To ask what you would do with £45K?

[fortunatelynot]

Due to bereavement I have inherited £45K. I am 39, have my own mortgage of about £110K which is due to end in about 16 years.
I earn a reasonable wage, have a bit saved, but not loads and 1k in premium bonds. I have one credit card debt of 4K which I have on interest free card for another two years. I have two teenage children whom I largely support financially on my own.

I know it is not a completely life changing amount of money but would be interested to know what any of you financial savvy people would do to maximise the benefits. Thank you!

P.s. double check if there are financial penalties for early repayment on your mortgage. It might work out better to save the money and split the repayment over a couple of years to avoid penalty fees.

Roughly, I'd put about 25k towards a mixture of getting rid of credit card, injecting 1k or 2k into supplementing the regular household finances to have some treats and generally be more comfortable for a while, and putting the balance into savings. The remaining 20k I would put towards mortgage as it will shave significant time off.

Your position is a bit vague - depends what a "reasonable" wage is, "a bit saved" etc.

How old are teens and what is the university situation?

How secure is your job?

How is your pension?

All things above being equal - i.e. teens uni/onward education or training provided for, pension provision good, job secure as it could be - I would

1. pay off at least £20-30K off the mortgage and reduce the term. (You'd need to check penalties and the best way to do this.) Being mortgage-free earlier in life gives you more choices and you will save loads in interest.

2. Put at least £5K in accessible savings, but continue to pay off the 0% card. (If situation changed you have security of knowing you can pay it off but at 0% I'd keep the cash instead, as an emergency fund.)

3. £5K into long-term savings e.g. S&S ISA

4. £5K towards a holiday/home improvements like decorating etc and plan to buy something tangible to remember the person who left it to me.

I would also pay off credit card, save £5k, rest into mortgage.
It’s worth thinking what the person you inherited it from would want you to do with it? Maybe a holiday or something enjoyable with £2k?

Pay off CC
Home improvements
Nice holiday
The rest on the mortgage

Pay off debt , invest half in an isa , pay mortgage with what’s left .

Pay off credit card immediately.

Put 6 months of living expenses into savings.

Treat yourself to something nice (weekend away? theatre? some new clothes?)

Pay down your mortgage with the rest.

Sorry meant to add on mine, start overpaying on the mortgage each month if you can (there are normally limits to how much you can pay)

I'd put it away for if the teens go to uni.

Pay off credit cards.
Buy a second car. (Secondhand)
Family holiday.
The rest in savings.

Do you have a pension? Prioritise pension, then mortgage, then savings

pay off cc (after any 0% expiry)
look at one -off pension contributions - because you will get tax relief. You can back date as well.
pay some off the mortgage/ring fence for any household repairs (or car) that might repair/replacement next 0-5 years
save some
treat for family.

I’d pay off credit card and then put the rest towards your mortgage. Maybe save a little for a treat or something. When DH and I inherited a similar amount we got a mortgage, best thing we ever did.

Invest it in low risk stocks. Make some money off it.

Right now? We own our house outright, so wouldn’t need to pay off a chunk, but in your position I’d definitely pay it down a bit. Maybe 20 grand’s worth (or however much you can pay without incurring a charge).

Hmmm what would we do...

25 grand into savings and investments
10 grand on part purchase of a new car
3 grand on a holiday
2 grand on handbags etc for me
1 grand on treating my daughters
1 grand on long weekend trip to celebrate our marriage
3 grand in the bank for incidental purchases over the next year or two.

I'd pay £20k off mortgage (and keep the same payments thus reducing the term from 15 years), pay off the £4k credit card, put 10k into a pension (making sure I informed HMRC to claim the tax relief), 5k in savings and use the rest for home improvements or a family holiday depending on which is needed more.

If I had children I'd put some in savings for them, though really my financial security is theirs, as I would be comfortably off in later life and be in a position to help them out if they need it.

When I'd cleared the mortgage, I'd continue to put the equivalent amount into pension savings thus building up a sizeable pension for retirement.

Find out what the penalty is for over-paying your mortgage and find how how much extra you can pay off penalty-free each year. Pay off the maximum penalty-free amount while putting the remaining money in a secure savings account with a decent rate of interest. Also pay off the credit card when it stops being interest-free in two years' time.

Debt costs you money, so paying it off is the very best way you can use this inheritance.

Why would anyone put any money into savings of any sort when it gets you no return?

Do the basic snowball -
pay off the highest debt first (card),
then whack as much as possible onto mortgage. I'd want to reduce the term as well as the monthly amount if possible.

Less monthly obligations then will allow you to afford a holiday, car without incurring any more significant debt.

The kids can get a job to pay for their own driving lessons.

Pay off credit card. Lump sum to mortgage to reduce term considerably and a nice holiday. Leftovers in savings.

1. Clear the 4k credit card debt immediately. It might be interest free for now but get that future noose off your neck.

2. Get 30k off the mortgage as soon as you can (find out re penalties). It'll save a shit tonne of money in the long term. When you do this, arrange it so that your monthly payments remain the same and the entire 30k goes to reduce the term of the mortgage. So, you'll still pay the same monthly payment but actually it will reduce the capital even faster. If they won't allow you to pay the whole 30k this year, wait until a year goes by to do the rest. But do get 30k off asap.

This leaves you 11k. Is there anything pricey that your teenage dc need that you have not been able to get? Like perhaps a laptop or something? Would you like a holiday next summer with your dc? Other than that, I would put that money in a savings account in case any large things are needed in the short-medium term.

Oh in your circumstances I’d definitely clear the credit card straightaway as well. Sorry, missed that.

I'd pay off the cc and then if you plan to stay in that house for the rest of the 16 years, I'd put the extra money to the mortgage minus about 5K so that you can have some 'fun' money whether that's taking the DC's on holiday or giving them 1K each to buy whatever they want and you keep the rest.

10k mortgage
4k credit card
1k family holiday
25k savings
5k account for children

Pay off your credit card
Look at your mortgage it is almost always worth paying off as much as possible but you may have an overpayment penalty.We did pay our mortgage off very early though so it’s saved us thousands.

I don’t think it’s necessary to see a financial advisor unless your really unsure and nervous of what to do.

www.moneysavingexpert.com/savings/savings-accounts-best-interest/ Link to MSE, trustworthy site.

Unless you have been living a life of sackcloth and ashes on your current income I wouldn’t be doing any of the holiday, put money away for dc stuff. It’s sort of a life changing amount in that it will up your financial security. We had paid off out mortgage by the time we were your age. DH made a high risk investment and I also had a very good year, we were extremely lucky and it changed our life financially.

I would be very tempted to reduce the mortgage to reduce its payments. The money you don’t pay in mortgage every month allows for other nice or necessary things.

If your kids are going to uni in the next few years, I would save the whole amount as student loans reduce the maintenance loan according to the household salary so you might need to pay the difference.

Having said that, even if they get