Hi everyone. I was hit by a drunk driver a little over a year ago, and I recently received the first part of my settlement, which came to $63,675.50. There’s a second part coming, estimated between $110k and $150k.
I’m 28 years old and currently renting a house for $1,100 a month, which I split with my boyfriend, so I pay $550. I’d love to use some of this money as a down payment on a starter home and put it solely in my name.
I don’t have any credit cards. My main debts are:
My truck (2018 F150) - $19,300 left at 6% interest. I bought this for safety after the accident.
Student loans - $85,900 from my undergrad and grad degrees, currently at 0% interest with paused payments.
I work full time in healthcare administration at $23.94 per hour and have a side job as well. I’ve had some anxiety about managing this amount of money, and I’ve heard suggestions about putting it in a money market account.
Any advice on what to do with this? Thanks so much in advance!
EDIT: My medical bills from the accident are fully covered by my personal injury protection policy with State Farm.
I like my healthcare job and plan to stay long-term since there’s room to grow in the company.
Check out this Bogleheads guide on managing a windfall. It covers some great basics on how to make the most of a big financial gain. I went through something similar years ago, and following this advice helped me manage my money wisely!
@Camila
I completely agree! I got a similar settlement a few years back, and using the Bogleheads approach built my confidence in managing it. I highly recommend it!
First off, it’s smart to keep this private—no need to tell anyone about the money. My advice:
Pay off the truck right away. It’s like getting a 6% return on investment.
Any other high-interest debt, pay it down.
Put the rest in a high-yield savings account as your emergency fund and use this for future goals.
After that, take the amount you’d been paying on the truck and add it to this savings to grow it over time. That’ll give you a nice cushion to work from!
That’s a big amount of money, so I can see why it’s overwhelming!
A couple of things to double-check:
Are your medical bills fully cleared, or does any of that need to be covered from the settlement?
You’re young now, but injuries from accidents sometimes show up years later. Some people set aside a portion of their settlement in a structured account to cover potential future medical costs. Your lawyer might have options on how to do this if it interests you.
Debt can hold you back financially, so clearing what you can now could give you more options down the line. That way, you don’t pay interest over time. I’d pay off the truck first, maybe set aside for an emergency fund, and then look at the house plan.
Pay off the truck loan and set aside an emergency fund.
If you don’t have retirement accounts, consider putting some into a Roth IRA or similar for the future. That way, you have options both for now and later.
Consider putting some away in case of long-term health issues. I was in a similar accident, and years later, I still need the occasional physical therapy session. Better safe than sorry!
My suggestion: pay off the truck, put some in savings, and invest a bit for growth over time. That gives you flexibility while you figure out what’s next.
Paying off the car and student loans will free up cash flow if you go for a mortgage. And remember, buying a home also means you’ll need funds for repairs, taxes, and other costs. You could park the settlement in a high-yield account to grow while you plan.