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What should I do with this money?


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#1 secret agent

Posted 11 February 2017 - 10:38 AM

As part of a separation I will be given $15,000. I currently have $5000 in a savings account. That was my minimum goal. I don't want to go below that. For example I have a trip booked to Melb in April so any spending money I will save separately. I also have a trip to Thailand in September and again I will save separately for the spending money.
I'm currently living with my mum. It's very cheap, and I'm not a big spender of money anyway. I rarely drink, don't smoke, don't often go shopping etc so I don't plan on spending any of the $20,000 I will have. I just want to know is there something I can do to try and get ahead? Buying a house isn't really an option at this stage as I only work casual even though the hours have been stable it's just a big risk and I'm not sure id even get a loan. I currently have my $5k in a Bankwest hero saver account. But if I don't put a certain amount in each month I don't get th bonus interest.
Any advice? Thanks.

#2 Mollyksy

Posted 11 February 2017 - 10:46 AM

No credit card debt? Look, I am sure someone savvy will have a bunch of ideas but I personally would park in the high interest savings account and keep adding the minimum amount to get the better interest rate. Maybe it will be a house deposit eventually or more travel or just some security.

You could look into term deposits and compare the intetest rates to your saver account. You might choose to lock in say the 15k for 6months and just let it compound. Don't rush it, think through your long term plans.

Don't forget, you need to pay tax on interest earned. Good luck.

Edited to correct you pay tax on interest earned. My brain isn't braining today apparently!

Edited by Mollyksy, 11 February 2017 - 10:58 AM.


#3 MarciaB

Posted 11 February 2017 - 10:56 AM

I think it is always a good idea if you can keep a minimum of 3 months (and up to 6 months depending on your individual circumstances) in cash in the event of emergencies.

This will cover you if you lose your job, have to replace a major appliance, need medical treatment not covered by public system, various family emergencies, car repairs etc etc.

Having that amount of accessible savings reduces an awful lot of stress in your life.

So I would work out how much that is, add on your planned holidays, and tuck that  amount into a cash savings account (not your day to day one) or look at term deposits (incidentally you CAN withdraw these during the term if you need, you just lose the interest - also when shopping around, look to see if there is a higher rate for "odd" months, like 7 months - often banks will put special deals on those rates for some reason).

Check things like whether you have your health insurance/home insurance/car insurance at the place you want.

Then you could think about some longer term savings with any balance, Exchange Traded Funds have low ongoing fees and a range of different options.  That might suit you - but figure out just how much you want in accessible funds first.

View PostMollyksy, on 11 February 2017 - 10:46 AM, said:

No credit card debt? Look, I am sure someone savvy will have a bunch of ideas but I personally would park in the high interest savings account and keep adding the minimum amount to get the better interest rate. Maybe it will be a house deposit eventually or more travel or just some security.

You could look into term deposits and compare the intetest rates to your saver account. You might choose to lock in say the 15k for 6months and just let it compound. Don't rush it, think through your long term plans.

Don't forget, interest earned is tax deductible. Good luck.

I think you mean tax assessable.

#4 Mollyksy

Posted 11 February 2017 - 10:59 AM

Thanks Marcia, yep I did! Sorry. Not having a good day. Have corrected.

#5 sandgropergirl

Posted 11 February 2017 - 11:18 AM

Is the holidays something you can cancel. Living with your mum, working casually, doesn't really seem like the right time to go holidaying. I would be savings furiously and looking for more hours in your situation

#6 LUV-MY-KIDS

Posted 11 February 2017 - 11:20 AM

If it was me I would be putting the $15,000 into a term deposit and not spend any of it.  

I have no idea how old you are, but once it's gone it's gone.  The $5,000 I would put in a shorter term term deposit say 3 months and role it over each time.  If you do need to take it out before the 3 months you won't lose much interest.  The larger one I would lock it in for a year.

What you have is a foundation for getting yourself back on your feet.  It's great your living with your mum, use the time to get yourself financially better off by saving what you can and spending less. You may not be in the position to buy a house right now but setting yourself up to better of financially for the future is what I would be working towards.

#7 LUV-MY-KIDS

Posted 11 February 2017 - 11:23 AM

View Postsandgropergirl, on 11 February 2017 - 11:18 AM, said:

Is the holidays something you can cancel. Living with your mum, working casually, doesn't really seem like the right time to go holidaying. I would be savings furiously and looking for more hours in your situation

I agree with this, no way would I be going on holidays.  I would be focusing on getting myself back on my feet and getting income sorted.  



#8 nup

Posted 11 February 2017 - 11:33 AM

If you're asking online I'm assuming you don't have goals apart from short trips away. Perhaps sit down and seriously focus on where you want to be in your life so that you can work your way toward it. Money is a tool. You mention buying property and that amount could be a significant deposit for a property under 200k but it appears you're not considering that as an option. If you don't know yet and are still at home with parents I'm assuming you're

#9 intd242

Posted 11 February 2017 - 11:53 AM

I'd be starting to think about using the money to break into the property market.

Going down the rentvesting path (where you buy a property, rent it out, and rent else where yourself, or continue to stay with your mum), is a good idea in a number of situations.

Though there may be benefits in living in it for a period yourself first ... FHOG ... doing a bit of touch up/painting ... claiming it as your PPOR etc.

Worth looking into ...

#10 Cimbom

Posted 11 February 2017 - 12:12 PM

I would look at moving into at least part-time work (with set weekly hours) or preferably full-time. Keep building up your savings to have a good buffer and consider either buying your own place or getting a rental. I wouldn't want to be living with my parents long-term as an adult (unless there were particularly extenuating circumstances) even if it's cheap/free.

#11 Overtherainbow

Posted 11 February 2017 - 12:17 PM

I'd sit down and create a 10 year, 5 year and 1 year financial plan.  What do you see as your big expenses and goals for those times?

Some things to consider: car purchases, home purchase, chn's education, purchase of home or furniture, travel, savings towards retirement.

You can find examples of plans online and then adjust to your own situation.

Then look at what you need to do to achieve it.  How much do you need to put aside each year?  Do you have time to invest it in shares? Would it be better in a term deposit, bonds or high interest account?


You said you're currently in a shared housing situation and only working casual.  What do you need to do to increase your future earnings capacity?  Education, training, move areas ??

I'd view this money as your future, if you must spend some, spend no more than 10%.  Invest the rest through high interest account, shares, etc.

All the best with your planning.  Remember, we can tell you what we'd do, but it's not the advice of a qualified financial planner.

#12 nĂ¥gonsin

Posted 11 February 2017 - 12:28 PM

I would save it (and add to it over time) for a big future goal like a house deposit - your employment situation might be ok for a modest loan if you have large enough deposit, or it might change for the better in the future, so some long term planning makes sense.

Ideally also earmark some savings for rainy day and fun. It sounds like you have capacity to save for all three targets right now so I certainly wouldn't be cancelling the holiday.

#13 secret agent

Posted 11 February 2017 - 01:17 PM

I'm 29. I said I'm casual but I am averaging 4 shifts a week. I'm also studying my diploma at the same time and I am a single mum with 100% care of my 4 year old.

I won't be cancelling the holidays. I worked my bottom off to pay for them. The Melb trip is because my sister lives there and was almost hit by the Burke st maniac driver. I haven't seen her in years and it was a bit scary and an eye opener. Thailand is a big family trip with all the kids and my mum. I get that I need to watch what I'm spending. But everyone deserves to do things they love especially if they work very hard.

Some great ideas. Thank you. I may have a meeting with a few different banks to talk about options as well. At the moment I am saving between $250 and $300 a week. I have no credit card debt but I do have an $8000 car loan so I guess it would probably be better to pay that out before saving??

#14 BBC

Posted 11 February 2017 - 01:37 PM

Yes, pay off the car loan. Redirect the car payments to savings.

You are likely paying much more in interest on the car loan than you could earn in a savings account.

#15 sandgropergirl

Posted 11 February 2017 - 01:44 PM

Pay off the car loan. I get the Melbourne trip but disagree about the other one. But if you are determined to go on it - it will need to be you last overseas one for a while. You are 29 not 19, you need to focus on a sensible financial plan.

#16 Bone Apple Tea

Posted 11 February 2017 - 01:45 PM

Pay off the car loan, and then save the car loan repayments in addition to what you are already putting away.

#17 JBH

Posted 11 February 2017 - 01:46 PM

At the moment it sounds like you are at a time of change after tumultuous events, as well as studying towards a better future.  Assuming you are planning with living with your mum for at least a year, I 'd leave the $5000 where it is as an emergency fund and put the $15,000 in a 12 month term deposit.  You can be paid into a transactional account, transfer savings to add to the $5000 with a plan to withdraw the savings and interest to fund the holidays, so long as that account doesn't dip below $5000. Pretend the $15,000 doesn't exist and let it earn interest. You can then reassess in a year.

Sorry - typed the above before I saw the car loan.  My approach as to whether to pay that out from the $15,000 would depend on a few things. First, would you save interest if you did? Some car loans are structured such that you actually don't, because they don't want early pay out - they want to maximise the chance you will roll over and buy a new car at the end. Second, if you will save interest, how does it compare to the interest you could earn on the money (also considering tax and insurance - insurance on cars is usually higher if you have a loan)? Third, what kind of person are you? Are you better off pretending the $15,000 doesn't exist because once you've "broken" it you'll spend more? Are you more likely to be tempted to upgrade your car if you pay out the loan? Sometimes the economically rational choice is not the right choice due to our own psychology.

#18 sandgropergirl

Posted 11 February 2017 - 01:55 PM

I agree with JBH about checking out the car loan details and about hiding the money away, just bear in mind the interest you would earn would be about $500 with interest rates what they are

#19 lunariviera

Posted 11 February 2017 - 02:12 PM

I like Overtherainbow's suggestion.  It depends on what your are doing casually at the moment but can you invest in yourself in terms of education and training to get ahead?

I certainly understand the need for a holiday after a separation and think you should go ahead with that, but also think about your work prospects going forward.

Edited to add> I see from your update that your are already studying.  In that case I would look into the car loan.

Edited by lunariviera, 11 February 2017 - 02:20 PM.


#20 Soontobegran

Posted 11 February 2017 - 02:24 PM

View PostMarciaB, on 11 February 2017 - 10:56 AM, said:

I think it is always a good idea if you can keep a minimum of 3 months (and up to 6 months depending on your individual circumstances) in cash in the event of emergencies.

Is this realistic for the average wage earner ?
I am just not sure how it could possibly happen to save this amount and live.
We have never ever had 6 months worth of expense money just in case. :(

#21 sandgropergirl

Posted 11 February 2017 - 02:31 PM

The OP is living with her mother and stated that its very cheap to live there.

#22 Soontobegran

Posted 11 February 2017 - 02:35 PM

View Postsandgropergirl, on 11 February 2017 - 02:31 PM, said:

The OP is living with her mother and stated that its very cheap to live there.

I wasn't actually talking about the OP.......I was talking about the average person in response to MarciaB 's post.

Sorry I didn't make that clear.

Edited by Soontobegran, 11 February 2017 - 02:36 PM.


#23 MarciaB

Posted 11 February 2017 - 02:36 PM

View PostSoontobegran, on 11 February 2017 - 02:24 PM, said:

Is this realistic for the average wage earner ?
I am just not sure how it could possibly happen to save this amount and live.
We have never ever had 6 months worth of expense money just in case. :(

It is obviously not feasible for many.  In an ideal world everyone should have a cash reserve however it is a pipe dream for many.

However - I raised it as this is a "what should I do with this money" question.  The OP is in a position to do exactly this.

However, it should be a goal for everyone who is able to save.  For some it will be the amount that they can re-draw against their mortgage.

I responded to the OP - not as a general "this is what we all should have/do".

Edited by MarciaB, 11 February 2017 - 02:40 PM.


#24 EsmeLennox

Posted 11 February 2017 - 03:42 PM

View Postsandgropergirl, on 11 February 2017 - 01:44 PM, said:

You are 29 not 19, you need to focus on a sensible financial plan.

29 not 19...oh my sides. Sensible financial planning does not mean you have to give up pleasure in life. The OP states she has saved hard for these holidays, she should go! She is also a student, working casually and thinking about her financial future...sounds quite sensible to me.

OP, I agree with paying off the car loan, your interest rate is probably hurting you there...so pay the car loan out and direct debit what you usually pay for your car loan to a savings account (perhaps your high interest account). You should go on your holidays and enjoy them, I'd ignore the naysayers on that. My advice would be to travel while you can when your child is young...travel with older kids just costs more and more and more.

Edited by EsmeLennox, 11 February 2017 - 03:44 PM.


#25 McG2013

Posted 11 February 2017 - 06:39 PM

I would put the $5k in a savings account as an emergency fund, $15k into a term deposit with a goal to keep adding to this when you have the car loan paid off, try and pay extra on the car loan but don't seriously limit yourself financially doing it and go on the holidays!

Once you do get into the property market you may not be able to afford trips until your salary goes up so I say do it while you can. I would be looking to get a permanent part time or fulltime job asap after the big family holiday if you've finished studying by then so you can start adding to your super fund and hopefully that will come with default income protection and life insurance if you don't already have these.

You have your short term goals -the holidays, your medium term might be saving enough for a deposit and long term maybe paying off the mortgage or a euro trip or something important to you.

The fact that you can save for the trips in the first place is a great start!




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