For once in our lives...we've come into cash!!! £30,000!! AIBU to ask WWYD?

[Stripedmum]

Well it's only gone and happened - we have money! Yippee!

We are now thinking of extending. What would you do with the cash?

I have life insurance until my youngest dc reaches 21 as it wouldn't be fair of me to die and leave my eldest dd to pick up the pieces - so there is a small amount index linked to cover roughly 7 years or bill paying and taking into account the bills going up and having to pay tax on inheritance. This would include an au pair and a car.

My eldest is 21 and I really wouldn't want to shit all over here by not having a will and an insurance policy

We've paid off the mortgage so we'd probably put half towards a holiday and half towards investments. That's if it was an unexpected sum. If it was an expected bonus from work etc, probably most of it would go to investments.

I would put down a (very small) deposit on a flat. I have no other chance of ever owning a home. That would take all of the money.

the priority is getting rid of debts except mortgages and sometimes student loans you say you have none so

an emergency fund of 3-6 months normal expenditure( include food and petrol not just bills etc) must come before an extension; holiday or anything it is really important

Catinabox's husband sounds like a cunt....and not in a good way.

Back to the OP though, congrats! You've had some great advice, hope it helps you make a decision.

Agree completely with stoic. At risk of sounding a bit Catherine Zeta Jones, £30k is really not that much money. Given your financial situation, I would save/spend down the mortgage. Forget the extension and cap your holiday/present spends at $2k. Give yourselves a bit of a financial buffer and peace of mind.

And congrats!! I envy you!

SHOUTS.... REALLY FUCKING LOUDLY!

StripedMum....THIS:

Stripedmum Sat 24-Aug-13 22:04:39
Thank you Stoic! That was really thoughtful and I've tried to absorb all of the advice.

So...can we still get the extension?! Are you saying to ring a few agents, get them round and ask to see whether what we have planned would actually add value to the tune of the 30k (or £25k if we tuck a bit away for emergency)?

OR, MORE SPECIFICALLY,- THIS BIT:

(or £25k if we tuck a bit away for emergency)?

if.

IF.

IF

IF.

IF?

IF?... WTAF???!

You are MORE than welcome re advice, but you have my UTTER word that if 'IF' is ANYWHERE in your thinking wrt to the 3/6 months fund, then I won't be offering any more [& I mean that in a really really REALLY nice way ]

And Anglo is wholly correct BTW in her summation of what £30k is right here, right now and especially in context of rest of your financial landscape (just flagging that before a possible predictable barrage of retorts to her..)

Way to make a comeback StoicButStressed. I didn't realise you had taken a break but I'll never forget you now! I see neon lights and fireworks all over the thread

Mortgage and a cheap holiday. Save 5 k for emergency fund.

New kitchen, mortgage.

Prob divide into 3:
£10K rainy day fund (never had one and constantly panicking about paying mortgage should anything happen)

£10K into mortgage to reduce the term

£10K traveling (prob £7K to kick start our 3month trip round South America planned for 5yrs time, £3K on a US touring holiday - we live in US so don't need to factor in initial travel costs)

So pleased for you!!!!

£1K family treat
£5K emergency fund
Rest - mortgage

With £30 000, I would book a big holiday for this year and next summer.

Then i would give my dp and myself £500 each to blow (he would buy gadgets and I would buy new wardrobe and makeup).

I would treat ds to some new clothes an toys (£200).

Then I would spend/invest the rest in something sensible, extension in your case sounds sensible.

When factoring cost/benefit of extension, surely it depends if you would outgrow your house and need to move otherwise and if so what the full costs of moving would be - one of the benefits to my mind is that you would avoid the £10k costs associated with moving, which never seem to get properly accounted for in the whole 'moving up the property ladder' thing.

Say you have a 2 bed house and 2 children so need a three bed.
Scenario one: Spend £25k on an extension which agent reckons adds £20k of value to your house.

Scenario two: Sell house and buy a bigger one with third bedroom at (optimistically) £20k more, pay £10k in estate agent fees/legal/tax/moving costs.

Making that point generally about extending/moving, not saying you should spend £25k on extension OP.

Stoic gives sound advice.

One clarification only: there is no tax to pay for the recipient of a lifetime gift. There is only Inheritance tax anyway if it is someone old (ie someone who dies within 7 years) and rich (over the IHT limit) giving you the money, and even then it is the estate that will have to pick up the bill. There is no question of CGT.

Disclaimer: I know nothing about tax credits so also recommend you check that out.

Okay - no if. I promise.

Er, not sure why I put a blushing face on my post about Stoic's excellent post. It was supposed to be a grin because it was such cracking advice so passionately expressed!

Got me thinking about my situation too - thanks Stoic.

£5k doesn't seem enough for a 3-6 month fund. Surely you'd be thinking at least £10. For us we'd be thinking £15k minimum as a backup fund.

And agree again with stoic's second more sweary post too.

it depends on their expenses our basic living costs are about 1,250 a month so 5K would be 4 months asthere would be no tax

a 30,000 gift is tax free if donor lives 7 years; if they do not inheritance tax is only payable if estate is worth more than 320K it is on a sliding scale as well so if live 3 years you pay X live 6 years considerably less etc so if the donor is unlikely to be paying inheritance tax no worries if they are then certain allowances still apply

if you are on any means tested benefit you have to declare it unfortunately but not if it is not it will not affect your weekly child benefit or contributes to childcare costs if you get them
you would no longer be entitled to free school meals help with council tax, prescriptions or dental treatment

Bits for kids
Clothes for everyone
Lovely hol
Amazon spree

Congratulations OP. I hope you make good use of it. Lots of good advice.

Jumping on the bandwagon a little here but I have inherited a similar sum and plan to put it all towards paying credit card debt and mortgage. Could one of the experts tell me how this will affect my tax credits? We don't get childcare paid or free anythings just child tax credit.

the OP has stated that the people giving them the money are not giving it for a good holiday etc but so they can make their lives better long term they are expected to be sensible with money they do not actually have it yet