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What to do with the money?

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#1 money

Posted 23 January 2013 - 09:51 AM

Hi All

long term member going anon due to the nature of the topic.

DH and I have recently been told we will be receiving a large portion of money from our grandparents will. Im estimating this to be between $50-$100k most likely about the $80k mark.

The only debt we have is our rather large mortgage of approx $430k.

Our house is brand new but has no landscaping. We have 1 child with another on the way very soon.

What would you do with the money? Do we lump it all on the mortgage to reduce our current debt? Do we use it to finish the house, spend a little on upgrading one of the cars and getting solar, put the rest on the mortgage to reduce our current living expenses?

What would you/should i do?

#2 Country (deci)Mel

Posted 23 January 2013 - 09:55 AM

I'd sit it in the mortgage offset account - then go from there.

You get the same benefit as if you HAD paid it off your mortgage but it is still there to spend if you want to.

#3 Justaduck

Posted 23 January 2013 - 09:58 AM

I would be getting the solar, as it in a way is an investment in the long run & will mean you have an extra $400or so a quarter from not needing to pay electricity bills.
I would probably put some of it in an account for both of the kids & some of it aside for emergencies too.
If there was a need for a newer car (ie frequently breaking down, getting a bit small) I would look at replacing it.

Can you put it in an offset account that has free and unlimited redraws?

#4 CallMeFeral

Posted 23 January 2013 - 09:58 AM

I'm someone who would always put it on the mortgage. I HATE paying interest. Have you done one of those interest calculators that shows you how much you would save over the life of the loan with $80k extra in there?
Especially with another child on the way, reducing your interest repayments should serve you well. I'd save improvements on the house etc till when you are not in such a financially precarious situation as being on one income with a large mortgage.

ETA. I'm assuming you have mortgage redraw or offset so that you could withdraw it later anyway

Edited by CallMeAliG, 23 January 2013 - 09:59 AM.

#5 50ftqueenie

Posted 23 January 2013 - 10:00 AM

Our mortgage is about $330k and we would also just put it in the offset account.

(we would probably blow some of it on a luxury weekend away for the two of us, and a cheaper beach holiday with the kids)

#6 BadCat

Posted 23 January 2013 - 10:00 AM

Depends on whether you are getting by on the money you have.  If you will be able to afford the landscaping and whatever else without that money then I'd just throw it straight at mortgage.

#7 suline

Posted 23 January 2013 - 10:01 AM

I am with countrymel- straight into the mortgage offset, even if it is untouched for a couple of months, then you put a little towards say the landscaping - the reduction in your interest on your mortgage will be significant.

While it is sitting there reducing your mortgage you can make a good plan about where you want it to go.

#8 Julie3Girls

Posted 23 January 2013 - 10:01 AM

Yep, straight into the offset account.
Then I would gradually do the things that we needed with the money, like the solar and the landscaping.

#9 *-*

Posted 23 January 2013 - 10:03 AM

QUOTE (countrymel @ 23/01/2013, 10:55 AM) <{POST_SNAPBACK}>
I'd sit it in the mortgage offset account - then go from there.

You get the same benefit as if you HAD paid it off your mortgage but it is still there to spend if you want to.

Where is the like button??

#10 MintyBiscuit

Posted 23 January 2013 - 10:09 AM

If it were us in our current situation, I'd spend it on the landscaping, pay off the last of our personal loan and credit cards, and put any remaining on the mortgage. In our situation, paying off those last debts would free up a huge amount to pay extra on the mortgage, and while the idea of reducing the mortgage quickly is lovely, I currently have a crappy backyard and really want it sorted. We don't have an offest account so it wouldn't be an option for us, and we have a fixed rate for another 18 months so while we can pay extra on the mortgage we can't pay that much extra. I'd rather improve our standard of living now and set us up to smash the mortgage in a little while.

But obviously that is very specific to my situation original.gif

#11 EsmeLennox

Posted 23 January 2013 - 10:12 AM

Yep, straight into the mortgage or mortgage offset and then think about how to use it. With young children the landscaping would be pretty high on my agenda, but I wouldn't go mad just because I now had the money, IYkWIM.

#12 A Tiny Hedgehog

Posted 23 January 2013 - 10:14 AM

Pretty much in agreement, solar panels and then mortgage offset. There's very little else you could immediately do with the money that would make as much of a difference.

#13 Leggy

Posted 23 January 2013 - 10:29 AM

First off, look up the mortgage repayment calculators that PPs have mentioned and play around with different figures. Seeing how much faster you can pay out your mortgage with various lump sums may change your priorities.

I would put in solar first - we did this last year and don't have to pay electricity bills anymore.

Then I would put aside 3 to 6 months' worth of expenses in a saving account (I work in a career where serial 1-year contracts and consequent job uncertainty are the norm, so this might be less important for you guys). You could also do this in your mortgage offset if you have one, but be careful it doesn't get spent by accident.

Then, if you already have a mortgage offset account, I'd put the rest into that while you decide what you want to do with the landscaping, and then redraw a bit to get it done. As PPs say, with littlies it would be good to have a pleasant garden to grow up in.

If no offset account, I'd put a chunk straight into the mortgage, and keep the rest in a high-interest account until you've decided what to do about the garden, then transfer the rest onto the mortgage.

Maybe also a holiday if you haven't been away for a long time, what with young kids and buying a house - a couple of weeks at the beach can do wonders for your sanity original.gif

#14 SlinkyMalinki

Posted 23 January 2013 - 10:34 AM

I'd spend what you need on the landscaping, and put the rest on the mortgage.

#15 Bluenomi

Posted 23 January 2013 - 10:42 AM

What Country Mel said. Stick it on the mortage and when spend some time thinking about what to do with some/all of it.

#16 Always amazed!

Posted 23 January 2013 - 10:44 AM

If I got $80k in your situation I would

Put $50k to offset the mortgage
$30 towards solar, landscaping,holiday,upgrades on anything that NEED replacing and get upto date with bills ect
That way I would get to enjoy some of the money whilst still putting a large chuck on the mortgage

#17 Jembo

Posted 23 January 2013 - 10:51 AM

I would put it all to the mortgage/offset and reduce the debt.

#18 I'm Batman

Posted 23 January 2013 - 10:59 AM

Id go the solar, Id do the backyard for the children so its safe and tidy, so lawn and a few trees plus a cubby house and then the rest on mortgage.

Your mortgage is pretty large, I wouldn't be comfortable unless It was reduced to the point where it would be covered on 1 wage.

#19 Lainskii

Posted 23 January 2013 - 11:29 AM


use this calculator to see how much you will save on your mortgage. Even if you redraw some, a few months will $80000 will reduce the principle of your loan.

#20 F1widow

Posted 23 January 2013 - 11:31 AM

Since the money represents around 20% of your remaining mortgage, I would actually seek financial advice.

To me, it would depend on the following factors:

interest saved vs potential interest gained by investing
any disadvantages of making a lump sum payment to the mortgage?
how tight are you incomings and outgoings now? (rhetorical question)
weighing up your goals with any opportunities/threats

Also, if you were going to spend some money on landscaping, solar, new car etc I would do so without considering any gain. As in, set a budget for these expenses based on your current situation not on your future one. This will ensure that the $80k is a real gain.

From a purely emotional perspective and without knowing the full circumstance, I would do the landscaping and solar, then put half (of the remainder) on the mortgage and half in savings for a rainy day.

#21 Freddie'sMum

Posted 23 January 2013 - 11:33 AM

Give it to me  ph34r.gif

(I'm being silly of course)

Agree with the PPs - do you have a mortgage off-set account ??  If yes, I would put it in there.

#22 ~polly~

Posted 23 January 2013 - 11:33 AM

QUOTE (countrymel @ 23/01/2013, 10:55 AM) <{POST_SNAPBACK}>
I'd sit it in the mortgage offset account - then go from there.

You get the same benefit as if you HAD paid it off your mortgage but it is still there to spend if you want to.

This is the best option.  It will hard to get a return on investment (after tax) that is better than not paying interest on your mortgage.

Maybe put half on the mortgage and half on the offset account so you can spend it if you want to

#23 bright*future

Posted 23 January 2013 - 11:36 AM

You don't have to spend it tomorrow (or at all), put it in an offset acct and think about it for a while.

#24 steppy

Posted 23 January 2013 - 11:38 AM

Offset account for me too - reduces interest while giving you time to consider.

#25 hanz33

Posted 23 January 2013 - 11:39 AM

QUOTE (money @ 23/01/2013, 09:51 AM) <{POST_SNAPBACK}>
Hi All

long term member going anon due to the nature of the topic.

DH and I have recently been told we will be receiving a large portion of money from our grandparents will. Im estimating this to be between $50-$100k most likely about the $80k mark.

The only debt we have is our rather large mortgage of approx $430k.

Our house is brand new but has no landscaping. We have 1 child with another on the way very soon.

What would you do with the money? Do we lump it all on the mortgage to reduce our current debt? Do we use it to finish the house, spend a little on upgrading one of the cars and getting solar, put the rest on the mortgage to reduce our current living expenses?

What would you/should i do?

put it in the mortgage

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