How can I save £10 000?

[theduchessstill]

I have recently divorced and will have to pay ex £10 000 in 13 years when ds2 is 21 as part of the financial settlement. He is also getting about £13 000 now from the house, but isn’t touching my pension.

I now need a plan to ensure I have the £10K when needed. I don’t want to be forced into selling the house at that point, and not sure that would be reliable anyway as there will be about 10 years still left on the mortgage and I will be well into my 50s.

At the moment I have no savings as such as we never had any when married and I have kept all money in my current account in order to pay solicitor’s fees etc while divorcing. However, I do have a fair bit left over each month (£2K) so need to get organised. What would be the quickest, most efficient way for me to save this amount so it doesn’t hang over me or come back and bite me? Tia for any advice.

You only need to save £64 a month. Open a new bank account that you don't touch. Set up a standing order to it and try not to think about it x

If you have £2k left over each month I don't really see what your problem is ??

Personally I would be putting any truely spare cash onto the mortgage to pay off early, and also save the £10k in time for the repayment.

Your ex is going to wait 13 years for a fixed sum of £10K?

First are you sure it's a fixed sum - I know someone who was caught out by that. I wouldn't have been happy to agree to letting 13 years of inflation degrade the money I was owed.

When you say you've got £2K spare a month, do you mean after all essential bills? That's loads.

You have no savings which is bad.

What I would do is put £10K into an ISA over the next year from your high excess income. That would give you the start of your safety net of savings - it's earmarked for him, but you can use it if you have a real emergency before then. Go for a medium risk level stocks and shares ISA. Keep an eye on it and "lifestyle it" (switch to lower risk fund when it's close to payout time) And enjoy the fact that in 13 years time you'll probably have the gain of the interest from it, whilst he gets £10K with much lower purchasing power than it had this year.

Actually, given your £2K excess, I'd save it as quickly as possible.
Then lie to him next year and say your mum has offered to give you £8K to pay him off so it's not hanging over you both.
If I were him, I'd take £8K now over £10K with 13 years of inflation eating away at it. Bird in the hand.

5 months of £2k = £10k.... or am I missing something here.

I would look to see if you can overpay on your mortgage too! Mortgage interest is the biggest drain on your income.

If it is a fixed sum just save the money each month and hand it over when it's saved.

Do check the figure isn't adjusted for inflation though, it's rare that the settlement would be a £ rather than a %. A % changes over time.

Put 2k into a savings account every month for 5 months? Or am I missing something?

Definitely a fixed sum - my solicitor advised me to accept the offer as it wasn't a % and that would definitely be the amount. He is waiting but will also get £13k this month as soon as the transfer of equity is sorted.

There were no other assets, apart from my pension, which was probably our biggest asset but he was always adamant he wouldn't touch that.

£23K for doing nothing and wrecking our marriage seems a good deal to me, and he pays nothing for the dc.

Thanks so much for the advice - I don't understand ISAs but obviously need to look into them. Is there a minimum amount to open one? My income looks good, but is not that great and I have no one to rely on apart from me so I hate having this hanging over me and want to build up savings, rather than have to put it all aside for loser-man.

I think I'm doing ok, then I remember university fees and feel sick to my stomach...

Ah, pays nothing for the DC?
Is he in a job where you can get an attachment of earnings?
Because if so, I'd do that until the £10K was saved

You can open an ISA for a £1!
You could save in a NatWest fixed interest 2 year ISA with 0.6% interest. That's pitiful interest - but it's all yours, not his.

Google any bank's website and it'll explain ISAs. It's up to you how much risk you want to take.
Even though it's not financially the best thing to do, you might be happier to save £10K as quick as you can and just pay him off. Emotional state has a value too! Or you may prefer to sit on £10K knowing that he was being made to wait. Honestly, I would waver between the two "here's your money, now fuck off" and "ha ha ha fuck you, you can wait"

So think about what's best for you emotionally as well as financially.

I think I'd sit on it and save it though. You never know what will happen over 13 years.

University fees is the last thing you should allow to stress you! They may not go, and if they do it's not the end of the world to pay for themselves.

I do understand the stress of being the sole provider.

Just keep saving - you have enough money to do so. Save the £10K, and more.

But do sort out the child maintenance!

Overpay the mortgage, big time, so tht is paid off asap. Pay into a pension for yourself as the gov are currently adding 20 or 40% to your contributions taxfree and you can take it all back out as a lump sum should you need it, e.g. to pay for uni.

Set up a standing order for 1k for 10 months into NSandI premium bonds to get the 10k sequestered away and it can sit there waiting for ex whilst potentially winning money for you and dc.

Ps, you can always get mortgage overpayments back should the shit hit the fan at some point.

You can't definitely get over payments back.
If it's an offset account, you have complete freedom.
And of course overpaying means you're theoretically able to remortgage as your LTV improves.
But you cannot say to your bank "I want my over payment back". You don't even have the right to insist on a temporary stop in payments whilst you're in overpayment. Not unless you have a specific product with a guaranteed withdrawing facility.
On an ordinary mortgage, the minute you over pay, that money is gone.

And the OP can't necessarily just withdraw it from a personal pension.

Although she'll be "well into" her 50s when the money is due, based on her current age it's likely she'll only have pension access age 57, or possible state pension age -10 years (now 58).

And the withdrawal would be taxed.

And it might not be a good idea to withdraw a small sum at that time as going into draw down could have implications on future pension contribution tax relief. Currently OP can claim tax relief on up to £40K contributions or her annual earned income if lower. If she goes into drawdown on the pension, her maximum amount on which she can get tax relief becomes just £4K pa. if she's still working with an employer contribution, that could mean a lot of lost tax relief.

Pension and mortgage are my default places for putting extra money, I don't disagree with that in principle. But you have to understand all the implications!

Have a look at offset mortgages- we have one with first direct which has been brilliant. Also gives you access to your money if you need it.

Def see a financial advisor we had a shortfall on our mortgage so invested with medium risk and it made quite a bit quickly

If you want to save for the DC open an ISA in their names too - they will have access to it at 18 though!

Check terms of mortgage - some allow to overpay without penalty and allow you to draw it back down but they are all different.

I think you would benefit from seeing an independent financial advisor to look at everything including offset mortgages. Def save as much as you can whilst you can to safeguard against future redundancy and ill health.

Make a plan.

General plan would be:

Have a small emergency fund.
Pay off all consumer debt.
Build up big emergency fund.
Pay off mortgage and your ex, whilst saving for retirement and college/uni.

Your ex's £10k is an unsecured loan effectively with a 0% interest. So I would not make it a priority but I would tackle it after anything else you might owe. I would repay it early, get ex off your back. You don't want it hanging over you for 13 years!

With £2k spare per month you have the ability to save up quite a lot over a few years. Some bank current accounts give a better rate of interest than a cash ISA at the moment, so you may initially want to look at those.

I would open a new savings account and set up a regular payment of £65 a month to it...then forget it, that's covered.

Plan to pay off debts/save for emergencies etc separately, from your remaining income.

What I would do in your position...

£2k left over each month.
£1k each month into an account for the £10k. You'd have the £10k in 10 months. Make him wait 13 years and keep the interest gained from it.

The remaining £1k a month, either put into savings or overpay the mortgage. Or £500 each month into both.

Save 1k a month for the next 23 months to replenish the money taken from the house too.

The sneaky suggestion of offering 8k next year as full and final settlement is worth thinking about.

Also I'm sure if the court said no maintenance you can go to cms next year for it to be paid. I thought the court could only make a 1 year judgement on child maintenance - worth posting in legal.