Come into some money....what to do now?

Penguin8410

We have been put in a very fortunate position where my grandma has given us a large sum of money from her house move.


She has given us £10k for my girls to share (age 2 and 4) and £30k for us.


We currently have £33k worth of debts and a £949 service charge bill to pay. We also have no emergency fund, nothing at all in savings.


Do we pay the whole £30k off on debts? do we use some of it to put an emergency fund aside and pay off less debts?


You would think that this once in a life time opportunity would have given me a lot of relief but i'm even more stressed and anxious than i was before because i don't want to get it wrong.


thanks in advance for any advice.

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[Deleted User]

Wow, your finances are a rollercoaster, after browsing your MSE history.. Weren't you only 3k in a debt a few years ago?

I think you need to use this money in a manner that will keep you afloat better. Pay off that service charge bill, pop £5k in a savings/rainy-day account and pay off a BIG chunk of that debt. Do it in a sensible manner of paying off the highest APRs first. You can then start to clear that debt right down much quicker and begin to live within your means.

Remember - if you use this money for 'fun' (e.g. a holiday) then you are just borrowing from 'future you' and your children's future. Until you are out of debt, any big purchases are prolonging your borrowing.

Then start planning better so that you don't get surprised by service charge bills.

List_Maker

That's such a lovely and fortunate position to be in.

I guess your heart would be saying that it won't come round again, so best to save it. But with measily interest rates at the moment you will be paying more in the long run on your debts.

Personally I would take £2000 out as the emergency fund, and pay off debts with the rest. With the remaining £5k of debt make a plan and stick to it.

Set yourself some goals for after you DFD so that you don't get back into old habits.

Good luck with whatever you choose to do.

LindaMary

Be aware that if gran needs nursing care then the council could claw it back from you. Hopefully she is in good health.

enjoyyourshoes

Look in to a raft of regular savings accounts that mature after 1 year and drip feed into them every month, could start all together or stagger?

S&S ISA if you want to dip your toe into investing, or look at a SIPP if you are short on Pension (tax efficient way of saving for retirement)

If your debts have increased from £3 to £30 K you have to ask yourself why and get together with other half and resolve the real issue before you plan to do anything with the windfall.

S&S ISA for the two little one's?

OneLife_OneShot

I'd pay off the service charge and as much as of the debts as possible while leaving a few grand for a rainy day. But that's me

Penguin8410

Hi Ringo, yes they have been a rollecoaster! we've had redundancies, 2 children and i was signed off work for 6 months with severe anxiety and depression since so have been a bit all over the place and most definitly not prepared! with the service charge we normally pay by direct debit but we have a new management company who have changed things and i would rather get this payment out of the way and then start again with the monthly payments from august which we always did.
thank you for taking the time to reply.

Absolutly 100% agree with you about 'fun' things. we have nothing planned on this front as we know that we need to focus on getting the remainder paid off.

Penguin8410

Listmaker, yes we are extremely lucky to be in this position and know it is highly unlikely that this opportunity will arise again!


i was thinking along the lines of 2k in savings and then paying the rest off. we just want to get as much cleared as possible. goals will definitly be set to make sure we don't get back into this situation again. If you see my reply to ringo you'll see we've had a lot to deal with so want to be prepared more for the future.


thank you for taking the time to reply

Penguin8410

Lindamary, thank you for the advice. Luckily she is in good health at the moment and has moved into a warden assisted flat. she is also in the fortunate position where she has enough money stashed away to pay if she needs to go into a home, so hopefully we won't be in that sitaution, but i wasn't aware of this so thank you for bringing it to my attention :-)

Penguin8410

enjoyyourshoes thank you for the savings advice. i was a bit stuck with what to do with the girls money as we have never had anything to put away for them. i will look into the s&s isa.


If you see my reply to ringo you'll see what we've had to deal with which has got us into so much debt so quickly. we have had very frank discussions about what we have done wrong in the past and are making a plan currently to make sure it doesn't happen again. we've been in a flat for 9 years now and with 2 children now also that is a lot of incentive to sort things out and do our best to get somewhere with a garden for our girls. thank you for taking the time to reply.

Penguin8410

thanks one life, that was what i was thinking of doing :-)