£100K - difference of opinion on how it should be spent.

[Wrinkledretainer]

Name changed. We’ve inherited (dh parent) just over a £100k. Both late 50’s with good defined benefit pensions of many years and good max lump sums if we want to take it of £200k or minimum of £50k tax free if we want to keep max monthly pension. Annual pensions will be £85K with state pension included. One child at uni whom we have saved £40k for towards flat deposit. Fees via student loan but we pay maintenance/halls/rent cost.

Dh earns a third more than I do, combined income £95k. Debts £20k as we needed some house works. Mortgage still £170k as we lost a business and had to sell up so didn’t re-enter the property market again in SE until 6 years ago. House worth £450k.

Over the years we’ve travelled extensively around the world and spent a lot on holidays. I’d like to pay off the debts, put a patio in (5K), buy a £10-12k car as ours is on its last legs and then put the rest towards the mortgage. Dh wants to pay off the debts, put a patio in, get the car then spend the rest travelling more whilst we can.

In my scenario, paying off the debts and paying down the mortgage will mean we can save an extra £1200 a month. With his scenario, it would be an extra £600 a month. We only have savings of £15k taking out dc savings of £40k above.

I think the longer term plan is to move to the South coast but houses there will probably be about the same as where we are price wise.

Dh thinks we should live a little now as we’re getting older and health wise things are creeping up. He envisages we’ll slow down in our 70’s and the pension savings will accrue then. I feel we need to be more sensible now to build more of a cushion. If there is another inheritance, it’s only likely to be about £20k.

What would you do?

I've been on nice holidays but never feel that spending thousands on two weeks away is worthwhile.

What happens if one or both of you end up being made redundant tomorrow? You won’t have savings to cover your living expenses till you get a new job?

Pay debts and go for the holidays!

They’ll get a redundancy payment, the first £30k of which would be tax free.

It’s extremely unlikely luckily and, as a pp says, we’d get large redundancy payments and would be able to argue to be paid full pensions.

I agree

1. Pay off non mortgage debt (assume this is at the highest rate of interest)
2. Pay off mortgage (waiting until next fix, if rate is currently fixed below 3%)
3. Max ISA subscription (2x£20k/annum), invest in low fee tracker funds, e.g, Vanguard.

That is all.

This.

The person who inherited should have the voting cast.

I've always lived by spend half, save half. Spend half as you might not see tomorrow, save half in case you do!
Having also had a Mum who passed away much too young, make sure you enjoy life now. x

This. OP, you are both clearly sensible and in a very good position.

Yes, if it was my money, I’d be doing mortgage first, yes, (unless a crazy low rate, then I’d wait until it was going to go up).

Your DH is also grieving and having the perspective reminder of life and death. You hope you do make it to your 70’s. But, you might not…. 🤷‍♀️

Either way, a nicer problem to have! 👍🏻

I said earlier get your house on the south coast and decide everything else while you're there, for me it would be the warmer winters that were attractive and possibly changing my car for something higher due to degenerative arthritis...it's a long way down to get in my little accord lol. Enjoy your darn selves...xx

Is there a way to split the difference?

So pay off some of the mortgage but also have some for a (perhaps slightly lesser) holiday?

It occurs to me that the reason why you are the one worrying about the situation of the surviving spouse is that you are more likely to be that surviving spouse, statistically. Make of that what you will!

Edit - I do also think the person who lost a relative gets the final say - morally though not really legally

Just to give you a different perspective, I was completely fit and healthy up to being 64, in the last two years osteoarthritis has appeared from nowhere! Now I can barely walk, I’m in constant pain and am riding around on a mobility scooter. Spend some money enjoying yourselves, you have really good pensions.

Honestly - I'd spend it given you have ample pension income. You just don't know if/when your helth will fail and you will really regret not going if it does.

His inheritance, his choice

Thank you all - it’s been good to ‘talk’ the finances through as it’s not something we can discuss in real life.

We’ve decided, (and dh happy) with paying off debt (20K, gone now thank goodness which is a weight off my mind), 20 K to savings (dh ISA) which will give us 35K savings in total as we already had 15k. 10K towards good used car, £5K patio. 1K on other miscellaneous works; bathroom fixes and carpet cleaning.

Balance will be paid off the mortgage.

We can have a nice holiday straight away and then continue saving with the £1.2K a month extra (plus our normal savings from income) to fund a bigger trip next year.

This sounds like a really good, balanced solution and you could always raid the ISA in future to put towardds the more expensive holiday you mentioned.

Paying off debts and mortgage. The amount of interest you would save would mean you could still travel as your monthly payments would go down