£5k windfall - what shall I do with it?

cupboardie

Advice would be greatly appreciated……

Credit:
I have just inherited £5k.
I have £1k credit in my current account.

Debit:
I have £3,500 on a long term no interest credit card, rate expires in 4 months. Before my windfall I planned to ‘tart’ it to another long term no interest credit card.
I have £1,800 on another long term no interest credit card which has over a year until the rate expires.

I live with my boyfriend who has a mortgage, I pay him rent and contribute to bills and shopping. I am 34, have no dependents, work full time, have a pension and a stable job.

I earn £26,500 per year. After tax and pension deductions I get £1,650 per month.
Outgoings:
500 – rent
150 – bills
250 – food/toiletries/going out
20 – phone
30 – broadband
40 – petrol
10 – car tax
50 – car insurance
70 – gym
TOTAL - £1,120

I should have a lot more savings but I shop a LOT and mostly I buy stuff specifically to sell it on ebay/shpock/facebook etc. but never actually get round to it so I have a lot of clutter – this is something I am trying to address.

My boyfriend and I would love to sell his flat and buy a place together but I will need £20k bare minimum before that can happen. He earns a lot more than me (£12k more per year) and I would love us to be equal but I am unlikely to be promoted or get a raise in this job (I’ve already been here 2.5 years)
I thought maybe I could use some of the money to take a course which would allow me to change careers, however I quit A levels 3 times after GCSE’s and I’m not sure I have it in me to undertake such a major commitment. Also, I work full time and I’ve no idea what I want to go into. I’ve got a few ideas (physiotherapist, celebration celebrant, counsellor, instructor) however I can’t dive in without knowing if I’ll enjoy it/ be suited to it and I don’t know how to get experience of these careers to help the decision.

teddysmum

I don't see what your savings related question is.

AnotherJoe

cupboardie wrote: »

Advice would be greatly appreciated……

Credit:
I have just inherited £5k.
I have £1k credit in my current account.

Debit:
I have £3,500 on a long term no interest credit card, rate expires in 4 months. Before my windfall I planned to ‘tart’ it to another long term no interest credit card.
I have £1,800 on another long term no interest credit card which has over a year until the rate expires.

What are you doing with this money? Where is it? Or is it just £5,300 you've borrowed and that you ultimately need to pay back??

How much do you save each month? I'm seeing circa £500/m free. Where's that going?

Pincher

Natiowide FlexDirect and Regular Saver.

Stick it into a pension if there's tax to get back, or put it into a S&S ISA. The Sunday Times Money section always has what to do with £10,000 picks.

colsten

Pincher wrote: »

Natiowide FlexDirect and Regular Saver.

Stick it into a pension if there's tax to get back, or put it into a S&S ISA. The Sunday Times Money section always has what to do with £10,000 picks.

If the OP wants to buy a property in the next 5-7 years, putting the money into a pension which she can't access until she is at least 55 seems a pretty bad idea.

Similarly, she shouldn't go anywhere near an S&S ISA if she can't sit out any potential market downturns. It is commonly not recommended to start investing unless you can lock the money away for at least 7 years.

It strikes me that she would be best off keeping the money in cash, and starting a Help To Buy ISA asap. She can use two Tesco current accounts with £3,000 each to put her £5K into, and to feed the HTB ISA and some good Regular Savers. For the next year, she could also think about a FlexDirect, which gives her access to the FlexClusive Regular Saver. In a year's time, she should review her options and again plug for the best current accounts and regular savers.

TheShape

You've got £5300 of credit card debt. It's possible that this debt may become payable at a time not of your choosing.

Unless you have other savings, you now have £5000 to mostly offset that debt should you need to repay. Put that in Nationwide FlexDirect Account and Flexclusive saver as mentioned above and earn interest on it while having it available should you need it. Perhaps open a Tesco current account for the part of the balance that won't fit into Nationwide initially and move money into the Flexclusive saver each month.

eskbanker

teddysmum wrote: »

I don't see what your savings related question is.

It's in the thread title - as I read it the rest of the OP is (mostly) background financial info for context, which IMHO makes a welcome change from the more usual 'what shall I do with £xK?' posts that don't give any such clues.

Having said that, there's probably more background stuff than is strictly necessary to answer the simple question but nobody's forced to read it all!

Mogley

I think the you maybe best served clearing the debt first. It sounds like spending comes freely and budget management maybe an issue. With the debt clear, it's a financial burden off your mind and you can look to set savings objectives with your spare monthly cash. Use this forum for advice on regular saving but be clear on your objectives first.

Pincher

colsten wrote: »

If the OP wants to buy a property in the next 5-7 years, putting the money into a pension which she can't access until she is at least 55 seems a pretty bad idea.

Do I really have to spell out

£5k fits the FlexDirect account plus Regular Saver to a tee.

And there are alternatives:

Pension, because you can get tax relief.

S&S ISA is not exactly silly. In fact, if the endowment policy concept has validity, five years of stock market growth, plus dividend, without the extortionate fees of the 1980s, could even be the better option for house buying.

cupboardie

Thank you for the suggestions, I will definitely get that Nationwide account.

I added all that extra info because ultimately if I don't get a better job I will never earn more, and have no hope of bettering myself/owning a home, so I could use the money for retraining and enter a profession.

Dird

cupboardie wrote: »

Outgoings:
500 – rent
250 – food/toiletries/going out
30 – broadband

Is your boyfriend mugging you off? Surely the mortgage on a small flat isn't costing £1000/month? Presumably gas/water/council are under "bills"?
£60/month broadband?

I'd stick it in BOS (3%) and then pay off the £3k debt when the 0% expires unless you can transfer it to another 0% for free, but I was under the impression they have a 2%+ transfer charge so I'd just clear it