I have been given £1,000 and don't know what to do with it.

LongTermLurker

I get charged £5.00 a month for my overdraft.

freddysmith wrote: »

The money will be doing more good in paying off your overdraft and you will be benefitting even more from the money in the long term.
If its helping to get you debt free with peace of mind then that is good use of a legacy.

Actually, £5/month costs her £60pa (and we don't know the size of the OD so can't say what rate that is - the higher the overdraft, the lower the interest rate, and after paying off the £1000 OP might still be paying £5pm).

But £1000 put into a 6.37% ISA with Principality would give OP £63.70, which would then compound. With that in mind, the difference is minimal and I would give yourself a treat and go for the holiday! Perhaps there are other ways you can reduce your overdraft, such as getting £100 to open a co-op current account or £50 to open a Natwest savings account? Bit of credit card stoozing to build up the cash? It depends what your credit rating is and how sure you are that you won't just increase your debts.

I have a favourite quote: it's not the things you do in life that you regret, it's the things you don't do.

I agree in principle with what has been said by others, but if you will still be paying the flat £5/month, I'd think a bit more about having that break. Sometimes it's good to be able to show something at the end of the day, even if it's just memories.

welsh_cake

My overdraft is £1,000 and I am constantly in it. When I get paid I only have a few hundred pounds left in the bank before going into overdraft and that gets swallowed up straight away when i pay my credit cards off. I am going to pay off 1 of my credit cards and then work on other things. As soon as i am in a position to go away, i will have my dream holiday but at the moment i think the holiday will mean more if i am debt free and have no money worries.

chesky369

I agree with long term lurker that it's the things you DON'T do that you regret; however, I don't think anyone is saying that Welshcake shouldn't go to Africa - just not right now. For a start, it would be so much more enjoyable for him/her if they didn't have amountain of debt to return to after the holiday. Also, I bet my bottom dollar the holiday will turn out to cost more than £1,000 (they always do, somehow) which Welshcake will add to the pile of debt.

No, much better to work off the debt first - maybe not even all of it, just most of it.

debbie42

A similar thing happened to me when my Uncle died and he left me a few hundred pounds. It was around 20 years ago, so was quite a lot of money then. I had rattled up some credit card debts and this just paid them off. It was so annoying and depressing to think it was "wasted", but it wasn't really. The lesson learnt was invaluable and I have never again got into that debt spiral with credit cards.

In my case I treated myself to a small memento to remember his legacy, but that was more of a token.

Good luck in whatever you decide to do.

LongTermLurker

welsh_cake wrote: »

My overdraft is £1,000 and I am constantly in it.

Ah, the missing piece of info - in that case, pay it all off, clear your debts and put a great deal of effort into saving as much as you can. I take back what I said before, but if your overdraft had been higher, meaning a lower interest rate than the current 6%, it could have been cheap debt.

You're right, the trip will mean more when you don't have the worry hanging over your head and as Chesky says, there's a chance your holiday would go over your budget and put you further into debt.

Good luck