What to do with your inheritance when you're skint, and really bad with money!

[JamesAndTheGiantBanana]

I should be getting an amount of money from the sale of my parents house, sometime in the next year (we've got to give it the kim n aggie treatment, decorate and get it up for sale/sold first) not sure how much but realistically it'll be in the region of £30K.

We are and have always been skint, we've never been on holiday, haven't even got passports, I don't drive, we rent, we have no savings, plenty of debt. Obviously the first thing we'll do is pay off all our debts which will probably take up about £10k straight away. Not sure what to do with the rest of it and I'm chronically bad with money, I've never budgeted in my life. Not sure what to do with this money, I've got this horrible feeling that if I'm not careful it'll be gone within a year with precious little to show for it except a few more clothes, a new car and tumble dryer, and a hundred meals out... help!

Oh, and if anyone can offer any advice on what to do in the meantime while we're waiting for the money to come through, to make things easier (we are sooo skint) like if there are any loans, credit cards or whatever which you don't have to start paying off for a year, that'd be great too. Thanks in advance!

I alway recommend this site but it really is good

www.moneysavingexpert.com/family/money-help

Tell us a bit more about yourself/your situation:

• do you have dc? If so, how many and what ages?
• is your rental place stable and secure?
• How did you get into debt? What does your debt consist of?
• Do you and your dp/dh earn, and if so, can you live off what you earn?
• How much 'extra' do you have a month after expenses are paid?
• How old are you?
• Do you/dp have a pension through work?

Last question (for now ) - rather than sell your parent's house, would you consider living there with your dp (and any dc) so you could get out of renting?

Start keeping a log of what you are spending money on, if you understand your spending patterns you can see what opportunities you have to make changes. Debt is a huge drain, and you may find that once it is cleared you can manage without it.

Earlybird asks some really pertinent questions.

I have two dc, 1 & 4, rental place is stable and secure but we will have to move eventually as it's not big enough. We got into debt by just continuously not having very much money, moving lots of times, never budgeting and I suppose by having kids before we were established enough, so we had to take out lots of small loans, overdrafts, credit cards etc to pay bills and sort out unexpected things like car problems. We probably pay between £150 and £200 a month on debt alone.

My oh works full time, I am a sahm for now, I'll go back to work eventually but I don't have a job to go back to iyswim. We currently live off what my other half earns. Budget sheets always tell me that technically we could live within our means although it would be tight, but it never seems to work out that way and I always find myself selling things and trying to come to arrangements with companies to pay them back over a year etc. We don't really have any extra after expenses are paid. I'm 31, no pensions.

We can't live at my parents house as I have siblings and the proceeds from the house are being split between us all, and the gc, as part of the will.

I would pay debts off, spend money on moving to a bigger house and household items that you need. That would give you a clean slate and better living accomodation so even if that swallowed all the money it would not be a waste. You should have enough left to pay for a cheap family hol/weekend away and maybe put a couple of thousand away in a high interest account that you cant touch too easily. Then make a proper budget and stick to it, should be easier with £200 a month not going on debt.

"if anyone can offer any advice on what to do in the meantime"

You could potentially transfer any CC balances to a card offereing 0% interest for 12 months. Will cost you about 3% of the balance typically but then you'd have to be very conscientious about not using the CC for anything else & meeting the minimum payment or higher each month. A consolidation loan is another possible. When you get your inheritance you would then pay off the balance. NB You may not be able to consolidate if you have a history of having to make arrangements with creditors.

In the meantime treat the time until you get the inheritance as a crash course in budgeting and money management. I always recommend the free download Microsoft Money Plus Sunset Deluxe as I find it a really good way to keep detailed track of income and outgoings.

At the same time, go through all your regular outgoings like utility bills, insurance and so on. Using comparison sites see if you can get a better deal on all of them. A £10 saving here and a £5 saving there can quickly add up. Repeat every six months or so. Moneysavingexpert has lots of other tips on how to save money and how to budget

Once you've spent 12 months getting to grips with your finances you will find that you are much more careful once you get the lump sum. After you've paid off your debts I would suggest you lock at least half the money away in an account that requires notice or something like a 3 year bond so that you are not tempted to spend it straight away. Put what's left into a tax-free Cash ISA but go for a postal account rather than an internet one so that you have to think about it before you take money out. If you're not good with money, a few barriers can be a lifesaver