Is this a financial mistake? Help please

[Subjk]

I have a 2 year old and have recently been gifted 80k. If I paid off some of my mortgage with this I would owe 150k. I’m 35.

The schools round here are absolutely awful. I can’t move area as I need family support so I have to stay.

Yesterday I looked round a private school which is 20k a year including vat. Me and ex are on good terms and he pays 1,200 a month. He won’t pay school fees but has said he will increase monthly payments to 1,500 if I choose private.

What would you do? I don’t have a high income my take home is 2,400. I am worried for dd and feel a bit lost with what to do. Please help!

I don’t think you can afford it sorry. Even if you used the £80,000 to pay off some of your mortgage plus your ex gave you £1500 a month, you wouldn’t have a huge amount of money left every month to pay your mortgage, bills, food etc for you and a child. Plus you’d still have to top up fees even with decent maintenance, and this amount would only increase as fees will increase because of inflation and because they tend to price based on age of child. For example, prep is £12k pa in the school DD will go to, sixth form is £24k pa. I think using the money in general for your housing is more sensible and more realistic in the long term.

When you say absolutely awful, what do you mean?
A good brain with a loving supportive home will succeed anywhere.
A stressed out broke mother trying to pay private fees on a standard income will not be conducive to a supportive home over the years.

I’d use it to move to a better area.

Kindly I don’t think you can afford to do it. Uniforms alone can cost in excess of 600-800 a year.

Then there are school trips abroad every year, school lunches £5 a day etc

it all adds up

Don't put it into private schooling. There are lots of things to consider- as she ages you can supplement state school with tutors where needed and be able to afford the nice trips/ after school clubs she will want. These things are not cheap and have hidden extra costs. Maybe ex can put towards clubs with increase and tutors. I think wherever your kid goes you always end up having to do extra at home with them so private doesn't guarantee no extra costs elsewhere.

Also maybe if it didn't go on mortgage and your comfortable covering that for abit then look to invest some of it or stick it in a savings account and let the interest grow for dd.

Pay if off of your mortgage. Then continue paying the same amount off your mortgage as you do now so that you significantly reduce the term. You will save a heap of interest and have the security that if the rate moves you can still comfortably manage the repayments.

Absolutely not.

How far would you really have to move to live in a better area. Could it be worth moving and then using childcare where needed.

I would look at whether it was worth paying the whole lot off your mortgage (given interest rates could go up) or paying some off your mortgage and buying the top amount of Ernie bonds and put any winnings each year towards your mortgage

I know when I have had the top amount of bonds I would over the year get a minimum of £300 per month £400 was very normal and once got £775 and a £625

I would move nearer the time to a better school if no school near you turns itself around in the meantime.

Private School may be £20K but what about secondary?

Relying on maintenance from your ex is a very risky in the long term as of course is committing to private schools

Bear in mind as well that there are a lot of pretty crap private schools

I'd be more inclined to invest so I could pay for secondary school, you can have a significant impact on how your child does at primary, not so much seconday.

I would use the whole £80k to pay more off the mortgage. What would you owe if you did this? Think of the amount you will be saving in interest!

State til 8, at least. Then see how you feel and if you can afford it.

£80k can buy a lot of tutoring if you feel DD needs it - and after school enrichment activities.

If you paid a big lump off your mortgage how would it impact things? Would it reduce monthly payments or your the term of payment?
Private school with an uncertain income isn't a good idea.
Are you already saving and have a pension?

I do think there’s probably a middle ground - £20k a year for a prep school is quite steep (location and reputation dependent obviously) - DD is going from reception and hers is £3.3k a term (although they take the early years funding until compulsory school age so reception is about 2/3 cheaper than a FT nursery place).

In your position I wouldn’t pay 20k a year but I do appreciate if there aren’t many decent schools around, then it’s a tempting option.

This makes sense.

£80000 won't get you anywhere with private education. You might think about applying for a bursary.

I would discuss with your ex if he'd pay half for a tutor for maths and English while at primary. If your now 2 year old can get ahead with the basics while at school I think that would be a better spend of some of the money (a lot less ££ and far less commitment than private school), I'd put some by for that perhaps - you have time to consider which tutor gets recommended well in advance etc.

I'd chuck £20k in a tracker ISA this financial year, and keep £20k to chuck in another at the start of the next financial year, ensure all your debts are paid off other than mortgage, put some by for easy access (to cover emergencies eg new boiler, new car, house repairs) perhaps premium bonds? for emergency. From what's left which perhaps won't be much, I'd look to pay down your mortgage to reduce monthly payments, or, if you have a low mortgage rate anyway perhaps consider additional insulation / thermal curtains/ some solar to heat your hot water and reduce fuel costs. Or invest in some training for extra qualifications for you to enable you to earn more in the longer term.

I wouldn't do it - as others have said that money will run out and then unless you can find the money each year, you would have to move DD at some point anyway.

If it was me, I would
Take a chunk off rhe mortgage - say £30k
Invest some - say £30k
Then keep £20k away but accessible for emergencies

Then perhaps re assess in a few years...

Personally if you don’t want to move, get some investment advice and then I’d look at

a - getting a tutor to fill in any learning gaps, but I’d hold off until late primary or secondary.

b - reassess private for highschool years after saving and investments, or

c - start building a good higher education fund, uni or if your dc wants to do technical courses have money to fund that.

A clever child with support at home will do well even in a bad educational setting.

I wouldn’t. The fees go up 5% per year. And there are lots of extras.

Also a lot of the children will be very wealthy which may cause issues for your child .

I would move to a better area. Then you still have the money. Once private fees are paid they are gone

100% this.

You can do a lot to enrich a child's life outside of their school hours that doesn't cost much E.g. joining clubs, going on day trips to different places, learning an instrument, encouraging hobbies, reading practice, a tutor if need be etc.

Invest the 80K wisely now and then the options will be there later on when the child is older and their financial need greater. That might mean helping them with university fees or with a deposit for their own place.

Just a thought -

If your ex is willing to pay an extra £300 a month for private school - would he be willing to put that into a savings account to help pay for private secondary school? Worth asking if you're on good terms.

I honestly wouldn’t spend it on private school fees. Most bright children will do fine anywhere. You’d be better off using the money to buy her a flat somewhere cheap as an investment! Or saving it for her.

Don't rely on him. He might die or lose his job

As other have said, you could be starting from a false premise with the sweeping statement “the schools round here are are absolutely awful” , when your child is not even at school yet. How and can a primary school really be? Are you really trying to say that the people who live in the school catchments are not people you want your DD to grow up with? Is it one of those areas where everyone who can afford private school does so, leaving the state schools with a very uneven demographic?

It would make sense to do more research into state schools before you commit to private.