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comment by user-inactivated
user-inactivated  ·  2100 days ago  ·  link  ·    ·  parent  ·  post: Ask Hubski: I just inherited $40,000 - what do I do?

I'm late to this but will add in my opinions.

$40K is not a lot of money. It can buy a lot of stuff, as have been described below. But there is one thing that this money can buy not one single person in this thread mentioned:

$40,000 can buy Freedom.

Every single person should have six month's take home money in cash in the bank. This is your "OH SHIT" fund. Not vacations, not sad buying. This is for Emergencies and Critical Life Changes only. When you have six month's cash on hand you now have options that 90% of Americans can only dream about. Let's say you get a call and have an interview for your dream job. This money is the "Buy a plane ticket and hotel" to go to the interview. This money is the First and Last Month's Rent fund for when you have to get into a better apartment (note that this money is not a house down-payment). This money is the "get me the fuck out of this lease" money. This is the "Oh shit the transmission just fell out of the car" or "I need new tires" fund. This is the money you fall back on when a dumb-fuck redneck in a truck causes an accident that sends you to the hospital and totals your car. When money comes out of this fund, you put that money right back in.

This money is the "I lost my job but I have a cushion to look for a better fit" fund.

This money is the "I can afford to invest the max into my 401k and not starve" fund.

With you being in college, you are at a perfect point in your life to build the habits that will increase your ability to enjoy life and take part in the great adventure. You have a golden opportunity to learn how to pay yourself first. Any money coming out of the "OHSHIT" fund goes right back into the fund. If you get a raise? The whole raise goes into the fund first, then use the raise to do something nice for yourself. The amount of worry and stress in your life, having built this fund, Will go down exponentially. I can quit my job right now and live off my "OHSHIT" fund for a year. I bet I can stretch it to two years. My "OHSHIT" fund was a part of the reason I got the home loan I did; I was able t demonstrate good money skills and also had the money to pay the mortgage's closing costs.

Freedom is something special. Money is not the be-all-to-end-all but man, having a real, honest, emergency fund feels so fucking grand. Build the emergency fund, then see what you need to make your college experience better by investing in the tools you need to do better and get better grades. I'm thinking fraternity join fees, cloud storage, stuff like that. If you are in CompSci, learn AWS and Azure, which cost a non-trivial yearly fee. As much as investing is something that should be encouraged, building skill sets will get you better jobs, which means more money, which means bigger retirement funds...