what on earth to do with inheritence?

[marymaryquitecontraryusedtobeafairy]

I've been left a house which to sell now would bring me about 80K in the bank.

I'm poor. I bring in about 24K/year, and am in masses of debt. I just survive. I'm a mum and I work and get benefit top ups. I'm council housed in a dire part of the country, the house is in a slightly better area but I don't wish to uproot myself and children from school and home.

What do I do? Can this help me get out of the poverty trap? Do I live off the money? Live in the house and enjoy a secure home but remain in poverty? I can't afford to do the house up but can I possibly buy a very cheap or auction place, do that up and start flipping houses as my main income?

Look I'm not that bright but I've worked hard all my life and it's just not good enough financially. I decided to be a care worker because I enjoy it but the pay alongside the increase in prices has crippled me and there's no way to get out of it so I just trudge on day by day. I'm not miserable nor are my children but I don't want to waste this opportunity.

I don't have money for a financial advisor right now nor time to research so I'm hoping you clever and wealthy lot can help me out a bit with pointing me in the right direction.

Thank you.

@Tohaveandtohold I don't pay my rent, it comes from benefits and I'd lose it soon as I move in. I'd still get other benefits though, and have my income, and no rent.. so I'd be better off?
It just seems as though I'm missing out on a wad of cash that way but maybe that wad isn't that significant in the real world?

I think the best way to look at it is to pretend you won/inherited £55k cash. Now you need to work out how can you best use that money to better your situation.

That kind of money could either be used as a down payment for property investment investment. So you'd be looking at houses that cost around £200-220k, converting them to HMOs and taking out an interest only mortgage. Something like that could potentially net you £15-18k per year. Not life changing, but nothing to sneeze at either.

Done correctly, with some luck, you can end up with enough cash (after the mortgage) to reinvest in something else.

Alternatively, you could put the money into a high interest account for the moment, while you work out a business plan for a new endeavour. Many huge businesses started really small, even selling from home or market stalls. £55k seed money can be more than adequate as a start.

OP - how much to you pay on repaying your debts monthly now?

Also do you get 100% of your rent paid via benefits or are you expected to pay towards your rent? (Basically will you be in the situation of having more money each month without rent to pay or have the same amount.)

2 options 1)move to the house. See if you can get on a debt management plan if you are not already to pay down your debts. However you also need to try and earn more money. You will be leaving yourself exposed owning a house as when things go wrong as inevitably they do, you will have to fund them.
2) sell property clear debts and use the proceed to live off, money will run out and you will loose your benefits.
It is a trap I agree. Without the debts the move into the inherited property is a no brainer. With the debts, it’s a risk. As you have no capacity for unexpected expenses. I’d see if you can find a way though if making it work to move into the house, i a better area. You are unlikely to get that option again.

@AbraKedavra - she won’t be able to invest the £55k, benefits will stop and she’ll have to spend all but £16k of it until they start again, or she has to invest in a way that gives a monthly income matching or exceeding the £600 a month she’ll lose.

You’d need less income, you wouldn’t be paying any rent! If houses were money pits people wouldn’t be breaking their backs to own them. You need one insurance policy for the house and contents, compared with paying rent it’s buttons.

Exactly.
So far the choice to me seems
Sell and live off money in bad area until back where OP started.
Move and have own home security in better area, have an asset which can either be sold or borrowed against in a future should large sum be needed (deposits, uni costs, etc).

How much would it cost to buy a small (but suitable) house/flat in your area?

Id prioritise the debt first and then look at securing a property so you have the security. Be careful about advice about giving the house to your children etc. That could lead to lots of problems - deprivation of assets for your UC (so you lose UC anyway) and potentially fraud allegations (less likely but possible)

Unpopular suggestion - do you have the RTB where you are?

Indeed, being a landlord is not easy. OP does not say what the current state of this house is, but getting the house fixed up to rent it out, which might possibly require installing a new boiler, kitchen, bathroom, new carpets, decorating throughout, inspections etc will cost ££££££.

Wouldn't the income from a rental count as additional income whether it was being used to pay off debts or not, and would need to be declared as income and may affect the OP's current level of benefits?

@marymaryquitecontraryusedtobeafairy People saying treat the kids, go on holiday- this is BAD, BAD advice. Ignore it, please!

Sorry OP, I misread- I thought you'd inherited £800k!

How much is your rent atm?

Ok so you dont pay rent so moving into the house wont free up income to service the debts, but 20k debts and only 24k salary, your repayments must be a large chunk of your income. I would look at going on a debt management plan or even an IVA (but move into the house first so you wouldn't be forced to sell to service the debts) this would reduce the amount you pay each month towards your debt, you won't see the benefit immediately but once the 5 years are up you would be debt free, own your home and have more disposable income each month

I would definitely move into the house, give yourself security.
You say a 40 year old with only admin and care experience. Don't underestimate yourself, I was just the same only really admin experience at 40 and now 4 years later I'm mid management, working in a dream job in a dream city and I was on my own with children for a time. They moved schools to adapt to what life threw at us and are thriving as young adults.
Live in the house and get in touch with citizens advice as apprenticeships are free at our age alongside work which is how I've managed to get where I am

But it's a step in the property ladder. As others say if you do nurse training them you could get a mortgage and but a better house in time. And it's yours. Things to consider.

In your position, I would not keep the house. Do you have the money to maintain it properly at the moment or the costs of moving? If not, you will end up spending on it and having to sell it anyway (and then move into private rent as you'll have lost council property). I would:

1. Sell the house and clear your debts- £20k. Clearing debts should always be a priority.
2. Put some of the money aside as a rainy day fund- enough for 6 months costs - £15k in a Cash ISA/savings account nothing fancy.
3. Allow a small amount for family treats - £1k? Be strict about not going over. Use for things that will extend the pleasure- dishwasher to make life easier, annual swimming pass etc?
4. Use the rest to support getting into work/better paid work - this might be top up your income, pay for childcare, 2nd hand car or retraining. Don't fall for earning scams (like pyramid selling). Getting out of the poverty trap requires maximising income.

Do you have a sensible and wise friend who you trust to give you advice on day to day basis?

Go on to Money Savings Expert - the advice on finances there is better than on Mumsnet.

I definitely wouldn't mess around renting the house out. That can be time consuming and expensive.

It sounds from your post that you're not keen to move into the house. So don't. You have to live and be happy.

So your other option is to sell it.

Sell it, pay your debts off. Invest the rest as best you can. Pay for some financial advice and make sure you've topped up your pension, NI contributions, anything like that.

Yes you'll lose your benefits but you'll be debt free and can maybe spend some of the money on things to make your life better now.

Move into the inherited property Houses are not the money pits people make them out to be. This will give you long term security into retirement
Can you get the debts written off before you move into the house?
Increase your income by having a lodger £7500 a year tax free.
Your benefits will go down but only by the same amount as the rent you are paying.

I'm not so sure that moving into the house would be the best thing and it's certainly not a no brainer as some people think. OP hasn't given the ages of her children but if they’re teenagers moving might not be best for them. Universal Credit may be paying a lot of the current rent so she wouldn't save a lot by living rent free and it won't necessarily be easier to pay off the debts. Also, if OP is in a council house currently her accommodation already is secure and if she pays her debts off now she could buy if she wanted to.

It depends on how high the debts are really. Also, it doesn't look like the house she's inherited is going to rise particularly in value if it's only worth 80K to begin with. It could be worth 80k in 10 years time or even less.

Does UC disregard any home you live in? I think I've read that on here before so if you move into the house and give up your tenancy you will still be able to claim UC.

I am another not recommendating renting it out

If theres no mortgage left on the house I'd move in . Then work on sorting your finances out.

If you wasnt receiving benifits it would be worth selling .

Not sure there will be much of a market for high paying lodgers in a house worth 80k.

She would still be enntitled to the child element of UC. the only thing affected would be the housing element.