WWYD in my situation if you came into £120k?

[WWYD12345]

Married with one DC
DH and I are 29-32
Mortgage with 20 years left and £230k to go (£100k equity)
Own one car outright
PCP on another car with payment of £10k needed in 18 months to keep it
Circa £5k in savings
I pay into a defined benefit pension
DH pays into a defined contribution pension
I have student loan of about £18k, pre 2012 version

Is paying a chunk off the mortgage, putting money aside to buy the second car outright and then putting a chunk in savings a sensible plan?

Would anyone do much different?

first 6 months living expenses in a savings account assuming no debts bar car/ mortgage and student loan
another 10K in car account either to buy current car or to enable next car to be a cash purchase
anouther 10K for long term treats ie holidays etc
get advice on investments / better pension for DH / paying off mortgage etc or some combination
do not commit too soon you can put in ISA or premium bonds while you think it doesn't matter if you don't decide for months
A lot more people than you think have to give up work before retirment age due to ill health / injury / burn out etc or take a part time much lower paid job I would advise not tying up all money so it is
inaccessible before 67 or inaccessible because you put it in your child's name ( i would put about 5000 in an account for them at 18 with interest it will be a nice sum without the opportunity to waste too much but could fund a car or a gap year)
paying off some mortgage early not on;y reduces your monthly payments so freeing up money to invest etc, but also means you are reducing term of remaining mortgage perhaps quicker as more of the money is paying capital not interest
BTL is more trouble than its worth if you ask me unless it is very close at hand and your are very handy so can fix any problems quickly and you never get nightmare tenants
so in summary
1 another 5-10K savings 6 months living 12 months if DH job vulnerable

1. 5-10K holiday treats
2. 10K car
3. 50K mortgage

5 5k child account

1. 30K investments
2. 10K trickle into DH pension and then use some savings from mortgage to increase monthly payments
3. Consider permanent health insurance especially for DH as NHS normally quite good at paying out early retirement for ill health

There's someone on every single inheritance thread that strongly recommends BTL and I make it my mission to put the counter-arguments every time too

It's strange isn't it, considering how much Mumsnet hates landlords? Every time someone asks for what to do with £50k/£100k etc, someone always suggests buying property to rent out.

Definitely allow yourselves to possibly buy a treat, like a slightly nicer holiday or newer tech, but don't spend for the sake of it. Just keep the money in savings until you think of something.

Absolutely. And I wouldn't blow £10K on a holiday. And definitely not on a Disney holiday or something focussed on part of the family rather than everyone.

£120K is a good amount of money but when you're young it is not loads - it won't change your life. So I wouldn't blow any of it. By all means, splurge £1K on something (a great weekend somewhere, a catered party at home, etc) but I'd rather make nearly all of it work hard to reap the benefits later.

I would consult a financial planner. They will assess your assets, pensions, attitude to risk and advise accordingly.

I know mortgage debt is cheap. You will probably make more by investing than the interest on the mortgage.

I would invest it - no point in paying if the mortgage with interest rates where they are

In terms of how I would inverse - I would buy a holiday home somewhere I would use it amd Airbnb it the rest of the time

one DC - I would put some in to a Junior ISA intended for their higher education, or going towards a car or home deposit. You can put up to £9k in per year.

PCP on car - I would ask for a settlement figure, see if you can get something less than it would cost you to keep going to the end of the agreement and then buying it. They pay not offer anything good, so put money aside to pay it off at the end of the agreement if you intend to keep the car.

Circa £5k in savings - that sounds a bit low. I would bump that up to being 6 months of expenses. You never know when you may need some money to pay for an unexpected expense.

I pay into a defined benefit pension - look at how your change in working hours will affect that.

DH pays into a defined contribution pension - find out how much is being paid in, it may be minimum amount. Aim to bump it to 15% for his contribution.

I have student loan of about £18k, pre 2012 version - as you are employed I would not be in a hurry to pay that but it does depend on your income. Look at student loan calculators to get a feel for how much this is costing you in interest. www.student-loan-calculator.co.uk/

Mortgage wise - it's in two parts, £70k at 2.73% fixed until August 2022 - can you repay £70k in August?

the other £160k fixed at 1.69% until Dec 2025 - I would overpay that at the max you can given the agreement.

Anything left I would invest using your ISA allowances... you and DH have £20k ISA allowance each (assuming none already used). Invest in a global tracker or global mixed investment. Spend some time learning about investing, it's as hard as you may imagine.Podcast: How to choose a mult-asset fund

Depending on how you came into £120k, I would enjoy some of it and give some of it. If it is an inheritance think about how the person giving it would have liked you to use it - spend some, invest some, give some.

I wouldn't pay off my mortgage, especially if you can afford it.

I would pay off the car. If I were you, I would invest most of it into a stocks and shares ISA (£20k a year) for you and your hubby and start an investment pension fund.

@gottakeeponmovin

In terms of how I would inverse - I would buy a holiday home somewhere I would use it amd Airbnb it the rest of the time

I have a holiday home that I let out to holiday makers when I'm not there, and a few rental flats. The latter are way less work than the holiday let from an admin point of view. For possibly similar returns.

An NHS pension is great but you can’t take it until state pension age unless you take a lower amount.

Lots of people don’t want to work for that long, so you could consider opening a SIPP (a personal pension) and putting £10k in there to give you more options in your 60’s - allowing you to either retire earlier or reduce your hours further.

The government will add to it so £10k will immediately become £12.5k, and with the length of time you’d be investing it you could afford to invest it in higher risk funds so it should grow very healthily.

It depends on the scheme in NHS you joined if you are over 50 you may have joined a scheme where you can take it st 60

OP is way under 50 though

I’d pay £90k off the mortgage
£15k set aside for emergency savings
£15k for fun (mainly a few nice holidays)

I probably wouldn’t bother buying the car, £10k is a lot of money to spend on something that’ll lose its value very quickly. I’d probably just continue with monthly payments on a new lease.

Actually, no I change my mind!

I’d put most of it towards a buy to let property. Gives you a second source of income as well as being a good investment.

Do bear in mind that most mortgage companies charge a penalty if you pay off over a certain amount in one year, and it’s pretty hefty. Our limit is £10,000 pa, after which we have to pay a steep sum pro rata.

Personally, I would just squirrel away for the next rainy day.

@LivingLaVidaCovid

Mortgage is cheap debt. I wouldnt pay it off early. It's a false friend. You'll make more investing it.

I'd put 20k into stocks and shares ISA for you and your husband this year. 40k this year and 40k next year.
Remaining 40k I'd use on car a nice holiday (disney?) and paying off the student loans. Anything left I'd pop in children's ISAs

Enjoy your good fortune (although I am guessing it is perhaps the result of a sadder event)

This! Don't pay off your mortgage early for the sake of it.

I also wouldn't put it into his pension. Maybe consider putting it in to your own via AVCs but check it out first.

Invest in ISAs for you and children and savings

It would put it all into mortgage but leave enough for a dream holiday