Best way to deal with windfall

womaninblack

Hi all

Next month I will be receiving a windfall, and I wondered if any of you could advise the best way to deal with it.

I will receive £43,000. I have debts as follows:

credit card £8,000
overdraft £1,000
loan £10,700

I am leaving my job and going travelling at the time the money comes in (unknown as yet how long I will be travelling for), and will be using the money for my travel and living costs.

I am guessing that the best way to do things would be to pay off all the debts, then put the remainder in a high interest account, which has to be accessible. I believe you get a lower interest rate if the money can't be locked in?

Am I making the most of the money re interest paid on the debts versus interest raised on savings? Or would I be better off to put more money away and keep say the loan on (It's a very low interest rate of around 8%.)

I've never had money before, always been a poor pennyless mum, so have no idea about saving money!

Thanks in advance for any advice you can offer!

CLAPTON

womaninblack wrote: »

Hi all

Next month I will be receiving a windfall, and I wondered if any of you could advise the best way to deal with it.

I will receive £43,000. I have debts as follows:

credit card £8,000
overdraft £1,000
loan £10,700

I am leaving my job and going travelling at the time the money comes in (unknown as yet how long I will be travelling for), and will be using the money for my travel and living costs.

I am guessing that the best way to do things would be to pay off all the debts, then put the remainder in a high interest account, which has to be accessible. I believe you get a lower interest rate if the money can't be locked in?

Am I making the most of the money re interest paid on the debts versus interest raised on savings? Or would I be better off to put more money away and keep say the loan on (It's a very low interest rate of around 8%.)

I've never had money before, always been a poor pennyless mum, so have no idea about saving money!

Thanks in advance for any advice you can offer!

yes pay off the debt first which will leave you about 23,000

you might be lucky and get an interest rate on the saving of 1.5% so you will then get £345 per annum i.e. 28 per month

I would recommend you don't use it all but keep sufficient back for your return to the UK

Not knowing your circumstances, I'm not sure that going travelling is the best use of the money but I wish you the very best.

redcard

womaninblack wrote: »

Hi all

Next month I will be receiving a windfall, and I wondered if any of you could advise the best way to deal with it.

I will receive £43,000. I have debts as follows:

credit card £8,000
overdraft £1,000
loan £10,700

I am leaving my job and going travelling at the time the money comes in (unknown as yet how long I will be travelling for), and will be using the money for my travel and living costs.

I am guessing that the best way to do things would be to pay off all the debts, then put the remainder in a high interest account, which has to be accessible. I believe you get a lower interest rate if the money can't be locked in?

Am I making the most of the money re interest paid on the debts versus interest raised on savings? Or would I be better off to put more money away and keep say the loan on (It's a very low interest rate of around 8%.)

I've never had money before, always been a poor pennyless mum, so have no idea about saving money!

Thanks in advance for any advice you can offer!

So you have around £20K to spare and that's enough to quit your job and go travelling round the world? And you have kids?

Bonkers.

xylophone

And you have kids?

They might be grown up! Perhaps seeing them through university is what has kept her poor!

redcard

xylophone wrote: »

They might be grown up! Perhaps seeing them through university is what has kept her poor!

Are you just making stuff up now?

kidmugsy

If you craftily opened a couple of the current accounts that pay good interest you could switch money between them by standing order and so fulfil the minimum monthly deposit requirements. That way you could get 3% p.a. or better (and get it gross by completing an R85 form for each).

If the accounts demand that you have a couple of monthly direct debits, and if you wouldn't otherwise have any, just open savings accounts of some sort that take your monthly sum by DD. Some take as little as £10 or £20 p.m. And the current account money should be reasonably accessible abroad.

Worth a thought.

innovate

Pay off all debts, including, if possible, the 8% loan. Check the T&Cs whether there are any charges for early redemption. If there are, it might be worth putting the money to pay it off into an account that you don't touch until you can pay back the loan without early redemption charges.

Then with the rest do as kidmugsy describes.

Other than that: £23K isn't much to live on for any length of time.

atush

CLAPTON wrote: »

yes pay off the debt first which will leave you about 23,000

you might be lucky and get an interest rate on the saving of 1.5% so you will then get £345 per annum i.e. 28 per month

I would recommend you don't use it all but keep sufficient back for your return to the UK

Not knowing your circumstances, I'm not sure that going travelling is the best use of the money but I wish you the very best.

I gotta say I agree.

I'd pay off debt, but instead of travelling I'd take a long holiday. Then back to work.

43K is not a life changing sum, so should not be treated that way.

We aren't saying to not have a bit of fun, we are saying you are planning on too much travel.

Better to use the 43K to better your life, so save what is left over, dont' quit your job, and start saving at least monthly what you used to spend on servicing this debt.

You also need to address long term, such as home and pension.

womaninblack

Thanks to for the helpful advice in 2 or 3 posts, it is very much appreciated.

Apart from that, maybe people shouldn't jump to conclusions.

I never said I was going around the world. I am going around the UK, in my own caravan which I already own and is paid for, it will be pulled by a vehicle which is also already paid for. I am searching for the cheapest sites I can.

I never said I was going travelling for a long time. I am talking about 1 to 6 months, depending on how long the money lasts, or if I get bored. I'm expecting it to realistically be 2 months.

I never said I expect the money to last for the rest of my life!!! If all goes to plan there will be some money left to last until I get another job when my little adventure has ended, and I have settled somewhere new (which is part of the reason for travelling - to find somewhere to settle).

I am not walking out on toddlers! My children are 24 and 22, one is already at university, the other will be hopefully going in September. The one not yet at uni left home 3 years ago!

As xylophone said, I have gone without for years, in order that my children could have a better future than myself. I think considering that two children out of two going to university means a 100% success rate, I did pretty well.

There is a reason for me quitting my job to do this. I am on a low wage, and currently have more outgoings than incomings. Thus I am gradually getting deeper in debt, and if I carry on in this job I will end up with nothing. PLUS - again, in order to give my children a future, I had to take whatever job I could to do this. I currently clean public toilets for a living. Whatever you think I have to clean up, believe me it is much worse, and you would not believe the depths people on drugs or prostituting themselves will sink to. There are NO jobs available in my area that offer full time hours, or more than minimum wage. So I am stuck where I am unless I do something drastic. I could give up my job and go on benefits, but as I have never done this before, I don't intend to now.

I am completely stuck as to what to do, which was the original reason for selling my home (as you might be able to realise, sticking your hands down public loos for 8 hours a day can become rather depressing). Then a friend suggested that after my place is sold I have a couple of months away from it all, and to be honest with you, after the job I've done, and the things I've had to do to give my children a chance in life, I think I deserve it!

jimjames

womaninblack wrote: »

Am I making the most of the money re interest paid on the debts versus interest raised on savings? Or would I be better off to put more money away and keep say the loan on (It's a very low interest rate of around 8%.)

Good luck with the travelling, hope it all works out for you and you find a new location and suitable work - it sounds like a good opportunity to start again.

The only comment I'd make is that 8% may be low-ish for a loan but is certainly very high compared to savings rates.

So paying of that loan and any debts should be a priority for that money. Any remaining could be put into the best savings accounts which are current accounts at the moment where you will be able to get between 5% and 3% depending on the amount you have left.

PlymouthMaid

No money advice to offer but how very exciting. I hope it does trigger a more fulfilling line of work for you and you find a great new place to put down roots.