the inheritance flows into your budget as TBB with immediate budget action putting the funds in the category or categories that you have decided to use it for.

    From an emotional perspective, I'd urge you to think about what your father would have wanted you to do with the money.  When my father died, I used part of my inheritance to retire my mortgage.  Common wisdom at the time was to keep the mortgage and invest free cash in the stock market, but my father was a very conservative guy financially.  There is no doubt in my mind that retiring the mortgage is exactly what he would have wanted me to do.

    Like 8
    • casner
    • Now retired, and figuring out transitions
    • casner
    • 1 yr ago
    • Reported - view

    Condolences on the loss of your father. This happened to me in 2015, almost exactly the same situation. Suddenly, I felt like an orphan (my mother had preceeded him.)

    Since I started YNAB in late 2013, I had already paid off my credit card sink (it wasn't even up to the level of credit card float.) So I put it all into savings at first, then a month later I used 1/3 of it to lower the mortgage. A year later I used another 1/3 to pay the mortgage down to a year left. As Patzer said, common wisdom would have had me keep paying on the 2.75% mortgage and invest the money in something around 5%. But I really wanted to  be debt free and remain so, despite the rational alternative.

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