# Windfall of 23k.  Where to put it.



## Gettingby (13 Feb 2011)

*Age:*
38
*Spouse’s/Partner's age:*
44

*Annual gross income from employment or profession:*
E20,000
*Annual gross income spouse:*
E20,000
*Type of employment:*
Private Sector and Self Employed taxi driver

*Expenditure pattern:*
Not huge lifestyle spenders, but not very good at budgeting

*Rough estimate of value of home*
E360,000
*Mortgage on home*
E263,000 - we've been paying our mortgage for 2 years now.
*Mortgage provider:*
KBC
*Type of mortgage: Tracker, interest only, fixed rate*
Variable 
*Interest rate*
Variable interest rate of approx. 3.7

*Other borrowings – car loans/personal loans etc*
18k loan from credit union over 6 years
10k loan from a relative
Credit card has about 500 on it now down from a few thousand

*Do you pay off your full credit card balance each month?*
Pay it in chunks when have the cash. It's under control now and hope to pay it off with a couple of payments.

*Savings and investments:*
E5,000 in credit union tied up to loan.
E4,000 in deposit account (being saved to repay loan to relative) Drip feeding 135 per month into this from rent-a-room scheme.

*Do you have a pension scheme?*
No.

*Do you own any investment or other property?*
No just the family home.

*Ages of children:*
3 and 6

*Life insurance:*
Yes. (Tied up to mortgage.)

*What specific question do you have or what issues are of concern to you?*
We received 23k from a relative as a gift and I'm wondering where will it make the most impact as we owe quite a bit of money and our salaries aren't great. 
We 'net' about 650 a week but if one of us can't work it goes down to about 320 for that week. (I'm hoping my calculation of our 'gross' salaries accurately reflects our weekly net.

I was thinking of using the money to pay off both our personal loans.
My husband needs to get a car as with the new taxi legislation his 98 isn't good enough and we will have to pay about 7k for this.
We were going to take out a credit union loan for this car. We have about 3k in the account and hoping he can borrow about 10, then pay back the 3k to the relative who's money we are using to have in the account.. 

We are getting 23k as a gift from a generous relative and with all of our bills/debt,s we don't know where to put it to make the most impact for us.

Our mortgage is 1370 a month. (We rent a room so receive 500 towards the mortgage. It was used to save to pay back the relative below until they were paid off.)
Loan from credit union of approx. 18k and paying 265 over 6 years or so.
Personal loan from relative for 10k which we have 4k saved for.
We run two cars and need to purchase another one (taxi) as the one we have is 1998 and out of date for the new regulations. Hoping to get a decent one that will do us for approx 7k.
(we were going to get a credit union loan for this.)

We also need/want the following:
A small extension for an extra bedroom for us to rent out to students as a source of income as we are in the city.
Bathroom is in a bad way and needs to be done up (since the 70's).

We are bringing in after tax about 650/700 a week.

Any advice would be greatly appreciated.

I thought myself the best option would be to pay the credit union loan for 18k. Pay the relative the 10K back.

But maybe this isn't the best option as I know it's hard to get credit these days are are we better off keeping the loans.

The vice is also tightening for us in relation to tax increases, insurance increases, and the possiblity of interest increases too.

Thanks again for any tips. I read the forums a lot and enjoy them.


Prior to this happy news, I was toying with the idea of asking the mortgage company to give us interest only mortgage for six months and use the rest to tackle the personal loans. Not sure if this is a good idea though.


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## Brendan Burgess (13 Feb 2011)

What relationship is the relative to you? You may have to pay up to 25% gift tax on the gift. 

You seem to have a lot of loans and savings at the same time. 

Your most expensive loan is probably the Credit Union. 
You have €18k loan - probably at 6% = 1,080 ( check though, it could be higher) 
You have €5k deposit - probably at 1% = 50

So you are paying 1030 on a net loan of €13k which is 8%

Cash: €23k + 4k in savings
Pay tax: € 6k 
Pay off credit union: €13k
Cash left: €4k 

Borrow €3k from Credit union to buy new car. 

*Gift tax 
*Ask a separate question on this in the tax section before you get the gift. It might be better to split the gift in two depending on the relationship with the donor.

Brendan


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## Gettingby (13 Feb 2011)

Brendan Burgess said:


> What relationship is the relative to you? You may have to pay up to 25% gift tax on the gift.
> My husband's father. As far as I am aware, he can give him a certain amount before tax.
> 
> You seem to have a lot of loans and savings at the same time.
> ...


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