Pay or save?

akinyi

Hi everyone,
I'm a bit confused as to what is best to do with a small windfall - should I pay off a bit of my mortgage or the additional mortgage, clear a low interest credit card or save the cash for emergency funds?

Credit card - £7k owed, at 3.94% lifetime balance...
Mortgage - c.£150k, currently at SVR of 3.5%....
Additional mortgage borrowing - £10k borrowed at 2 yr fixed rate of 4.99% (18mths remaining, therefore penalty for early repayment).....
Emergency funds / savings in case of redundancy or sickness = zero at the moment, savings rate on ISA 3% (currently £650 balance), other saving rates for easy access accounts c. 1-2%...

The windfall is about £10k; at the moment my job is ok but my employer is constantly reviewing its financial situation (it's a fine balance) and is likely to be bought out in the next 12 months so I have no certainty of my job in the mid-term. Profit share was zero last year and this year, and we had paycuts (it looks unlikely to have full pay restored for a while). Despite the paycut, I'm just about balancing my income vs outgoings as things currently stand, having made various cuts in outgoings over the past year.

My gut is telling me I should keep the windfall tucked away as an emergency fund in case of sickness or redundancy, but I can't work out if this is the sensible way of using the windfall.

Any thoughts?

savingmummy

Personally i would pay NOT save. 10k wont go far IF you kept it for an emergency!
I am very jealous of your windfall

I would also be considering a job move now if it don`t look good x

GeorgeUK

I would clear the creditcard and keep the rest in a high interest savings account.
That way you at least have something to fall back on if the worst does happen (and of course you can add the monthly payments that were going towards the creditcard to the mortgage payment).

Oh, and congratulations.

poppy_f1

pay off the credit card and save the other 3k would sound like a good compromise to me

lozzam

Pay off the credit card then put £3000 into your ISA. You will save £2-300 per month which you can put into your emergency fund. Then every few months, if you are feeling secure, you can put some of it into your mortgage.

heatherks

agree with the others pay off the credit card (and try not use it lol) and save the rest (and payments you would have made to CC) for a rainy day

akinyi

Thank you everyone, all your thoughts are hugely helpful! That's a pretty clear majority, to pay off that credit card:rotfl:

It would reduce my outgoings each month slightly so I can put into savings instead, plus if I guess if I were to decide to remortgage then no credit card debt would be a very helpful thing in these times.

I'm keeping my eye out for other jobs, but there aren't any at this level in the construction industry at the moment. Will take a while for the industry to recover it seems.

Thanks again!

Butti

Akinya,

Should start to recover for construction soon, but unemployment will lag. The main problem will be an almost complete lack of capital projects being developed in the public sector as it won't have any money.

Have this small pot. Build on it and have a look and see if any outgoings need shaving (I need to dump my Virgin TV for example and go freeview)

B (redundant in 2 months!)

akinyi

Butti wrote: »

Akinya,

Should start to recover for construction soon, but unemployment will lag. The main problem will be an almost complete lack of capital projects being developed in the public sector as it won't have any money.

Have this small pot. Build on it and have a look and see if any outgoings need shaving (I need to dump my Virgin TV for example and go freeview)

B (redundant in 2 months!)

There is definitely a shortage of capital projects in both the public and private sectors Thankfully the planning system hasn't ground to a complete halt (though the election might cause some further effects on that!), so things are slowly and tentatively moving for various private sector schemes, but it is certainly way off the pace from 2007-08!

Very sorry to hear you're redundant in 2 months, and I hope you find a new (and better) job soon!

Butti

I'm very relaxed, don't know whether too relaxed or whether I have lots of experience that people want! May have to move and have accepted that. May have to go with temporary jobs for a while and don't mind that. Just hope I get other jobs so I can spend my redundancy on debts, lasering my eyes, the garden, the bathroom, the kitchen and a holiday in NZ (It's a decent payout!)
Do want to leave my job - my workplace is weird, it's like a cross between the house of commons and billy bunters schooldays. Its very white middle aged men who have lost touch with reality!