How should I be saving this windfall?

katyanne2605

Hello people.
Please help me- I have been a very lucky girl and have been given £22,000 by a relative. I have debts of around £13K, but they are interest free and under control- they should be paid off by the end of next year.
I dont, therefore, know what to do with the £22K- I suppose i should save it, but if so where- I MAY want access to it at some point next year as I MAY be converting my loft. Also, i want to add to this amount- probably about £700 per month.
Please help and advise me as to where the best place to keep this money is?
Also, I have been in a debt managemnet plan for the last 5 years, so have an awful credit history- so can't open accounts anywhere where that may matter.
MSE Forumites, I would very much appreciste your help
K

atush

First of all, apy off your debt when it omes off interest free if you haven't paid it down by then. No point in savings if you are paying higher rates in debt.

Second, do you pay tax? What rate is your mtg?

If you are a tax payer, you want to shelter some of the money from tax. So open a Cash ISA now with 5340. Save the rest in instant access for now, open a new cash ISA with 5600 in April.

katyanne2605

Hiya
My debts are interest and charge free- so I think its best to leave them?

I pay 40% tax

Which ISA's would you recommend?

Thanks!!
K

Ifts

atush wrote: »

So open a Cash ISA now with 5340. Save the rest in instant access for now, open a new cash ISA with 5600 in April.

2012/13 Cash ISA limit is £5640.

xylophone

http://www.moneysupermarket.com/savings/cash-isas/?source=GOO-1032E6D1&p=0&keywords=top+cash+isaExact&ef_id=zg29z9B6MjYAADLkFkwAAAAP:20111221151731:s
might be of interest.

http://www.moneysupermarket.com/savings/ for saving outside Isas

Ifts

Have a read through these guides -

Starting Saving: http://www.moneysavingexpert.com/sav...saving-account

Where to start Saving: http://www.moneysavingexpert.com/sav...interest#where

Regular Savings Accounts: The Best Currently Available List!

Maybe put some of it in a easy access savings account (emergency fund) and then if you have not already got a Cash ISA, that should be something you should look to open, especially if you are a tax payer.

Paying off your debts first is a good thing usually, but only if the debt is costing more to service than you will earn on your savings.

atush

katyanne2605 wrote: »

Hiya
My debts are interest and charge free- so I think its best to leave them?

I pay 40% tax

Which ISA's would you recommend?

Thanks!!
K

I said pay them off AFTER the interest free period is over if they haven't been cleared. Not now ;-)

Best paying ISAs are on a link at the top of savings page.

As for being a HRT payer, do you have a pension? If not, start one now. It might even bring you out of HRT

DebtKiller

katyanne2605 wrote: »

Hello people.
Please help me- I have been a very lucky girl and have been given £22,000 by a relative. I have debts of around £13K, but they are interest free and under control- they should be paid off by the end of next year.
I dont, therefore, know what to do with the £22K- I suppose i should save it, but if so where- I MAY want access to it at some point next year as I MAY be converting my loft. Also, i want to add to this amount- probably about £700 per month.
Please help and advise me as to where the best place to keep this money is?
Also, I have been in a debt managemnet plan for the last 5 years, so have an awful credit history- so can't open accounts anywhere where that may matter.
MSE Forumites, I would very much appreciste your help
K

The way I read this is that you are still in a DMP, with £13K left to pay (hence the "interest free and under control"). If that's the case, I would pay off the DMP in one go (you may not have to pay the whole outstanding amount, they may accept a proportion for paying early), and use the remainder for any saving you may wish to do. That way you would have the £700pcm you seem to have available, plus any debt repayments you were expecting to have to make, to rebuild your capital. This also means any repair of your credit history starts a year sooner.

Jegersmart

katyanne2605 wrote: »

Hello people.
Please help me- I have been a very lucky girl and have been given £22,000 by a relative. I have debts of around £13K, but they are interest free and under control- they should be paid off by the end of next year.
I dont, therefore, know what to do with the £22K- I suppose i should save it, but if so where- I MAY want access to it at some point next year as I MAY be converting my loft. Also, i want to add to this amount- probably about £700 per month.
Please help and advise me as to where the best place to keep this money is?
Also, I have been in a debt managemnet plan for the last 5 years, so have an awful credit history- so can't open accounts anywhere where that may matter.
MSE Forumites, I would very much appreciste your help
K

I would also pay off half the debt now if possible to reduce your credit exposure and free up monthly cashflow that you can either then invest with the remainder of the windfall or pay off the rest of the debt sooner. I don't like debt much personally, even if "free".

As to the investment part of the question, this very much depends on your risk profile, your existing savings/investments/pension etc.

Good luck!

J

Jegersmart

ps. if you are indeed in a DMP I would pay the debt off now as there are seemingly some "discipline issues" here.....

Beckyy

I would pay off the debt first, interest free or not, you need rid of them asap. You can then use the money you would have been paying them off with to add to your savings. I would then open an ISA for this tax year, max it out, then put the remaining amount into a bog standard acc. until April, when you can use up next years ISA allowance.