What to do with hubby 15k redundancy?

happymum37

Hello all.

We just hubbys 15k redundancy through. We are looking to do something with it and basically have no idea what's best. This is our situation -

We have 68k remaining on our mortgage. We bought the house for 244k.

I'm 37 and hubby 40. 2 kids under 6.

Hubby has another job and gets 41k a year .

I'm currently a stay at home mum but will go back to work for my family firm (i will not inhert this business!!!)
in 2021 and get 1k a month for part time.

We have a total of 30k savings including the redundancy.

And 2k in shares from an old employer.

We want to invest / pay off some mortgage / do something with the redundancy. But don't know what. It can be inaccessible and tied up as we won't need to access it.

Erm and we have all the money in a normal bank account. Yep hopeless. No isas or anything.

Hubbys new job is the bog standard basic nest pension. I paid into public sector pension for 9 years and that's now all on hold.

We have no debt other than the mortgage and a credit card we pay off in full eveey month

Thank you

Reed_Richards

It might be possible to invest the money and get a better return than the interest rate that you pay on your mortgage. But the simplest and easiest option from a standing start is to use the money to pay-off some of your mortgage debt and reduce your monthly payments. Then maybe deposit the amount you save each month into a regular saver account with a good interest rate.

kazwookie

I'd pay £10K off the mortgage.

£5k in a rainy day fund.

xylophone

You have no "relevant earnings" but could still contribute a net £2880 per annum to a pension and receive £720 in tax relief- why not make a start with a stakeholder perhaps?

Presumably your family firm offers a pension scheme - you could transfer in when you go back to work or perhaps have contributions paid to your stakeholder by the company?

https://www.cavendishonline.co.uk/stakeholder-pension

Have you and your spouse ever had a Nationwide Flexdirect account?

You might open one each and a joint which would get you 5% on a total of
£7500 for a year.

You would cycle in/out the required £1000 a month from an external account, perhaps TSB - see below.


You might each open a TSB Plus current account and a joint which would give you 3% on a total of £4500.

Having the TSB and Nationwide makes the monthly credits easy - you simply set up matching same day SOs.

The small balance of the cash could be held in a savings account to which you add the monthly interest from the current accounts.

https://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

At the end of a year you will have grown the capital a little and can then decide (as you return to work) how best to proceed.

You might make a pension contribution and pay off some of the mortgage perhaps?

cloud_dog

happymum37 wrote: »

Hello all.

We just hubbys 15k redundancy through. We are looking to do something with it and basically have no idea what's best. This is our situation -

We have 68k remaining on our mortgage. We bought the house for 244k.

I'm 37 and hubby 40. 2 kids under 6.

Hubby has another job and gets 41k a year .

I'm currently a stay at home mum but will go back to work for my family firm (i will not inhert this business!!!)
in 2021 and get 1k a month for part time.

We have a total of 30k savings including the redundancy.

And 2k in shares from an old employer.

We want to invest / pay off some mortgage / do something with the redundancy. But don't know what. It can be inaccessible and tied up as we won't need to access it.

Erm and we have all the money in a normal bank account. Yep hopeless. No isas or anything.

Hubbys new job is the bog standard basic nest pension. I paid into public sector pension for 9 years and that's now all on hold.

We have no debt other than the mortgage and a credit card we pay off in full eveey month

Thank you

Hi

There is very little in here regarding your pension provisions. Is this something you feel you / hubby should investigate / consider using some of the money for?

It is too late for hubby but, you may want to consider opening a Lifetime ISA (LISA) and use some of the money in there. For every £100 you contribute the government gives you £25, and when you withdraw it it is all tax free.

Only downside for yourself is that as a house owner you can only access LISA's at age 60 currently (without a penalty being applied to the withdrawal).

I think you need to consider if you need to use this 'windfall' as now money or longer term / retirement money. And if longer term/retirement, whether you would be better off investing some / all of the money rather than putting it in savings.

steampowered

If in doubt, open a Stocks & Shares ISA, and invest it into a low cost investment fund (such as a Vanguard fund).

This will get you far better returns and lower long term risk than anything else you could do with the money.

The other good idea is a pension - if your pension provision is inadequate, now is a great time to fix it, and if your hubby is paying income tax the taxman will even top it up.

MEM62

kazwookie wrote: »

I'd pay £10K off the mortgage.

Why?

It is highly likely that the mortgage will be costing them less in interest than the return from investment achieve.

happymum37

Thank you.

I haven't paid anything into my pension since i left to look after the kids 4 years ago.... good food for thought.

Thanks

happymum37

Thank you for your reply.

I have my paid into my pension for 4years when i left to look after my children.

The family buisness works with the police service so my uncle has matched what ever police pension is in existence for officers. Even though I'm only a office typist. So its now a CARE scheme. When i go back i will contribute 14 percent.

I had about 8 years service in befor i left.
Hubby has 18 years in an Aviva pension . It has about 80k in it. And now he is on a standard government NEST scheme and is putting maximum contributions in and gets the minimum from his employer.

Are life time isas safe?

I would like to use tge money for retirement i think. Or at least to use in 20 odd years when hopefully my youngest will have completed uni

Thank you