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Help me spend £35k!

(36 Posts)
Indecisive1976 Thu 23-Nov-17 22:22:39

So we have an unexpected windfall of around £35k coming our way. Trouble is it is burning a bit of a hole in our pockets but also that there are several options for spending it.

Option A, We really need to start building up a proper pension pot. Approx £20-25k has been ear marked for this.

Option B, We really need a new car ( old one is 12 years old and falling to pieces - DH is keen to spend £10- 15k on a replacement.

Option C, Our house ( which we own outright) needs a fair bit of work - new curtains, carpets, some windows replaced etc. Around 7k in total

Option D, The back of our house is open into a heat drain conservatory which has seen better days. It is freezing in winter and boiling in summer and also too small. We could replace it with a proper extension. Costing approx £35k ( would include a utility room).

So we can do pension and car, or pension and improvements ( and maybe a cheaper car), or blow the whole lot on an extension.

WWYD?

MyBrilliantDisguise Thu 23-Nov-17 22:23:22

What about your mortgage?

MyBrilliantDisguise Thu 23-Nov-17 22:24:04

And how old are you both?

juneybean Thu 23-Nov-17 22:24:21

See option C disguise ;)

MyBrilliantDisguise Thu 23-Nov-17 22:25:12

Oh sorry!

If you built an extension, would it add more than £35K to the value?

Kpo58 Thu 23-Nov-17 22:25:14

I'd go for options A & C.

B just seems very expensive for a newer car and you can get a decent one for much less.

ScaryDuck Thu 23-Nov-17 22:26:59

7K on a new car (which will get you better than what you have), 5K on home improvements, rest in pension, Forget the extension until you can afford it.

NoSquirrels Thu 23-Nov-17 22:28:11

Are you staying on your house long-term?

Do you have any contingency if you did the extension and it was more like £40K?

How old are you/what is the pension situation for you both?

I think if I were you, I'd be really really tempted by the extension and might go for it, despite sensible option being pension.

Sensibly, I'd go A (£20K - between 2 pension pots so £10K each?), B (£10K), C (£5K, economise here)

Indecisive1976 Thu 23-Nov-17 22:29:40

disguise We are both 40s.

Thank you wise mumsnetters. A pension is probably the best plan isn't it🙁

niknac1 Thu 23-Nov-17 22:32:04

I think I’d choose a 7k car and home improvements....... if only. Have fun choosing.

gingergenius Thu 23-Nov-17 22:33:22

Honestly in today's climate I'd do a pension contribution of £20k, a modest car deposit of £2-3k with a personal lease plan (if you have no mortgage you can have a new car every 3 years - no point buying new - cars depreciate in value massively) and then put the balance on house upgrades.

NoSquirrels Thu 23-Nov-17 22:34:46

If you are mortgage-free, you're in a good position but it doesn't sound as if this has freed up money every month for you, if car needs replacing/house doing up etc. So if you'd struggle to prioritise the pension any other way, it is the sensible option.

Ttbb Thu 23-Nov-17 22:38:20

How much value would the extension add to your house? If you live in London for example it may be worthwhile doing that then downsizing when it comes time to retire and living off sale proceeds.

CallMeDollFace Thu 23-Nov-17 22:39:24

But if the extension adds value to the house then that could be in lieu of a pension could it not?

Don’t discount the added value to your daily life of home improvements, too.

We are in a similar position and I’m thinking bathrooms/holidays/wider travel opportunities.

Life is for living!

Indecisive1976 Thu 23-Nov-17 22:57:04

I'm not sure how much it would add value wise. I might be worth getting a valuation done? We are in the South East so quite high property prices about here.

We are planning on staying put for the foreseeable future. It's not our dream home but the area works well for us ( school/ work etc).

gingergenius Thu 23-Nov-17 23:01:35

Bear in mind the ridiculously high property values in the SE will have to burst at some point in the next 5 years, I'd be worried about trying to add value at this stage of the game. It happened to me. Spent £15k on my property between 2004-2008 and after the crash of 2008/9 I barely broke even.

cafenoirbiscuit Thu 23-Nov-17 23:02:34

We put a guardian roof on our conservatory for just the same reasons - the space is v useable now, it cost 9k

viques Thu 23-Nov-17 23:44:25

I would go for the extension, add value, even if prices drop yours will hold, it will also vastly improve your quality of life, heating bills etc. you will enjoy it every day.

HermionesRightHook Fri 24-Nov-17 00:01:41

The heating etc bills are something to consider - if you did an extension could you even add solar panels to make it more if an investment than just adding value? Also will you want to sell? If not, then does the added value matter?

A pension would also enable you to stay where you are, probably, rather than have to sell for cash to live off.

Have you talked to an IFA?

Apileofballyhoo Fri 24-Nov-17 00:14:26

I'd look at anything that is costing you money from your cash flow - you said the conservatory is a heat drain - and possibly the older car is expensive to run and maintain. Brand new cars are an enormous waste of money though. I certainly wouldn't spend any on curtains or anything else along those lines. If you aren't forking out for huge heating bills you can afford to buy curtains.

I would definitely put some into a pension.

Could you do anything with the conservatory to make it better rather than knocking it? I'm not sure I'd do an extension using all of the money.

CustardDoughnutsRule Fri 24-Nov-17 00:26:42

Could you do a half way job on the conservatory to improve it and bung the rest onto pensions? It seems a shame to spend a windfall on stuff like carpets and curtains.

I'd a cheaper car personally - nothing else depreciates as fast as cars.

HughLauriesStubble Fri 24-Nov-17 00:38:21

We are in a similar position, except with a larger sum of money, and it was a long awaited investment return in our case. We are building an extension! Our mortgage repayments are very low and we did consider pension but knew that realistically, we would never see a lump sum like it again. So we thought we'd get more value out of it by building an extension that will give us a playroom (that can be a bedroom if necessary when kids are older), a downstairs loo and a block shed that will double as an outdoor laundry.

It does depend on family circumstances and age/number of kids though. I asked the same question as you when we got our money and the main advice was either pension it/pay down mortgage or buy a small seaside property (it was one of our options but I'm SO glad we didn't opt for that now)

I hear you about the money burning a hole, we felt the same, but still we gave it a good 6 months before committing to a decision and we wrote many pro/con lists for each option.

Good luck with it! grin

80sMum Fri 24-Nov-17 00:43:54

If you put the entire £35k into two pension funds split between you and your DH (and assuming that each of you had at least £17.5k annual allowance remaining) it would instantly become £43,750 because it would be grossed up due to tax relief.

If you then invested it in funds, shares or investment trusts it would have potential to grow. If growth were modest, say 5% a year, after 20 years the funds would collectively be worth £116k in today's money. However, if you were to achieve an average of 10% annual growth, then the funds would be worth £294k in 20 years. You would have to factor in fees and charges, of course, which vary depending on which management company you use.

Makesmilingyourbesthobby Fri 24-Nov-17 00:54:22

A,c & a much cheaper car

Peanutbuttercheese Fri 24-Nov-17 01:27:28

Do you need an extension for space because unless your packed like sardines forget it.

Pension pot and a car but there is no way you should be spending a third on a new car. get a nice boring but reliable car for about 7k, a Toyota would do the job. Car most likely to pass its MOT.

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