Got money and dont know what to do with it! Advice plz!

lolamancity

Hiya

Go easy on me, im a relative newbie in these parts, and im a bit inexperienced with money/mortgages etc!

As the title of the thread says, i need some advice on what to do with my money (well not actually MINE, i should say mine and my husbands!)

Ive looked into overpaying massively on my mortgage this morning and due to my policy (5 years fixed til 2010, whole term is 22 years) it'd be daft to overpay on it (i currently pay £250pcm and wanted to overpay up to £650pcm) My mortgage company said to do that i would incur £50 admin fee each time, plus 4% penalty, so ive put that idea on a back burner.. will just put the money into a savings account and when the term of the fixed runs out in 2010 i should have a sizeable chunk of money to remortgage at far less money and far less of a term (certainly less than 22 years anyway!) I'd love to have the lot paid off in 5 years ideally!

Anyway, what im asking really is, am i putting my money to best use?? Ive probably got £350/400 (maybe more or maybe less depending on the ups and downs of my husbands overtime availability) to spare each month. Ive already got an ISA in the process of being set up, and will stick the full allowance 3k in it asap. Also got a couple Premium bonds on the go, and just opened an direct online saver with my bank (Halifax) to use as a rolling savings account (which probably isnt the best use of my left over money each month)

I really dont know what else i can do with my money. A few people have suggested buying-to-let but as far as im aware, in Manchester, rental income is quite a bit less than what a mortgage on another house would cost. (please correct me if im totally wrong!)

Can anyone give me any inspriation as to what i could do? Im not keen on any massively strenious or wild ideas.. im a simple (and lazy lol) girl who gets confused easily so chopping and changing mortgages probably isnt the best idea for a start (the rate of 4.89% im currently getting is good, only draw back is the fact that i cant overpay )

Truth is, id love to have something to brag about in my signature on this site like all you other guys and girls, and until i get a bit more expert in this money saving lark, thats not likely!

Thanks in advance!!

Laura x

jennifernil

You seem to be doing OK. I would have said first thing is an ISA each, then feeding money into a good paying monthly saver, the rest into the best internet saver you can find.
All this obviously after paying off any credit cards etc (though it doesn't sound like you have any debts), and possibly making sure you have pension provision in place.
I would give the BTL a miss.

whambamboo

lolamancity wrote:

Hiya

Go easy on me, im a relative newbie in these parts, and im a bit inexperienced with money/mortgages etc!

As the title of the thread says, i need some advice on what to do with my money (well not actually MINE, i should say mine and my husbands!)

Ive looked into overpaying massively on my mortgage this morning and due to my policy (5 years fixed til 2010, whole term is 22 years) it'd be daft to overpay on it (i currently pay £250pcm and wanted to overpay up to £650pcm) My mortgage company said to do that i would incur £50 admin fee each time, plus 4% penalty, so ive put that idea on a back burner.. will just put the money into a savings account and when the term of the fixed runs out in 2010 i should have a sizeable chunk of money to remortgage at far less money and far less of a term (certainly less than 22 years anyway!) I'd love to have the lot paid off in 5 years ideally!

Anyway, what im asking really is, am i putting my money to best use?? Ive probably got £350/400 (maybe more or maybe less depending on the ups and downs of my husbands overtime availability) to spare each month. Ive already got an ISA in the process of being set up, and will stick the full allowance 3k in it asap. Also got a couple Premium bonds on the go, and just opened an direct online saver with my bank (Halifax) to use as a rolling savings account (which probably isnt the best use of my left over money each month)

I really dont know what else i can do with my money. A few people have suggested buying-to-let but as far as im aware, in Manchester, rental income is quite a bit less than what a mortgage on another house would cost. (please correct me if im totally wrong!)

Can anyone give me any inspriation as to what i could do? Im not keen on any massively strenious or wild ideas.. im a simple (and lazy lol) girl who gets confused easily so chopping and changing mortgages probably isnt the best idea for a start (the rate of 4.89% im currently getting is good, only draw back is the fact that i cant overpay )

Btl is complete garbage at the moment due to sky-high prices.

Premium Bonds aren't a good investment due to the poor rate of return.

Monthly savers are an obvious candidate due to you having a monthly amount to spare.

Lloyds regular saver at 8% and up to £250/month is good.

You could also invest in a shares ISA, for better return over the long run.

alecpr

Congrats, you seem to be doing everything right :-)

Use your regular saver, which should be paying 8-10% intrest to save £250 per month (normally the maximum) and when you get to the end of the 12 months put that accumulated £3K in your cash ISA (should be paying in excess of 5% intrest). Put your accumulated intrest in a good current account (see below).

You could have your husband do the same with his ISA allowance, for a no risk way of increasing your wealth faster than if you used the money to pay off your mortgage.

Only other advise I can offer on top of that is to shop around for a good "no ties" bank account, offering a good rate of intrest. Popular accounts here at the mo seem to be Icesave and Icici Bank, with intrest in excess of 5%. Any extra cash could be fed in to this account.

Other than that you appear to have taken all the low risk options, which leaves us with your attitude to risk and slightly more complex financial products.

You could have some fun with Premium bonds, you keep your capital and have the chance to win a million. No intrest, but a little money invested here doesn't hurt.

ISA - You have used the cash part of your ISA, maybe you could look at the other 4K which you could invest in the stock market tax free. Most banks offer this, but it would be good to shop around and get the best performing Stocks and Shares ISA fund.

Then there is investing in the market directly and any number of other investment ideas. From the tone of your e-mail though I think you're already doing the right thing for you.

I have assumed from your message that there is no lump sum involved and that you are debt free if you exclude the mortgage?

lolamancity

Ooo thanks for your replies!

jennifer - on your advice, ive just had a good read up on Monthly savers and will be taking one of those one step further asap! As for credit cards, i refuse to have one (never have, never will!) Im a self confessed total tight 4rse and i prefer to spend as little as possible of my OWN money rather than spending money that isnt mine on a credit card... im too much of a scardycat! So other than my mortgage (which is only 39k over 22 yr and £250 pcm) i only have my husbands car loan and thats it for debt! And re: pensions, i am in the government pension scheme (luckily best around imo) and thats coming along nicely, although im only 23 so got plenty of time (hopefully) to bulk that up if need be. Thanks!

Whambamboo - i knew btl was a rubbish idea... just thought i was getting that idea wrong though since soooo many people were telling me to BTL... maybe a few years ago, but not anymore! Esp in Manchester! As for Premium bonds... i kinda know they are a bit naff aswell... me and my husband have got £100 PB each for a bit of a 'gamble', and thats where itll stop... no more money will be going onto them! Will defintely look into the Lloyds monthly saver. Thanks!

alecpr - thanks! I try v hard to do everything as right as i can do seeing as im the tightest person i know lol! Im only 23, but would love to pay my first mortgage off, buy a bigger better house, pay that off and live an untra comfy life forever more with savings ive amounted over the years. husband already has a ISA, but unfortunately its not FOR him, its something he set up in his name for his mum..we borrowed a bit of money off her when we first bought our house and paid her back into an ISA... im working on it that he withdraws her money and gives it to her (now its made a bit of interest) and to then use it from now on as OUR ISA! But, thats up for him to sort out with her lol! Once we have one each ill be following your advise of sticking rolled regular savings account dosh into the ISA each time im allowed. As for investing in shares etc, im afraid i dont have the foggiest where to start.. maybe i should start browsing about to get a bit of knowledge!

Your right to assume i have little other debt other than mortgage. Only other thing we have is a car loan payment, but again, we borrowed the 6k we needed for that off his mum, and are currently paying her back £500 pcm (could probably give her £1k pcm so we could pay it off in 6 months rather than 12, and although we'd have little extra cash for 6 months, once it was paid off, we'd probably have £1k excess every month. Thanks for your help!!

I love this site already... its giving me tons of ideas!

Thanks everyone!

cheerfulcat

lolamancity wrote:

As for investing in shares etc, im afraid i dont have the foggiest where to start.. maybe i should start browsing about to get a bit of knowledge!

Start with the Motley Fool; if you have any questions try the discussion boards there. Incademy is also a good source of free information about investing and you can have a browse of the bookshop while you're there...

HTH

Cheerfulcat

Phoenix79_2

lolamancity wrote:

Ooo thanks for your replies!

jennifer - on your advice, ive just had a good read up on Monthly savers and will be taking one of those one step further asap! As for credit cards, i refuse to have one (never have, never will!) Im a self confessed total tight 4rse and i prefer to spend as little as possible of my OWN money rather than spending money that isnt mine on a credit card... im too much of a scardycat! So other than my mortgage (which is only 39k over 22 yr and £250 pcm) i only have my husbands car loan and thats it for debt! And re: pensions, i am in the government pension scheme (luckily best around imo) and thats coming along nicely, although im only 23 so got plenty of time (hopefully) to bulk that up if need be. Thanks!

Credit cards can be your friend as well! Use them right and they can earn you money. I put all my daily spends on a Morgan Stanley platinum cashback card. I get 3% back at the minute. All you need to do is clear the balance at the end of the month with the untouched funds in your current account. You win three ways:
1) Cashabck which can amount to a nice little amount at the end of the year
2) Your money stays in your current account longer therefore earning you more interest (helps if you have a bank account that pays excellent interest - check out Alliance & Leicester at 6.1%)
3) Paying for everything by credit card is more secure and if your card is cloned, its less of a worry than having your debit card cloned and account emptied which can lead to returned DD charges etc.

Just something for you to think about if you like to squeeze even more money out of the finance companies

alecpr

Phoenix79 beat me too it. Just to re-enforce what was said, three percent cash back on a credit card, if your good with money is practically a no-brainer. I got my first credit card just over two years ago as a start my stoozing career (moving intrest free money from a credit card to a bank account) and realised that maybe they do have their uses. Took egg for a few hundred pounds in intrest.

Now I use a cashback card (GE Money) that gives me 3% cashback for petrol and groceries and is racking up a nice amount of money. As long as your good with money and disciplined when using the credit card it's a great way of saving money.

On the subject of the stock market, safety first! Don't dive in and start investing directly in the market, research your options, look at alternatives from a tracker to a self invested portfolio, the options and variations in risk are huge. Think very carefully about any investment that ends with the words "the value of your investment can go down as well as up" and make sure you are comfortable with the risk and amount of money you are using. You want to be in the position where even if you lost the lot it would not hit you too hard financially (it'll always sting a little).

Thats not to say it's a bad idea, I invest directly through a broker and am doing OK, you just have to know the risk and be able to accept the losses if they come.