Windfall Advice

BB78

I’m looking for some advice on the best thing to do with a little windfall.
It’s not a huge amount and I could spend it twice over in the blink of an eye! but I want to do as much with it as I possibly can because the possibility of a lump sum of money isn’t likely to come round again!!
I got £13,700 :T
I had £1,131 on a credit card which I have paid off & 2 smaller debts of £715 that are now gone. (£11,854)
I need about £470 for TV licence, Contents insurance, pre-paid prescription certificate etc. (£11,384)
I want to put away a contingency fund of about £3,000 just in case I have another hellish 10 months & will at least have peace of mind I can pay my mortgage! (£8,384) :A
I’ve got a shopping list of around £1,500 (£6,884)
I may need £200 towards this months bills (£6,684)

I’ve opened a 6.5% ISA & have put £3,000 in for 2007 & will put in another £3,600 for 2008 while I decide what to do and will leave the £3,000 contingency fund in it till next year to earn decent tax free interest.
I was going to open a Kaupthing Edge savings account to stash the rest of the money while I’m moving it around, spending & deciding but reading the terms & conditions this account might be more hassle than its worth for what I want it for and only pays interest monthly, so the interest might not amount to much with the sums & frequency I might be withdrawing, so at the moment I’ve left a lump in a Savings account, only 3.5% AER but easy to access & was already open.

I’ve got £4,000 - £5,000 of building work to be done :eek:
Would like a new Kitchen £3,000 - £4,000
Landscape the Garden £3,000

I don’t think I can put the building work off any longer so if I’m saying I’m down to £6,684 - £5,000 I’d have £1,684 left.

I might sell my car which is worth £7,000 - £8,000 but would need about £300 to do this and would need to buy another one. If mine sold for £7,500 minus £300 & I bought a new one for £5,000 I’d have another £2,200. Plus £1,684 = £3,884.
(Before anyone suggests saving money and going green by not buying another car, it’s not an option! Been there, done it and have got too many long term health problems that make life very difficult and its not practical for me not to have a car.)

I also have a loan (6.5% AER fixed rate fixed term) costing me £200 a month. I’ve got another 84 months of payments to make costing me £16,757.16 by the time its paid but will get £1,037.99 back so total to pay will be £15,719.17. To settle the loan now would be £13,695.09 saving me £2,024.08.
I can’t reduce or renegotiate the loan so if I want to reduce my monthly payments by paying off a lump sum I’d have to take out a new loan, I was given a quote for paying off £6,695.09 and taking out a new loan of £7,000 over 60 months @ 8.9%; monthly payment £143.84. This option would effectively mean I would clear my loan 2 years earlier and save me £55 a month. I got some repayment calculations for the same amount over the same period from some of the lenders advertising 6.5% but their repayments were all higher.

I’ve also got a mortgage of £118,000. I’ve got a fixed rate of 5.14% until June 2009 and then it goes to a variable rate (around 7.3% at the moment!)
I’m starting to get nervous about being able to get a new mortgage next year with all the “credit crunch” talk and I’m assuming I would be better off not having a loan when I apply for a different mortgage??
I can make overpayments to my mortgage but if I do this prior to June 2009 I will be charged a penalty of 3% of the special rate loan but overpayments would reduce the interest owed and in turn my monthly payments. I’ve also checked and if need be I could borrow back any over-payments made but this amount would then be subject to the variable rate interest rate, not the 5.14%!! :eek:

Short term clearing or reducing my monthly loan payments would be best, but if it’s possible I’d like to put myself in a better position for the long term! And I’d like to buy the things on my shopping list and get the building work done and have a contingency fund and have a new kitchen… :rotfl:

Any & all advice on how to make this money stretch would be very welcome!!
:beer:

shinyhead

Congrats on the windfall, hope the reason you got it wasn't an unhappy one.

I've had to read through your post a couple of times now, if you don't mind me asking, what's on your £1500 shopping list? What building work do you need? The only thing I can recommend you don't do is splash out and landscape the garden. apparently it is one of those home improvements where you never recoup the outlay.

I think you've very much got the right idea using it to pay off things and reducing your monthly outgoings but regarding your mortgage and loan I can only say anyone got any ideas?

Are you sure you're in the right part of the forum for this?

BB78

shinyhead wrote: »

Congrats on the windfall, hope the reason you got it wasn't an unhappy one.

Went through 10 months of hell fighting a difficult employer! Happy now the stress is over!

shinyhead wrote: »

what's on your £1500 shopping list? What building work do you need?

Some of it is self-indulgent, promised myself a Nintendo Wii & Wii Fit (but my excuse is it'll also help with some of my health problems!) but the majority is things for the house.
The building work is knocking down a wall to make tiny lounge bigger, new fence (blown down in the storms!), convert bathroom to shower room (additional costs on top of Disabled Facilities Grant) & furniture.
Using cashback sites & trying to get the best deals on everything before parting with any money but it all adds up and I'm a typical woman with expensive tastes!! :rotfl:

shinyhead wrote: »

Are you sure you're in the right part of the forum for this?

I wasn't really sure of the best place to post so followed the forum thread from Martin's article about using savings to clear debts & it lead me here!

shinyhead

Wii's are great fun, my DS bought one from his saved up paper round wages. You will need a bigger lounge if you buy one of them!

I'm sorry I don't really feel qualified in any way to form a balanced opinion or offer advice but me posting back keeps it bumped up so others might see it and be able to help.

I'm just lurking (hate that term) and posting this late as I'm waiting for DD to come home.

I'mcomingbackasaman

Yep I'm lurking too. Sorry to hear you've been having a rough time but you can treat yourself a bit now. I'd go on a little holiday and make a list while your there

Remember you can't stretch that amount of money to cover all your 'wish list' and debts. I'd write down your priority debts first that by paying off (if possible) would free up more income in the future like loans for instance.
Get some quotes for the priority jobs you need doing in the house that would make your life easier on your health. But before you do that a friend of mine who was on benefits and had a leaky roof rotten windowsills etc, got a grant including tradesmen to do the job and the cost of the jobs done are added on to the mortgage so that when the house is sold they get paid the exact amount they quoted for the job no interest added. it's a government thing. Pm me if you want the details. If you got this you could pay more debt off or mortgage off with you windfall.
Just a few suggestions ..

BB78

Trust me I don't need a holiday to write a list, I have a veeeeerrrrrryyyyyy long one already that I could just keep adding to!! :rotfl:

Sounds like your friend got a Private Sector Loan?? I've seen my local Council advertising this and was considering it because I want to get my floor insulated and couldn't get the kitchen done under the grant but I was a bit wary when it said you don't pay it back till you sell your property & was wondering if that meant a charge on the property??!!

I'll try & pm 2mo, far too late for me to still be up I'm afraid!!

moanymoany

I would spend nothing that is not essential, stash it away and sit and wait for a few months. When the excitement has calmed down, you may find you have a different set of criteria for anything you want to spend.