What should I do with my Lump Sum

WazMeister

Hi all

First post, So a quick hello to all!

Hoping I can get some advice here.

This is my situation.

Currently in debt with Credit Cards, paying off what I can.
Currently getting married for May 2009, saving as much as we can but struggling.

I be getting a lump sum of roughly £7000 and I'm basicly thinking of doing the following-
Due to struggling to pay for Wedding/honey moon I'm thinking of putting it in a non-tax savings account.
Using it to pay for the Honey Moon and wedding and still have some left over for Credit Cards.

I know its best to pay debts off first, but the wedding is kind of a debt as it has to be paid for.

What are your suggestions?
I'm not sure what bank/savings account I should use with all these banks closing etc.....
Also need to have access to it so I can withdraw money to pay off wedding items.


Thanks for help

Regards

WazMeister:money:

Lokolo

Non tax savings account = ISA = max of £3600 a year.

Leaves you will £3400 which will be taxed on interest.

But you should pay off credit cards first, that way you save money on interest you owe, leaving you with more disposable income each month, which means you can save more monthly...

WazMeister

Thanks for your replie.

I've worked it out, if we pay off credit cards it gives us an extra £350 a month to save.

This on top of what we save now is not enough, hence the idea to use money for wedding and then after wedding putting everything we got into credit cards.


So if I put my money ina ISA, can I not touch it?

And the rest, does it only get taxed on interest? I wont get tax each year on my actual money do I?

Lokolo

Only taxed on the interest, 20% for normal tax payer, 40% for higher.

Ok well you can use that money to save for the wedding, but in all serious, paying off the credit cards is the best thing you can do as the interest you have to pay on them is a lot more than you will get from savings.

Baldur

WazMeister wrote: »

So if I put my money ina ISA, can I not touch it?

Depends whether you open an easy access or fixed term account.

And the rest, does it only get taxed on interest? I wont get tax each year on my actual money do I?

20% tax only on any interest earned, not on the capital (assuming that you are a basic rate taxpayer).

sabretoothtigger

Get the credit cards on 0% interest otherwise pay them off and then use them to pay for the wedding when you have to raise your debt again.

Lynt_3

Martin would insist you pay off your credit cards.
He'll make you go and stand in the corner if you don't