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Old 26 June 2018, 02:26 AM
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Plurabelle Plurabelle is offline
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default Moral Compass: When You Get a Small, Unexpected, Needed Windfall

Just found out I got a small, but significant (less than $10K, more than $100) windfall from a completely unexpected source, as in one I didn't know existed (but is legitimate).

Right now I'm keeping afloat financially but on the slimmest edge. I owe a large balance (about 100% of the windfall) soon as part of an annual payment, but have negotiated a one-time payment plan and reduced rate based on my years of payment timeliness, extenuating circumstances, etc). I can afford the cost, but given the challenges of late, not all at once.

This payment plan was agreed to weeks ago.

Am I morally in the wrong if I invest this windfall with a trusted broker and maintain the negotiated monthly payments to my creditor, so while I pay the full amount plus minimal interest over 12 months, I will eventually get a somewhat larger gain (based on market/history with broker - close to 20 years, and yes my age is only 36).

I feel vaguely dishonest but it would seriously help everyone, including the creditor, if I had a little more in the bank next year to, oh, pay said creditor.

When I applied for payment plan I was completely open.

I feel like the banks are as savvy as can be with us, why can't I do the same? Where do I draw the line? I'm not worried about fraud... but souring my history with institutions? (NB I worry about everything, especially lately)
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Old 26 June 2018, 06:22 AM
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Don Enrico Don Enrico is offline
Join Date: 05 October 2004
Location: Hamburg, Germany
Posts: 7,694

You are absolutly morally in the right to kep and invest your windfall.

When your creditor agreed on the payment plan, he checked your credit worthiness - whether he could trust you to pay the agreed rates over the agreed time. He decided that you were worthy of the credit. Now, your credit worthiness has just gotten better. You've got more money in the bank that you can use to pay a rate, even if you are hit by surprising costs in one month. The chance that you will fully comply with the payment plan is better than it was (and it was good enough before for the creditor to agree).

So, if you keep and invest your windfall, your creditor has lost nothing and gained security. There's nothing wrong about that.
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Old 26 June 2018, 03:44 PM
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Sue Sue is offline
Join Date: 26 December 2011
Location: Ontario, Canada
Posts: 9,210

I'm not sure why this would be an issue. If I owe money to the bank, or any creditor, my obligation is to meet the terms that have been agreed to not to turn over any extra money that comes my way through inheritance, gift, extra hours worked, whatever. No reasonable creditor is expecting you to keep out just enough each month to live on whilst turning over all the rest of your income to them. If this were a personal loan from a family member or friend that might be a bit different but a business loan is a business loan, you pay what you owe when you owe it. In some situations they actually do not want you paying it off early, they count on getting the interest you pay over the term of the loan after all.
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Old 26 June 2018, 03:56 PM
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GenYus234 GenYus234 is offline
Join Date: 02 August 2005
Location: Mesa, AZ
Posts: 26,570

I can pretty much guarantee you that the creditor would not easily lower your payment if you had encountered hardship. So you don't need to feel bad about not doing the reverse. Normally paying off a debt that includes interest is the best thing to do, but if you are sure that you can make more interest with it invested, that would be better. I would make sure that at least some of the windfall is in liquid investments so you can use it if there are any unexpected bills, but otherwise your plan sounds fine to me (IAMAFI).
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Old 04 July 2018, 03:46 AM
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Plurabelle Plurabelle is offline
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056

Thank you so much for your opinions - fwiw, it's a hospital, not a bank, so the odds of me patronizing them in the future are somewhat high (I broke my leg really badly and have been having surgery more or less constantly, even obamacare only covers so much - hub and I are self employed).

It all makes total sense when you guys explain it to me, but i felt so uncertain on my own. Thank you so much!
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Old 04 July 2018, 01:23 PM
overyonder overyonder is offline
Join Date: 03 March 2010
Location: Charlotte, NC
Posts: 2,123

As others have mentioned, if this is a bank and the terms are mutually agreed upon, then there's no harm and no foul in investing that money. In fact, some people will take on a mortgage and invest the money somewhere else when the interest rates are low and the returns are higher.

That being said, if it were a loan made with a person, especially a family member, I would be more inclined to repay them early if they preferred it.

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