A repaid debt is returned

Another windfall arrives and shores up my foundation.

Photo by Mohamed Nohassi on Unsplash

I wasn’t kidding when I told you in my introductory Money Talks column that my mother continues to pass down everything from unmatched wise counsel to unsolicited wads of cash.

File today’s post into the unsolicited wads of cash category.

You know that debt to my mother I just wrote about paying off? Well, she decided to return it to me. Remember the total? It was $10,958. But she didn’t stop there.

For reasons I still don’t understand, my mother almost doubled the money. She chose to give me $20,000. There are no strings attached, no instructions, not even a stern directive to not spend it all in one place.

The money is mine to do with whatever I see fit. And I’m eternally grateful. With it, my mother has fortified my financial foundation and put me on the fast track to freedom.

For the second time in 11 months, I’ve been blessed to be in a position of determining how to put an unexpected $20,000 to work. Both times, it was my mother who graciously gave me the cash.

Again, to avoid burdening me with having to file a gift tax return she divided the transfer into three payments. I received the first installment of $9,000 on Sept. 6. The final transfers, which will be split into two $5,500 lump sums, will arrive in January and February.

I didn’t need all of that money. I was eager just to have my $304.40 monthly payments end. I knew that sum alone would strengthen my financial health. With my day-to-day expenses already covered, I anticipated using 100% of those funds to invest. That was before I bought a car. My new car loan costs $231.78 a month, but I plan on paying well above the note each month to pay off the debt faster and avoid racking up interest charges. That means the $304.40 I have coming back each month already is spoken for.

Still, I’ll gain great financial flexibility thanks to three, five-figure lump sums.

Throwback Thursday shot of Mom and me. Thank you for your heart, Mom!

My first inclination was to go crazy in the stock market. I wanted to use the initial $9,000 to gobble up shares for my long-term portfolio. And with the market pulling back in September and October, this would have been the perfect buying opportunity. But this time I decided not to run this race backward.

With my windfall from an inheritance last year, I jumped into the stock market. My timing was fortunate, but my overall foundation was fragile. If another expensive vehicle repair was needed, I would have been cooked. I would have had to sell equities and take from my portfolio. The bones that made up my financial house were bad.

This time, I’m using the windfall to bolster my base. I transferred all $9,000 into my emergency fund — which I’m now referring to as my freedom fund. Because it’s not just a nest egg for whatever negative that arises. I prefer to view it more as a positive, as capital I also can access in a pinch if it means not missing out on life’s important events and possibilities.

Early readers of Money Talks will remember from February that building a $5,000 freedom fund ranked as my No. 2 financial goal of 2023. Last month’s transfer obviously sent me well over that mark. It coupled with the $4,444.28 I had socked away to raise my freedom fund balance to $13,444.28 on Sept. 12.

My original plan, before I bought a car, was to dump the final two lump sums into my freedom fund as well. With my monthly $334 contributions, my freedom fund would have sat at $26,114.28 by the end of February 2024.

But I pulled $3,000 from my freedom fund to use as a down payment toward my vehicle purchase. I reasoned that repairs to my old vehicle would have cost the same or more, and I would have taken the funds from my freedom fund. Rather than paying for a repair, I dipped into the fund to buy reliability.

Nevertheless, I received a $31.07 interest payment for September from the financial institution in which my funds sit in a high-yield savings account currently drawing a 4.30% APY (annual percentage yield). It was one of my best money moves of the month and a payment I can’t wait to receive as the months go on and the account grows higher. It’s among several easy methods I’ve adopted to make my money work much better for me.

Thanks to my mother’s generosity, I can turn my attention away from my freedom fund as early as February. I think $25,000 or thereabout should cover me in case something comes up.

At that point, I will have an additional $334 each month that no longer must be funneled to my freedom fund. That means I’ll have additional investing capital, which will only accelerate our march to financial freedom.

I’m already looking forward to the New Year.