Inheritance wwyd

[60k]

NC for this one as I don't want to be identified.

I'm about to inherit 60k. I know its not a huge sum of money relative to a Euro millions jackpot or the kinda inheritance that means someone won't ever have to work again but I'd like to make the best of it.

Background: I'm divorced, living with a partner and my two children. Partner is not their dad. They see their dad and he contributes 500/month in maintenance. They are 8yo twins so that'll continue for a few years. Our house is big enough for us although nothing amazing in an area with nice enough schools so no reason to move. I work full time. Earn 55k before tax. Still owe 10k student loan. Paying about 10% into a pension. Debt wise, I have a car loan on a 12 month old car with about 25k outstanding. It's pcp so I'd likely return the car at the end of the term and get a new one, but could pay that off outright. 2k on a credit card which I've recently balance transferred to 15months 0% to allow me to chip away a couple hundred a month. Mortgage has about 220k outstanding with 40-50k equity. House owned as tenants in common with partner 50% each.

Savings wise, I have nothing really. I have 12k in a stocks and shares isa in my name but this is actually my children's money. I just put it in my name so that they can't get uncontrolled access at 18.this does mean I use some of my isa allowance each year (I add 100-150 to it for them each month).

Options include sinking the whole 60k into the house. Our mortgage is 2.1% fixed until 2027 so I guess I'd have to wait until then, overpaying in the meantime. We would change the deeds or whatever it's called to change our ownership shares to reflect me owning more.

Could pay off car loan. It's not interest free but it's not super high interest. That would give me 300 a month more in my pocket with 35k left from inheritance.

I live in a very cheap part of the country where there are a number of 2 up 2 down terraces for sale with sitting tenants for 50-60k in reasonable nick earning 400-450 a month. Could buy one of these outright? The associated fees and stamp duty would be a pinch though. Could buy one paying a 50% deposit with a buy to let mortgage. Thing is I don't know the first thing about being a landlord. All the insurance and tax etc. Also it would almost feel like I'd blown all that money for 400 a month. No savings for urgent repairs? Do I buy one outright and then borrow against it to buy another. Is that how they do it on homes under the hammer? Am I just being crazy and 60k isn't enough investment to start buy to let.

I know the idea is always to pay off debt first but I don't really feel like my debt is unmanageable. Car loan is big but obviously secured on the car and student loan hardly counts does it? I'm so confused.

Wwyd?

Don't become a landlord. It's not worth the pain! Risk of bad tenants in a legal relationship weighted in the tenants favour. The fear of the phone ringing - heatings gone, water boiler broken, there's a leak, etc
Pay off your car loan and student loan and put the rest in account in your own name. Keep it as a fu*k off fund. In a few years of your comfortable use it for extension, new kitchen, bathroom etc. You'll probably never have that sum of money again in one lump. Save the €300 a month that you are now not paying out and keep building your fund, difference is you'll be earning interest on the money and not paying it.

How many years left on student loan

You have loads of useful ways you could put that money to work, so you need to start with your goals.

Do you want to:
Have more discretionary spending money each month?
Have a massive safety net for peace of mind?
Pay off debt ASAP?
Retire earlier?
Provide for children’s uni/house deposit down the line?
Grow the capital to keep pace with inflation?
Become a landlord?
Delay deciding for now, see the lay of the land when your mortgage term expires?

You can’t achieve all of those things, so there’s no right or wrong as such, you’ll need to prioritise.

I'd pop £30k into a locked up savings account, to gain interest and be a future you fund, if you want to move in the future or just keep as an out of your mind savings account. £20k into easily accessible savings for dipping into if needed. Both in just your name!! Pay off the credit card, so another £2k on that.

Then use the other 8k as you'd like, treat yourself to a nice holiday? Bit of home improvements? Something snazzy for you?

I wouldn't become a landlord, you need to be able to maintain the house + manage tenants etc etc. Not always the easy earner you might think! I'd leave the car loan, it's affordable and secured against the car.

i would put more in my pension... and some aside for dc ... maybe in Lisas ...where the government gives money too? uni fund...
and do a nice weekend away.. that would suit ur family... disneyland/Rome or Something nice.... cheap holiday in half term/lapland...

I would want to feel it wasn't just all on dull stuff! my friend bought herself a pair of diamond studs that she says thinks about the person who left the money when she wears as dearer than usual!

What is the interest rate on the car loan? If it is high, can you pay it back early? If it is a low rate, say below around 3%, then ignore this suggestion.

Also do you really need to change cars every few years or could you just keep the same car and drive it for 10 years, and then have zero car payments to make? If it is a well-built car then it is often cheaper to keep a car for longer instead of changing cars regularly?

I'd pay off the student loan and save some so that when your car lease is up you can buy another car outright not on a lease. That'll mean you pay less interest and can enjoy a bit more money day to day. I'd then use a few grand in a special holiday as your kids are a great age right now to get the most out of an exciting foreign trip, then stick what's left in the bank for a rainy day

I agree, don’t become a landlord – but please also don’t pay off the student loan! You’ll probably never end up repaying it – and that’s exactly how the system is designed. Martin Lewis has a good explain that if you want to take a look.

I would compare the interest rates of savings accounts and your mortgage and your car loan and go from there.

Agree that you should buy yourself something nice though, however small!

I agree with this.

Hard to be sure because it has interest and the lower the balance the more of each monthly payment repays the loan itself. By my maths I think about 4-6 years depending on salary rises. I'm in the public sector so just had an increase and have a couple of payscales left before I'm at the top

Sorry that post above was in reply to the person asking how long on student loan

I think priorities are retiring earlier. There's no way I could do another 30 years in this job. Also helping the twins out in future. But obviously nice things to do now with the money would be good- so getting some return from the money

I will pay off the loan. I'm not on the new system where I will get it written off. I was at uni 2006-10 so I am on plan one. I'm in my late thirties now, paying approx 220 a month back with 10k to go, so I'll pay it back one way or another. I signed into the account today actually and it said my interest rate is 6% which was higher than I thought. Presume it tracks the boe base rate and can fluctuate?

I'd say, as others have that being a BTL landlord is too much risk/bother for any potential return right now.

Will your boys' father keep on paying maintenance at current rate? He should bu t there are plenty of folks who'd treat a £60k 'windfall' as a reason to pay less.

Unless the interest on the PCP is onerous I'd probably leave it but, when the time comes, consider settling the balloon payment at the end and just run the car. If you can extend the warranty on the manufacturer's scheme that's probably worthwhile if the risk of big repairs is real and/or a worry.

Invest a chunk for growth while keeping enough to be comfortable as an emergency fund in the best paying instant access account you can find.

I would pay off student loan and car loan (or half the car loan if it’s joint with your partner). Then invest the rest in a SIPP (as you say retiring earlier is a priority). You could also put the money you are no longer paying on debt repayments each month into your SIPP. If you use a compound interest calculator you can estimate what it’ll be worth in 20 years. You can access a SIPP when you are 57 (though this may go up)

Exh is reasonable and would continue paying at the same rate. What he pays is the same as what the government child maintenance calculator suggested when we separated in 2017 based on his salary then. I'm quite sure he's not still earning the same, so should he wish to bring my inheritance into it, he will be very welcome to provide proof of earnings for every year since and give me back pay, in the interests of fairness. Seriously though, we're amicable and the maintenance won't change.

Use £250 of it and book an appointment with an independent financial advisor.

My first thought if you don’t need it for anything right now is to invest it in stocks/ shares.

Re buying an investment property, I am a landlord and don’t do any property management. I pay a fee and the letting agent does everything.

I’ve put mine in a one year fixed savings account , a three year cash isa and a five year cash isa and the rest into premium bonds Aim is partial retirement in 3 years. But I had no debt , if I had student loan I’d have paid that off first

Being a landlord is not easy. Nor will it make you money. Stay well away.

If it was mine I'd consider putting it away in my own name in a few ISAs for several years and forgetting about it. As you said it's not a life-changing amount but with interest rates rising it could add up to a nice amount.

You could pay off the car loan etc., but you're managing as you are. Standard advice is to pay off the highest-interest debt first but I'm a cynical person that's been stung too many times.

Where would you be in the future if you split with your partner and/or lost your job? If you became too ill to work and an operation waiting time was ridiculous?

You need that money for yourself. For emergencies. Save it wisely and quietly.

Just wondering - does your xhB have a partner? I've lost count how many times ex-partners are amicable until a new partner comes on the scene.

Also, your student loan is fairly cheap as loans go. If you're managing okay as you are, you need to forget you had it until you really need it.

Look at savings interest rates. Are they higher than the rates you have on debt? If the interest rate is higher than the debt rates then makes sense to save it for now - £60K at 5% is £3K a year. If you earn £55K before tax, that roughly equates to approx £40K a year take home? An extra £3K a year from interest is almost 10% bump in income, and you'd still have your lump some afterwards.

Pay off debts which cost you more than saving it as they come up. E.g. The rest of your credit card when 0% runs out or your mortgage when the fixed term ends if new rate higher than savings at the time. Of course make sure you write that in to how much house you own. You don't need to pay off stuff with it now, you can wait and save it meanwhile.

Look into investing with an established property developer. I get 8% on 100k and it’s absolutely safe and underwritten. You’d probably get about 7% on 50k, so £3500 a year for doing nothing. It’s a no brainer

If she earns £55k and has £10k outstanding yes she will.

I would save as cash (ISA and fixed rate bonds) until your credit card and low mortgage rate expire. At that point (3-4 yrs) time I would probably pay off student loan if you are still in same situation and consider paying off a chunk of the mortgage. Teenagers are expensive - particularly if they want to go to uni - and you seem quite leveraged already so I wouldn't take too many risks with this money. I also wouldn't pay off the car loan because it would depress me to spend so much on a car (but that is just me!) but it might depend on the interest rate. I would probably also spend a bit on something nice (holiday or needed home improvements or something) so it is not all for the future.