General Finance Question from a Gambling Jackpot.?

Hello Yahoo! Answers Forum,





I've been looking for some interesting thoughts regarding my unique situation so I'm very happy to have stumbled upon these forums. This seems like a great place to get some insight.





I am a 22-year old senior in college (Class of 2011). On January 14th of this year, I won the Harrah's


Bad Beat Poker Jackpot in Atlantic City, NJ. My share of the pot was $180,622.00. They did not withhold any taxes, so I tipped the dealer $2,000 and requested the rest of the amount in a check. I then drove straight to the bank and deposited $100,000 in a low-interest bearing 6-month CD until I could figure things out, while keeping $50,000 in a Savings account and adding $27k to my checking account to deal with current student loan debt. Here are some specs on the status quo, as well as what I've done so far:





-Using the free online version of TurboTax, I acquired tax estimates (No deductions included yet!) of approximately ~$42k (federal) and ~$9k (state).





-I gave Mom and Dad about $12k. They're the only ones who know about this, aside from the friends I went with. I told them to keep it a secret, and spent 350 dollars on a night out for the friends I was with. They've been loyal enough not to spread the information.





-I paid off $32,000 in consolidated private student loans accruing interest at rates of 6.8% and 7.62%. I still have $3,000 in Federal Perkins loans that won't start accruing interest until 6 months after graduation in May 2011, and ~$20,000 in Federal Direct loans accruing interest at a rate of 6.8%. Payments on both loans are not due until 6 months after graduation. I have one more year of school that will cost another $20k that I will pay for in cash.





-I have no other debt, bills, or payments. I got my license at age 17 but have never had a car (grew up broke =( ironically). My cell phone is on my Dad's family plan, and I'm cheap as heck (cheap MP3 player, cheap cell phone, refurbished used Dell laptop, haven't bought new clothes in years). I've never had a credit card before.





So, to sum things up, I now have $133k and change left. Taxes will probably be around $45-50k after I've hired a tax/financial adviser, which I've set aside $1,000 to pay for. I won't have to file taxes until April of 2011, so I have 10 months to figure out how to lower taxes. I still have ~$23,000 in student loan debt, $20k of which is accruing interest at 6.8%, but none of which I need to make payments on until November of next year. One more year of school will cost another $20k. At the end of the day, I should have around $40,000 in expendable cash and no debt by the time I graduate.








What would you personally do from here, if you were put into my shoes? Would you pay off the rest of the student loans ASAP or wait? How much would you put into an emergency fund? In your checking? How much would you invest and how? How much would you spend on a car? Retirement? etc...





Yes, I realize it was irresponsible of me for taking out so much in student loans that I couldn't afford, and that it is unbelievably, ridiculously miraculous that someone other than a bank could receive a bailout like this.








I've heard great things about this forum so I'm looking forward to your responses!





Thank you in advance.|||You're not only very lucky but you seem to be very intelligent.





I always believe that if you can pay off a debt today, why wait till tomorrow. No one knows what the future holds and being in debt is a horrible thing that most people experience on a daily basis.





If I were in your shoes I would start a business. My greatest interest in life is to make money into more money and then as I get richer and richer things like how much to spend on a car and so on would become irrelevant.





Keep ten cents out of every dollar you earn and invest it, never spend that 10 cents or it's interest and you are guaranteed to become rich.





Read this: http://www.amurrayenterprises.com/The Richest Man In Babylon.pdf





Good Luck!


Andrew|||There is a lot to deal with here. Standard answer to the student loan question is that paying it off now will save you money in the long run because you will not be paying the interest. So pay those off. Hiring an adviser was the right move, make sure that you discuss your taxes with a CPA, they will tell you what, if any, ways you have available to you to reduce your tax liability, but don't expect much reduction. Your prediction of 40k sounds right, do yourself a favor and save all of it or invest it wisely. 40k in your twenties with no major debts, that's how you want to start things off. Try to live on your wages and don;t reduce the principle on that 40k. YOu'll need it to but a home, or send your kids to college, or to retire on. Spending it now is flat outirresponsiblee and you will regret it later.