How to proceed following a life assurance payout

R

Royalwe

Guest
I am posting this on behalf of my sister.

Age: 30
Spouse’s/Partner's age: N/A

Annual gross income from employment or profession: 26K
Annual gross income of spouse:

Type of employment: Civil Servant

In general are you:
(a) spending more than you earn, or
(b) saving?...............
Spending more then I earn

Rough estimate of value of home 280K
Amount outstanding on your mortgage: N/A

What interest rate are you paying?

Other borrowings - car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: Recently received 100k from a life assurance policy

Do you have a pension scheme? Yes

Do you own any investment or other property? No

Ages of children: 10 and 7

Life insurance: Yes


What specific question do you have or what issues are of concern to you?
I recently became a single mother with 2 kids. The life assurance policy has now come through (about 100k) and I'm looking for advise on how best to proceed for my and my kids future.
Firstly, I would like to set up accounts for my children's future so that when they go to college or turn 18 that they will be set up. What would be the best ones to go for?

Secondly, I want to move out of my old house into somewhere new. What would the best way to proceed be? (i.e. sell my current home to buy another, rent it out and take out a mortgage on another house etc)
 
Well, I just wanted to offer my condolences to your sister. It's a tragedy. I will leave it to the more learned people on this site to advise. Best of luck.
 
My Condolences to your sister, not an easy thing to do after a loss (sorting out your finances).

Heres a couple of questions She coulds ask herself to clarify what may be best for her:

-What is rental income like in her area (ie if she kept her existing house to rent out, what would she expect to receive).

-Has she an idea of where she would like to move and how much it would cost?

-If she was married, has she factored in widows pension?

Given the fact that its a bad time to be selling property, she should strongly weigh up the pro's and con's of buying a property to live in, with the intention of renting her existing property (obviously factoring in all expenses involved).

To be honest, her immediate concern should be deciding above before working out her savings for her children. I say this because it should be roughly an 8 and 11 year plan for her children (ie assuming they will be in college by 18).

Any Excess profit made on monthly Rental income should be put (if possible) straight into a savings account (perhaps notice deposit for better rates). In 5 years time your Sister would hopefully be more comfortable financially to save more and would of course be more used to saving and spending for the 3 of them (as opposed to 4).
 
My condolences to your sister and her children - it must be a very difficult time for them.

The line that concerns me in the first post is that she is spending more than she earns. While this is only to be expected in the immediate short term, she will have to be careful that the 100k doesnt get eaten
(accidentally) into on a month by month basis. She obviously doesnt want to spend the 100k with nothing long term to show for it, however her salary isnt high.

I think that if i was in the same situation I would spend a proportion of the 100k over the next 10 years (+) in order to keep my standard of living up during that time (for myself and the kids). It does depend on how much she is overspending and how accepting she is of their lifestyle on her salary (which is very subjective)

Think of it this way - 2.5k per year from the 100k still leaves her with 75k after 10 years but it adds 10% to her salary.

anon473
 
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