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What to do with a windfall?
http://www.x404.co.uk/forum/viewtopic.php?f=3&t=11932		 Page 1 of 2
Author:  snowyweston [ Tue Dec 28, 2010 12:17 am ]
Post subject:  What to do with a windfall?
Christmas came a day early for me, my Mum & my sister this year; with my Grandparents prematurely sharing some of the proceeds of their recent house sale. 8-)

Immediately I announced that a good portion of the monies would go toward my 30th birthday plans. But that's not till late November and although I'm still undecided on what "that" plan is*, I'd already set budgeting for it in motion, so I'm thinking maybe I should do something more practical with it in the meantime.

*shortlist is a holiday to Hong Kong with a special friend and/or a group-villa holiday to somewhere-still-sunny like the Amalfi Coast, Sicily or Morocco


Now I know many will jump to "New Year Sales!" suggestions but I've got everything I could ever want/need. Okay sure a new computer might be nice, a TrueHD AV amp would certainly be fun, and I've still not got round to buying me one of the natty four-thirds compacts yet - but I really don't see any of them as clever/essential/life-changing purchases/investments. No, shopping's not for me.

Instead, I'm actually thinking about banking it. Thing is I've no savings whatsover so I see this as a very good foundation stone for starting something. Afterall, I would like to be on the property ladder one day. But alas, I have little-to-no understanding of finance management. The only thing I do know is that I'm not putting it in my current account because it'll only get turned into rent & booze before half the year is up. And that, apart from being an immense waste, would be a crying shame.


So, I guess my open question to you all is, what shall I do with it?
Author:  Spreadie [ Tue Dec 28, 2010 12:28 am ]
Post subject:  Re: What to do with a windfall?
Someone give Amnesia10 a shout...

All I will say is, if you have any debt, clear it. The interest on debt will likely far outstrip any savings interest.
Author:  snowyweston [ Tue Dec 28, 2010 12:44 am ]
Post subject:  Re: What to do with a windfall?
Spreadie wrote:
Someone give Amnesia10 a shout...
Why so? Sorry I've been gone too long...
Spreadie wrote:
All I will say is, if you have any debt,
Sadly I've plenty. So I guess
Spreadie wrote:
clear it. The interest on debt will likely far outstrip any savings interest.
is sound financial advice given the rates* on my loan and credit card.

*I'll post some proper numbers and percentages tomorrow. My maths is pretty ropey at the best of times and although some see it vulgar to discuss money, I'm not embarrased to, especially if it might help.
Author:  ProfessorF [ Tue Dec 28, 2010 12:48 am ]
Post subject:  Re: What to do with a windfall?
Clear your debts, stick as much as you can into an ISA. If there's any left over, enjoy, in moderation of course. ;)
Author:  Amnesia10 [ Tue Dec 28, 2010 9:09 am ]
Post subject:  Re: What to do with a windfall?
ProfessorF wrote:
Clear your debts, stick as much as you can into an ISA. If there's any left over, enjoy, in moderation of course. ;)

Exactly. If you have a large amount then you could do a huge pension top up before the annual caps come in. Then allow yourself a small treat. Something that you would not normally be able to afford. Maybe upgrade a camera or laptop? Think about what you want and take your time.
Author:  hifidelity2 [ Tue Dec 28, 2010 9:51 am ]
Post subject:  Re: What to do with a windfall?
Some numbers

Ave debt interest rates - 17%+
Inflation is around - 3%
Ave savings rates - 1%

So

Pay off all debts - even if that uses up all of the cash. Better to pay off the debts and then re-borrow for the holiday.
As soon as the debts are payed off set up a standing order for the amount of the replayments into a savings account - that way you are saving

Use an ISA
Some regular savings accounts - where you must save the same amount each month for 12 months are paying over 5% (1st Direct is paying 8%) so if you plan that far appart thrn use those accounts as well
Author:  okenobi [ Tue Dec 28, 2010 10:20 am ]
Post subject:  Re: What to do with a windfall?
Agreed.

ISA is the best you can do from a tax standpoint. Stocks and shares ISA was never my favourite as there are better products for either risk aversion, or bigger gains. Cash ISA though is a total win. Though you'll get bugger all interest in virtually any product these days. How much are we talking? Could it be turned into a depo for a buy-to-let?
Author:  finlay666 [ Tue Dec 28, 2010 10:42 am ]
Post subject:  Re: What to do with a windfall?
Clear debts (except student loan)
ISAs/Other savings
Author:  AlunD [ Tue Dec 28, 2010 4:40 pm ]
Post subject:  Re: What to do with a windfall?
snowyweston wrote:
Spreadie wrote:
Someone give Amnesia10 a shout...
Why so? Sorry I've been gone too long...


Cos he's a genius with finance. :D
Author:  tombolt [ Tue Dec 28, 2010 6:56 pm ]
Post subject:  What to do with a windfall?
People never do what makes sense financially necessarily. My credit card debt costs me about 100 quid a month and yet I still have two grand in an ISA. That's earning me about a quid a month in interest, but as it's credit, I always hate the idea of losing it by paying off my credit card debt. Absolutely ludicrous, but that's human nature!
Author:  finlay666 [ Tue Dec 28, 2010 8:14 pm ]
Post subject:  Re: What to do with a windfall?
tombolt wrote:
People never do what makes sense financially necessarily. My credit card debt costs me about 100 quid a month and yet I still have two grand in an ISA. That's earning me about a quid a month in interest, but as it's credit, I always hate the idea of losing it by paying off my credit card debt. Absolutely ludicrous, but that's human nature!


But it makes sense not to reduce the amount that you can put into your ISA and instead pay money directly off the card instead of moving money out of the ISA
Author:  tombolt [ Tue Dec 28, 2010 8:40 pm ]
Post subject:  What to do with a windfall?
finlay666 wrote:
tombolt wrote:
People never do what makes sense financially necessarily. My credit card debt costs me about 100 quid a month and yet I still have two grand in an ISA. That's earning me about a quid a month in interest, but as it's credit, I always hate the idea of losing it by paying off my credit card debt. Absolutely ludicrous, but that's human nature!


But it makes sense not to reduce the amount that you can put into your ISA and instead pay money directly off the card instead of moving money out of the ISA


Of course it does. But one is cash I have and one is a debt that maybe one day I can escape from. Not logical, but it's how the banks make their money!
Author:  finlay666 [ Tue Dec 28, 2010 10:03 pm ]
Post subject:  Re: What to do with a windfall?
tombolt wrote:
finlay666 wrote:

But it makes sense not to reduce the amount that you can put into your ISA and instead pay money directly off the card instead of moving money out of the ISA


Of course it does. But one is cash I have and one is a debt that maybe one day I can escape from. Not logical, but it's how the banks make their money!

It is logical (to me at least)

To take money out of your ISA is doubly impacting on it as
1. You reduce the amount in your ISA
2. You lose that investment this tax year

So once you have put the money in your ISA it's best just to keep it there (unless you REALLY don't get close to the limit on savings)
Author:  tombolt [ Tue Dec 28, 2010 11:04 pm ]
Post subject:  What to do with a windfall?
Well exactly, if I got close to my USA limit on savings, I just wouldn't be spending enough. I am not a natural saver, hence the large credit card debt. If I lost my job, the whole pack of cards would fall down. I'm a good consumer me.
Author:  okenobi [ Wed Dec 29, 2010 9:20 am ]
Post subject:  Re: What to do with a windfall?
tombolt wrote:
I'm a good consumer me.


Keep calm.

Spend on.
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