if you inherited £100k...

[ruddynorah]

if you inherited £100k what would you do with it? or rather more to the point, what should i do with it as my head is just spinning with it all?? situation- after my gran passed away i inherited about £100k (will get it early next year i think).

there's me, dh, dd aged 4 starting school september, and ds 8 months. i'm due back to work in 2 months.

we have a £150k mortgage currently on standard variable, so no penalties for overpaying.

i work back to back with dh. he pays all bills and mortgage. my income is spending money, about £800-£1000 a month depending what hours i go back to work on. we have no childcare costs due to work opposite each other (him earlies, me lates).

do i.....

A) pay off large chunk of mortgage, maybe £75k, and keep repayments the same which will mean mortgage is totally paid off in 10 years ie by the time i'm 40. other £25k will pay off £5k car loan, £5k aside for each of the dc, £5k for some stuff to the house and £5k into savings for next years holidays.

B) as above but keep mortgage term the same, so half the monthly repayments. means more in our pocket each month, nicer hols etc etc. though we aren't massively fussed for this, we like uk hols while the children are young really.

C) take 5 years off work. (will have to go back short term until money comes through though) 5 years x £800 a month = £48k to fund the 5yrs off. so would still leave £50k (allow for 'pay rise') to make maybe £25k overpayment to mortgage plus £25k to do as above. so, mortgage would carry on over longer, but would have career break, though of course impact to think of 5 years off career ladder/pension etc etc blah blah. would probably do some volunteering actually to keep some semblance of activity out of the home as it were.

D) something else..

i don't exactly love my job, i do it because the hours fit and it's good money for what it is iyswim. as it stands, i'm with the children all day, then go to work while dh does tea and bedtime. i won't see much of dd as she'll be at school all day, though i'll be there for drop off and pick up. it would be nice to be home each evening.

but we'll save an absolute fortune if we overpay massively on the mortgage and be mortgage free in 10years.

thank you for reading all this.. soooo...tell me what you think?? i just want to make sure i do my best with this money. dh will go along with whatever i decide

i don't think i'd put the money into a business. with two small children i don't think i could give it the time or energy it would need. i like the idea of doing something once we're mortgage free though.

mortgage

I would pay off half the mortgage, cut down hours significantly and use the rest as b). Money is no good just stuck in a bank or with the mortgage. Yeah its great, in 10 years you will own your own home. woop, but what about the time you could have with your children. I would use some of it to have fab holidays, to have my children see places they would not otherwise see, learn languages, be debt free in every other way.

I would want to enjoy the time NOW, not in 10 years. In 10 years you could be dead.

I love the idea of a business like jjandbump use to to change your life completely and utterly for the better.

I mean, I would pay off half the amount you have, not half the mortgage, so £50k onto the mortgage.

unfortuntately 100k wouldn't pay off my mortgage - it wouldn't even pay off half of it but it would give us more disposable income so we could have nice holidays etc.

if i had 100k i would rent our house out to cover most of the mortgage (£50pm shortfall, plus expenses), and buy another house to live in (thus providing us with a pension, once mortgage paid off = any rental income is pure gain)..

although we'd have to wait for DH to get a job to make this possible.

You lucky bitch .

I collect Starbucks cards so I'd probably spend about £1000 on them.

We need a new car, so I'd buy DH the Landrover he wants (but not in blue - yuck).

Debts, pay those off - probably should have been my first thought.

Go on a cruise or not, 1 toddler, 1 baby and 2 adults - none of whom, with the exception of DH can swim. So maybe a beach holiday.

More children. Or not.

Ah yes, pay off the mortgage.

Oh and DH likes to have a 'safety net' so we'd have to have some in savings and shares.

DH keeps banging on about his job, so he could either take a lower paying one (he'll probably say this isn't possible) or retrain as something else.

Ah, how I envy you. This is the best part about people dying. Unfortunately, I have no family and DH's got a rather large one so I highly doubt we'll ever inherit.

Never mind, DH has got a pretty well paid job. Bugger, I've probably just tempted fate now and he'll be sacked.

see this is what's making me so indecisive, i'm leaning to pavlov's thinking.

however, i already only do 20 hours at work. and i don't start work til 5pm, so i do see a lot of the children, just not tea time or bed time which up until now has been fine, but dd starts school in september

i couldn't realistically cut my hours more due to the nature of my role, i'm a line manager so really have to be there for a decent ish amount of time to do what's needed. i already reduced from full time and went to evenings when dd was born.

just as i think YES, mortgage it is, that little wobble pops up again..

oh no someone's brought up the 2nd property conundrum again. see i think i do like that. buy small house outright, rent it out to cover mortgage on this one. still have other house to sell on in at retirement, plus equity in this house. interesting if you add in the option to downsize later on. BUT, i won't be saving the fortune in mortgage interest, and i'd still be paying til i'm 50+... of ffs!

and whoever said lucky, well believe me this really is the only luck i've had in my life, don't be too envious, you wouldn't want everything that came before it!

Do something lovely to treat yourself and your family - a real 'memory maker' sort of holiday perhaps?

Than use balance of funds to pay down debts and the mortgage.

Once the mortgage is paid off, then you can start contributing monthly (in a significant way) to pension/savings etc. You'll also, as someone said earlier, be in a position to 'retire' early, knowing your financial future is completely secure.

Mortgage Free/Debt Free = Complete Freedom and peace of mind, imo.

That is what I'd go for every time.

if you go down the buy to rent option, don't use the money to buy outright, pay off your own mortgage and use a mortgage to buy the rental.

1. you'll get tax relief on the interest for the rental property and not for your own.
2. your own home is more secure without the mortgage, if things went tits up which house would you rather be up for repossession?

very true squirrels

so much to think about.

I think you'd be better off buying shares. The market is still fairly depressed and if you are looking for a long term investment, it has the chance of really increasing the value of your inheritance. I've got a TD Waterhouse share ISA, which allows you to trade online.

There are some good shares - RBS is around 50p, LLoyds at c.70p. It's not unreasonable to expect they will double in value. At their height, RBS were £4. Stick to FTSE100 and you should be OK. You could double/triple the value of your investment, which is unlikely on property.

BUT, of course, this is a medium risk investment and shares can go down as well as up.

Food for thought !

I agree that paying off high interest debts, and then the mortgage is the best idea.
At the moment you are paying your bank for borrowing the money from them. I would pay off as much as you can and then re-borrow if at a later date you decide that you want to do something else with it, rather than leave the money sitting in an account in case you want it.

BP shares are cheap just now...

Probably B.

Although depends how much disposable income you generally have anyway. Is it enough to be able to buy a new pair of shoes you like without worrying, etc.

I'd quite like the idea of just having some in a high interest account to be able to dip into as and when I needed. Wouldn't have to worry if needed a new boiler, car repairs, etc unexpectedly.

So I'd probably pay off the car loam, pay some of the mortgage off but not as much as you suggest, maybe 25k but keep term the same. See if I could drop one day a week at work. Then keep rest of money for stuff like emergencies, uni funds for kids, etc.

(1) Pay the inheritance tax (sorry).
(2) If you do not have a pension but a shitload of annuities
(3) If you do have a pension pay off your mortgage first and any debts, then top up your pension.
(4) Save 10% of the capital up for frivolous things.

buy not but annuities. Actually look at a SIPP.

1. Most expensive debts first
2. Then mortgage.
3. Anything you'd want to do with your home? A new kitchen? A new bathroom? A loft extension?
4. A lasting personal item that can be an inheritance -- a beautiful piece of furniture or similar
5. Kids
6. Charity

Re keeping some back for a rainy day -- I'd get an offset mortgage eg First Direct's new tracker with the very good rate, and then you can always get hold of the money if you need to. I love my First Direct account, me. Only bank I've ever liked.

I would pay off mortgage

we were practically mortgage free by 40 and its WONDERFUL. Unfortunately we had to do it through having several jobs and saving hard rather then inheritance or lottery win

That gave us enough incoem to pay off all other debts (car , credit cards etc) so we are now debt free.

We also have no school fees and only minimal childcare costs ( £100 a month) so i can afford to work p/t now

I think we're all agreed that the only sensible, stress-free option would be to give it to me.