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Original poster

What would you do with 100k

102 replies

Smarshian · 12/01/2021 20:42

We do not want to move house. Early 30s, 2 DC in nursery, DD due to start school is Sept, DS gets 30 free hours in Sept. currently pay around £1k/month for childcare. I work 4 days and earn around 30k. DH works FT and earns around 45k plus bonuses.
We have a mortgage with 32 years remaining and a balance of around 225k. Nothing we particularly want to spend on, although we may want to upgrade one of the cars soon and in around 2/3 years thinking of a Disney trip.
I have a civil service pension, although have only been there for around 3 months. DH has a great DB pension through work. Both putting in above the minimum.
What to do with the money? Mortgage? Investments? What would you do in our situation.

OP posts:
Lightsabre · 13/01/2021 13:48

In addition, with the money you save monthly on the mortgage, put it into a children's stocks and shares ISA - £200 a month each should see good growth after 15 years.

AcerLady · 13/01/2021 13:51

I

HollowTalk · 13/01/2021 13:51

They'd do far better saving for their own pensions rather than saving so much for their children, though.

StillGoingToWork · 13/01/2021 13:51

Put aside some for the kids higher education/driving lessons and car each.
Holiday (when permitted)
Settle any debts and overpay the mortgage.

dreamadream1 · 13/01/2021 13:57

Invest in my children (it I had some) some savings in an account for them, clear my debts, have a nice holiday and put down a deposit on a house. A girl can dream 😂

WombatChocolate · 13/01/2021 16:30

I’d put at least half into the mortgage. That could be mean you reduce the term and stick with your current payment levels, or that your monthly payments are reduced. The first would save you more money over time, but the second might feel more if a middle ground if you’re feeling you need to live a little more now.

How about keeping £20k for living a little treats. You could have a big holiday or two or three smaller holidays plus have several £k left for decent treats like new bikes for children or electronic devices or new carpets or whatever makes you feel like you’re not scrimping. Then you can still pay £80k off the mortgage.

I would say it is actually quite easy to fritter £100k or to not use it to deliver a true long term gain to your family. The true long term gains can come from making changes to your mortgage which mean you don’t spend so much monthly on it (good if things are just too tight currently) and so day to day life is just a bit easier. Or, the best money saving thing long term is using it to reduce the term and maintaining your current payments....as they will be paying a smaller amount, you will effectively be overpaying the smaller amount and should be able to clear it much faster, on top if the reduction you already achieve due to the big payment.

Try to take a longer term view with the vast majority if that money so you really get a big gain from it, rather than it all going on holidays and bifold doors and things which essentially leave you in exactly the same financial situation as you are now. Currently your mortgage is very long. It would be good to reduce it.

WombatChocolate · 13/01/2021 16:37

You do t want to look back on this £100k in 20 years time when the kids are adults and think to yourself you wish you’d done something different with it.
It’s at that point that you would like to have more financial flexibility to perhaps help the kids out with a property purchase, or consider going part time or retiring yourself. You can actually make those choices so much easier if you have cleaned your mortgage and all your salary is for spending, saving and pensions. The difference you see in people in their 50s and 60s who are mortgage free and those who still have a chunky mortgage is huge, those free if it are boosting their pensions, having great holidays alone or with their kids, helping their kids into the property ladder and cutting down work if they want to.

Y67b · 13/01/2021 16:37

I would keep your mortgage payments the same but use some to reduce the term.

Unless you're planning anything extravagant like private school or investment property I would have a think about what can make your lives better over the next few years. Time with tiny children is absolutely precious and they really really need you when they start school so as short a work day as possible, get a cleaner etc to free up family time. Lots of holidays that you will all actually enjoy. Extra curricular classes if they're interested etc.

I would avoid buy to let as the returns aren't great at the moment and it's a lot of pressure

RavingAnnie · 13/01/2021 16:40

That's a very long mortgage term, I would be looking to overpay that as much as possible (without incurring fees).

Do you have an emergency fund of 3-6 months outgoings? If not set that up and save in cash or premium bonds? You should have this before paying down the mortgage.

Do you have money saved for house maintenance or refurbishments?

Any other bigger purchases you might need in the future (eg replacing home furnishings?)

Original poster
Smarshian · 13/01/2021 21:02

The house is a new build so don’t foresee needing any major repairs in the next few years and not planning any more kids.
Think we have decided to reduce term on mortgage. I already work pretty flexibly so I am around to pick the kids up at 3.30 so they don’t have excessively long days at nursery.

OP posts:
IdblowJonSnow · 13/01/2021 21:08

Right now I'd run away!
It's funny how we dream of these things but when you get it it doesn't feel how you imagined.
We bought a 'new' second hand car and out the rest into mortgage. I feel sad we didnt do something more inspiring with a bit of it bit really it was given with that in mind so it was the right thing to do.

waterandlemonjuice · 13/01/2021 21:15

I’d put £75k to reduce the mortgage, have a holiday next year and save the rest. Kids don’t get cheaper!

Nix32 · 13/01/2021 21:17

We're in a similar position, except the money had already been invested - it's been transferred to me. It's in an investment fund which has an average growth of 6%. I can withdraw 5% of the capital annually, tax free. If I don't claim it, it rolls over each year. It's been in my name for a couple of years and I'm only just about to use a tiny percentage of it. I feel an enormous responsibility to use it wisely.

harknesswitch · 13/01/2021 21:25

Put 10k each in a trust fund for the dc, pay off any debts and what's left I'd pay off the mortgage

Dawnlassie · 13/01/2021 21:36

£50k off the mortgage and reduce term
£10k for each kid into high interest accounts
£20k into blue chips
£10k into shit or boom AIM stocks ISA

Tiny2222 · 13/01/2021 21:43

@chipsandpeas

75k paid off the mortgage 10K on a holiday to disney keep 15k back for savings/towards home improvements/new car

by paying off the mortgage id reduce the term rather than payments

I would do exactly this! Imagine being mortgage free and the types of holidays you could go on!
WombatChocolate · 14/01/2021 08:37

Good choice Op.
Hope knowing you’ve knocked over a decade off your mortgage gives you some deep-seated satisfaction now and lots of flexibility further down the line.
Enjoy! And perhaps keep a sum of £5-10k for bigger luxuries you might not otherwise have too. That way you’ll get some immediate gratification.

SFHJ · 14/01/2021 18:22

I would overpay the max allowed for this year, ours is 10% so that would be 22500, 50k in premium bonds, 10k to each of the kids and then the rest as an emergency pot, maybe then next year use the full annual allowance again from bonds

Original poster
Smarshian · 14/01/2021 20:28

So as luck would have it we have been able to overpay 10% this week and then can do another 10% in 10 days as the New Years allowance is then. So we will overpay that and then reduce the term I think.

OP posts:
EuroTrashed · 14/01/2021 20:35

By the way - there is absolutely NO inheritance tax impact for you as recipient of this gift of the donor does within 7 years. There is a tapering impact on the estate of the donor - the estate pays the tax, not the person who received a gift years before.

SatsumasOrClementines · 14/01/2021 20:53

Sounds sensible OP.

I would give a grand to a small charity if it were me. In the bigger picture it would only be 1% of money that I wasn’t even expecting anyway and 1k could make a massive difference to someone. I would feel nice for paying it forward.

Original poster
Smarshian · 14/01/2021 20:53

I am interested in the implications of this - I will be a beneficiary of the will (it is a gift from my dad and I will inherit around 50% of his estate)

OP posts:
kittycorner · 15/01/2021 04:38

I would firstly make sure I had 6 months expenses in emergency fund (maybe 20k?). Next pay off 50k off mortgage and then 10k into each child's education fund which should if you add a small amount monthly pay Uni fees when of age. Finally last 10k I'd do things to enjoy life and make it easier.

kittycorner · 15/01/2021 04:38

Yes, and also give to charity. Maybe 1k to food bank. The need is massive right now.

LongIslandIcedT · 15/01/2021 05:31

I'd put it into a holiday cottage. It's our next plan.