how to grow a $7,000 settlement.

[Ahkeem Smith]

Okay, so I currently own my home that I plan to eventually rent out as my first actually investment property. My mortgage is $650 a month and it’s a 4 bedroom 1 1/2 bath row home that should rent for about $1200 in my neighborhood. At the moment, I’m aggressively paying off a little debt using Dave Ramsey’s avalanche approach to ultimately lead me to a debt free start or 0 net worth. Meanwhile, I’ve been blessed to receive a grant in aid settlement from my college football alumni and I want to immediately put it away until I’m ready to purchase my duplex. I’m asking my bigger pockets experts how to save that money until I’m ready to use it for my next investment move? Any suggestions?

[Cameron Tope]

@Ahkeem Smith great questions!

What are your mortgage and other loans interest rates? That would dictate where that money should go over ~8% then  you should pay down debt, under ~8% then you should invest. 

Do you have any cash reserves? A few months of living expenses always helped me sleep better at night. 

Are you the type of person that money burns a hole in your pocket? If so, then I would put it on debt or invest it, and not save it. 

How long until you plan to buy your duplex? If more than 5 years then put the money in a low cost index fund at Vanguard - most likely in a Roth IRA. In a Roth you can withdraw your contributions after 5 years tax and penalty free, this is not available for traditional IRAs.

Does that help?