What should I do with £500 gift?

tamtam10000

I am very lucky to have a wonderful Dad who just gave me £500 for my 29th birthday :j , and I'm wondering what to do with it, so it doesn't just get absorbed into the mire of bills and general outgoings.

As you can see from my sig, I still have hefty debts, which I am working hard to chip away at, but I'm also saving as well (partly to provide an emergency cushion, partly for the psychological advantages of watching my savings grow).

I know that my Dad would like me to do 'something' with the money, but I don't know whether to put it towards my debt (beneficial but not very 'visible'), or save it, or use it to buy a thing?

I'm considering:
- Using it to pay for the motorbike lessons I need to get my license.
- Putting it into this year's ISA (not yet opened).
- Buying a bunch of premium bonds (at the moment I buy £50 of PBs a month already)
- Paying off a chunk of debt (I'm already actioning my debt-plan and doing 0% switching, but this could help)
- Leaving it in my savings account until I decide what to do (that's where it is right now)

All thoughts gratefully received!

violetb_2

Hi there, nice to see some good news!!

If the motorbike lessons are needed for work then I would probably go with those as an investment. If it means you will end up spending more to buy bike, insure it etc then no.

Other than that, probably the ISA until you decide what to do?

I am no expert by the way, just thought I'd put down my thoughts.

tamtam10000

violetb

Thanks - that's really helpfull.

I don't 'need' the bike lessons, but already have a bike (hubby uses it sometimes instead of his own at the mo), so it would only cost me extra in petrol. And I could use it for some of my commuting, so making a saving on tube fares.

Okay, that's a current favourite, but I shall consider a bit longer before making my decision!

grumbler

tamtam10000 wrote:

... I still have hefty debts, ... but I'm also saving as well (... partly for the psychological advantages of watching my savings grow).

Martin wrote:

Pay off debts before saving


The reason is simple, it’s likely what you’re earning on your savings is much less, after tax than debts cost you, so use your savings to pay off your debts and you’re quids in.

The amounts speak for themselves. On a typical high street credit card £1000 debt would cost you around £170 in interest over a year. In even the best savings account £1,000 would pay you around £40 interest after tax. So if you used your £1,000 of savings to pay off the debts, you’d be £130 a year better off.

Starting Saving guide.

Tom_Saunders

buy an fa cup final tickets and watch liverpool smash the hammers!

crossleydd42

If it's special money, why not do something special with it and invest it in the Rathbone Income Unit Trust, a winner over the last 10 years, as you can see from the attached. You could put it into an ISA - with UT's, they're free.

http://www.rathboneunittrusts.com/rutm/news/

And I'm putting my advice where my mouth is - I invest in this UT!!

tamtam10000

crossleydd42 - LOL! I thought that UT sounded familiar, and it is! One of the fund managers is a friend of mine. We were chatting about his work just a couple of weeks ago, and I was impressed by how well he's done. I think the investment minimum is £1000 though...

Tom - I'm not a lover of football, but thanks for the constructive comment.

Grumbler - I know what you're saying and technically, you're absolutely right. However, my debt is all at 0% and my chipping-away-plan is working well, so I will achieve my target for this year. Also, this is 'extra' money, and I would like to say to my Dad 'here's what your gift did for me' as I know he would like that.

All this is really useful - thanks, people.

tx