What to do with $15,000?

If you come across a $15,000 windfall or grow a 15k nest egg, what should you do with it? Savings accounts, emergency funds, IRAs, HSAs, and paying off debt are all options. So which one should you choose?

Emergency Fund

If you don’t have a sizable emergency fund, use the money to build one. $15,000 would take care of all sorts of unexpected expenses that are bound to pop up. 

Savings Accounts

Saving $15,000 in a high yield savings account is always a safe bet, but it won’t earn much interest there. If you have 15k to save, it might be wise to save some of it in a savings account, but you don’t have to put it all there.

If you need the money within the next year, don’t invest it in the market. Place it in a high yield savings account to access it when the need arises. If you won’t need the money for awhile, consider investing it.

Funding a Roth IRA

If you haven’t funded a Roth IRA this year, plop a portion of your 15K in one. Your Roth IRA can grow tax-free, and you can withdraw your contributions at any time without penalty. 

You can use a Roth IRA as a place to store your emergency fund, which takes care of two birds with one stone.

Pay Off Credit Card and Student Loan Debt

If you have credit card debt or student loan debt, dump a portion of your $15,000 savings into paying those off. You don’t have to use the entire sum of money to pay off your debts. Place some in an emergency fund or invest a little for future growth.

Pay Off The Mortgage

If you have a mortgage, you may want to spend a portion of your $15,000, reducing the principal you owe. Use the calculators at dinky town to see if this makes sense for you.

Invest in an HSA

If you have access to an HSA, you could plop a portion of your 15k into it. Health savings accounts allow you to pay for medical expenses with pre-tax money. The money stays with you even if you switch jobs and can eventually be used as an IRA once you turn sixty-five.

What to Do With $15,000?

I originally wrote this post many years ago. At the time, I was sitting on $15,000 after selling my car and receiving a tax refund. I ran the numbers in my favorite excel spreadsheets to determine what to do with the 15k burning a hole in my bank account.

I asked the personal finance community what I should do with $15,000? Deep down, I wanted to pay off my mortgage. I was holding on to a 30-year mortgage that was just under $500,000 with a rate of 6.0%.

Rates were much higher back then, so dumping $15,000 would’ve saved me $36,000+ in interest over the life of the loan.

At twenty-eight years of age, I feared losing out on the beauty of compounding interest by paying down the house, but I also hated having a mortgage and being in debt.

After much contemplation, I decided to dump all $15,000 into a brokerage account. I bought 15k worth of S&P index funds.

What Should You Do With 15k?

What should you do with $15,000? It depends on where you are in life and what you’ll need in the future. It also depends on how much money you need to feel comfortable. 

Most financial decisions aren’t just about the money. Sometimes the safety and security of paying down the mortgage or paying off debt are more important than watching your money make more money.