Husband used our savings - what to do now?

[BojoGo]

A WWYD question with a bit of context. Sorry this is long. Also I know a lot of this is first world problems as we are both employed and not on benefits so very fortunate and I know so many are struggling worse than us. I don't mean to sound entitled and I hope that I am not.

My husband works in a job that has bonuses awarded annually for exceptional work. Last year he was awarded the top bonus which after tax came to around £20k. He was notified about the bonus at Xmas and the money came through in Jan. We were v happy as whilst we both work we have DC and like everyone the usual costs and the money was going to make a huge difference to us. We had a historical loan which we've been paying off, and our plan is to eventually get a family home (we are currently saving for a larger deposit) but where we live (SE) family homes are expensive.

Anyway we talked through how we would allocate the money to pay off our loan quicker and reduce our monthly outgoings which would be a massive burden off our shoulders and allow us to start setting money aside each month for deposit savings, and a tiny bit for a well earned holiday as we had our DC in Covid and like everyone were very keen to get a break.

In January, without my knowledge my husband invested the lions share of the money in some stocks and shares, crypto and NFTs. At the time he says he was convinced this was a no brainer as everything was on the up. Then Ukraine happened and stocks and shares / crypto plummeted. Long story short, we still have the investments but they are now worth a tiny fraction of when he invested, so we can't withdraw the money.

He confessed what he had done at the time. Needless to say I was absolutely bloody furious, hurt, betrayed that he had made this unilateral decision, and without talking to me. His actions have meant that instead of that little bit of security we now have no back up. We now have continued loan repayments each month where we could have got rid of those. It also affects our credit rating which is not great and if we had paid off our loan we would have been able to bring it up quicker. Now we are in a precarious position I feel in terms of credit rating / seeking larger mortgage in the future. Above all I am someone who feels very insecure without a little bit of savings set aside in case of disaster / redundancy / unexpected events.

At the time in Feb we had a major falling out and I took time to absorb what he'd done. He was absolutely out of order and I was livid. He was never trying to justify his actions. He said he had been bloody stupid, and he let ideas of investing in crypto run away with him, and stupidly thought we would double our money as things looked so good in Jan. He accepts that regardless, he should have spoken to me. He apologises every week and feels bad. I'm still pissed off as what with cost of living we are having to really cut back even more now and have zero money for extras. First world problems I know, as we are just about able to pay our monthly mortgage and bills as it stands, but we are really having to cut back in our outgoings, groceries etc. We won't be able to have our longed for holiday this year, and are struggling to afford any extras at all such as haircuts, dd birthday etc. I know many people are in this position, so don't mean to sound entitled at all. But it's so frustrating as we had the money and didn't need to be in this position.

Anyway I've had to decide whether to keep being angry or move forward. I take my marriage vows seriously and whilst he's been a total idiot and disrespected us, at the same time I know in his stupid mind at the time he thought he was helping our family. He is beyond remorseful and everyone makes mistakes. So I'm now trying to move forward with him as a team.

There is a possibility that husband might be awarded another bonus next January. Times are hard so we are not banking on his company doing do, but he had his annual review and his manager said it looks very likely as he's had another great year, is a top performer at work and never has time off etc. If he did receive the next bonus that would obviously be great, but a) it's not until January and b) no guarantees. Husband says he would pay the whole lot into my account. He's not going to make the same mistake again as he's learnt his lesson but wants me to 100% trust him.

So in the meantime we have no savings, no extras, and loan repayments every month. It's feeling really difficult and I'm always scared in case an unexpected thing comes up.

This brings me to my question. Throughout all of this drama I have forgotten that a few years ago before we got married I put £5000 in an ISA account. As I said I can't sleep at night if I know there's no rainy day money, so hence I did this and promptly left it. I didn't think about it as in my mind it was a little nest egg not to be touched. I can't believe I forgot about it but I did. I don't receive letters about it and haven't looked at the online app for a year or so. However i received a notification and I've just checked and it's still there. I haven't told husband yet - plan to do so later but just want to get my thoughts straight.

Do we withdraw this money to pay down our loan and get our monthly repayments down? Or do I leave the £5k in the ISA so we have an emergency fund? I'm torn as it gives us that buffer in case of emergency but on the other hand getting our loan down would help us out each month so much.

I know husband will immediately say pay down the loan, as the repayments are stressing us both out, and he doesn't have the same mentality as me about having a safety net in savings.

What with cost of living crisis I am getting scared basically. Thanks for reading if you got this far.

He made an error but im sure he will make better choices next time. Don't be too hard on him. I had a windfall of 10k last year and spent it in a year, despite my best efforts

You both need debt advice and money management lessons and better communication about money.

Tell your DH. Pay £4k off the loan, keep the other £1k plus interest as a rainy day fund.

Jointly review the investments and assess their long term historical performance I.e. 10 years+. Do some research as to whether they are worth hanging onto or cutting your losses. If they are now worth £10k I would consider cashing in as that’s a lot of money, but if they worth £1-2k I would hold onto them and just check annually.

@Hallyup89
Ah, come on, that's a bit nasty and unjustified.........🙁

While normally I'd agree with the people who say you should pay down debt as fast as you can rather than saving, that is predicated on somebody having an emergency fund. What if your roof started leaking or your boiler blew or you had a large car bill etc. I'd keep quiet about the £5,000 and keep that as emergency fund. This is entirely different to you and your husband agreeing what to do with money and him being fool enough to dabble in things he didn't understand. The time when everybody and their dog think its the ideal time to invest in something is not the ideal time because the peak is already past. Your husband knew you wouldn't agree to the investments he had in mind so he didn't tell you. That's all there is to it.

I would go through all your expenses very carefully. Are there any subscriptions that could be cancelled? Can you negotiate lower rates of anything? Do you have expensive cellphone plans? Do you have any expensive equipment that you don't use much and could sell? It's not worth selling jewellery largely because the amount you'd get is fairly minimal unless you have really serious diamonds. I'd be buying any larger size clothes for the children in op shops - I did that when my children were young. I even cut their hair from a book with step by step instructions. I'd try and cut down any extras for the children during the year - cancel or investigate cheaper options. Can you switch to a cheaper supermarket and/or buy supermarket brands?

You say that if you wouldn't have debt, you'd have more breathing room. Would that mean that you'll spend that money? Because then you'll be down the 5k since you eon't save it up again.

Get rid of the loan. That in itself will settle your head a lot.

Terrible time to pull any investments out right now, the markets are down but will recover (historically, they always do).

I'd avoid pulling out investments at a loss and manage the loan repayments. It sounds like you need to sit down and really figure out your spending as your DH sounds like a high earner but you have debt and you're struggling to make ends meet? That's not normal

That’s not necessarily true, the rule is you invest and hold long term and the markets goes up and done but over time always goes up when you average out the volatility.

Only investing the amount you can afford to lose will mean you will most likely not ever build wealth through investing.

Your advice applies to volatile investments like crypto though as the majority if not all do not understand it and are just speculating.

‘Afford to lose’ means extra money as opposed to cash you’d need instant access to. It doesn’t mean cash you won’t miss at all, like spare change down the back of a sofa.

Say I already have enough of a living expense buffer for 6 months, and have 5K extra. Of course I’d miss the 5K if it dropped, im not a millionaire. But I wouldn’t be in particularly dire straits either.

How about using half of your £5k to pay off a portion of the loan, then could the rest be transferred into an interest free credit card?

Then what you save on interest on the loan you can save towards moving in future.

Anything invested in the stock market should be looked at as a long term investment, so five years plus. We are using it to save for the DC's university costs- I started about four years ago and we've got at least five years until the older one goes (and at least eleven years until the younger one finishes).

But when we were saving for a house extension that was much sooner we kept it in cash and premium bonds (if you have enough and average luck you can usually match a cash savings account and always have the chance of a big win!). So the cash was never at risk but we were never going to get massive gains on it either (and I never got more than a £25 win on the premium bonds but I did actually get enough wins that it beat the money I had in a Best Buy savings account).

And take this chance to do a full financial MOT- work out a full budget, look where you could make savings, are there Direct Debits going out for things you no longer need, could you cut your food bills with meal planning, cut your petrol bills by driving less often and more economically etc.

To answer a few questions, no we don't have free childcare. We are paying a lot for nursery fees. No family to help. I work a condensed week to care for them 1 day and try to keep childcare costs down. Obviously we are at that horrible phase of young children where childcare is through the roof but once they start school things will be easier.

Husbands salary is more like 45 so it's not an equal split. He works in a sales type role so there's a lot of emphasis on bonus as a commission type incentive compared to some office jobs I imagine.

Yes we have a joint account. No he hasn't done anything like this before.

I would cut him some slack. Yes it was a mistake to invest if you wanted the money in the short term, but it's done now, and it's a lesson. If he makes it again that's a hard no. But lots and lots of people make this mistake at the beginning of their investing journey, it's not divorce worthy in and of itself.

Leave it all in, the shares at least will hopefully come back in time. The crypto is less certain.

Use this whole experience as grist for learning. Get on Reddit UKPersonalFinance and see the flowchart. Listen to the MeaningfulMoney podcast. And get communicating better. Make a joint financial strategy and stick to it. What about pensions etc? Really use this to talk together and get your financial house in order. In a sense, if it prompts you to do this and do it well, it is probably worth the money in the long term, costing less to make this mistake then get a grip, than to leave these issues untended for several more years.

Re the 5k. I personally would use the 5k to pay off the loan, but then redirect at least some loan repayments to building up your emergency fund, with a plan to use a 0% credit card for any emergencies until next Jan. It's only 6 months. Then you can move forwards.

Crypto and NFTs always recover? You know that that’s not true.

Sorry, I was the one who said your thinking seems disorganized.

Personally, I’d be throwing everything at the debt because I know how much a debt can suck you down. So, bonuses, the ISA, any extra money. The debt would be my priority.

Then, I’d start thinking about building up savings and paying for holidays and fun stuff.

But, it seems crazy to me to sit on money while you are paying interest on a loan.

I also think anyone would be furious about what your husband did, but it can’t be undone so make the best of it and move on. If he ever does something like this again though…

I also agree with not cashing out the crypto and NFT yet. It may recover a little in the future. Maybe not to it’s full strength. But, it makes no sense to cash out when it’s so low.

The loan will cost more than savings will ever earn but, tbh, you can't deprive yourself of a running away fund.

I wouldn't be too cross about his investments - just sit tight and they will likely go up again in the longer term. He could consider you have also not been upfront about savings you had put away - although I appreciate it was from before you were married. It isn't an insignificant amount and could potentially have enabled you to reduce the loan amount years ago and saved you interest.

Until you said he doesn't have the same savings mentality as you I'd have said that you should pay off to your debts. Knowing he doesn't value savings I'd 'forget'it too. One of the reasons I divorced my xh is because he lied about money. Go carefully op.