What would u do with $5000?

[Kanga.18]

We live on one income, as we have a couple of kids under 2 y.o. We live in our home worth around $215,000 - of which we owe around $160,000 (95% at a fixed rate, 5% variable - so that we had some money we could draw on if things got really tough at any stage, or something needed doing to the cars or house).
Thanks to K. Rudds Family Tax Benefit A hand out in December, and a payout of Leave entitlments should I change jobs soon like I hope to, we could have $5000 to do something with in the next 6 months.
Ideally we'd like to keep this house and then also buy a bigger house in 2- 3 years time when we outgrow this place (if the missus can also go back to PT work).
Do we put the moeny straight on the loan for this place, or spend it to improve this place in case we have to sell to upgrade, or put some in each of our Super funds to take advantage of the Govt top ups first, then put the rest in Savings/home loan etc??

Just wondering what others would do/will be doing/have done before?

 

[Moo]

In the current environment - I would just play a straight bat.

From your desription - you are likely to be in need of the cash at sometime in the future - it may be the house upgrade, but with being a single income family with kids - it could well be a car, broken water heater etc.

IIWIYS (If I Was In Your Shoes) ...I would just drop it into the home loan at this stage and do my best to forget about it. You don't mention what rate you are on but if it is fixed - I am guessing it is at about the 7 - 9% range.

Drop the money in and as always never adjust your loan repayment amounts - the cash is still available should you need it and the 7-8% you save is tax free and you can redirect it into your loan which will compound your gain a little.

Your smart mate - a ton of people are just going to run straight to Harvey Norman - money you never had ...use it wisely.

Good luck to you

 

[DemonErrol1964 - dees]

Put the lot on Septimus winning the Melbourne Cup. 5 grand x $7.50. Wheres my calculator. Doh.

 

[Kanga.18]

Cheers Moo !

 

[Ghostwriter]

Buy a new flatscreen tv, one that cost 10,000 bucks, put the other 5000 on credit card, this recession will blow over by xmas.

 

[chaddles]

1. Dump it into any high interest debts you have - i.e credit cards, personal loans or as suggested onto your home loan

2. Buy shares in the coming months - involves doing some research but there is definitely some bargains out at the moment which will increase over the next 6-12 months.

I'm getting a low 5 figure payout soon for a TAC accident, and I'm doing a combination of the above, getting rid off personal and credit card (no home loan) and investing the remainder into select shares.

 

[James23]

Definetely do NOT buy shares with the $5,000. The share market will continue to crash well into next year.

Buy physical gold. In times of recession / depression, Gold is one of the only resources / investments that not only holds its value, but increases in times of turmoil.

By the end of next year, that $5000 could be worth $8000

 

[STFUJEFF]

Forget gold its too exspensive, buy Fools Gold you get more per kilo for your dollar.
or pay of your mortgage
either one

 

[Kanga.18]

Paying down the mortgage seems to be the most common and straightforward idea so far.

 

[scooterb]

Invest in Enron.

 

[The KEY]

Put the $5,000 into a low fee, index Australian Share fund, and have the investment in your wife's name.

 

[telsor]

Generally, I agree with Moo.

Add a little from Chaddles though.

Pay off credit cards and any other high interest debt first ( and DON'T load them up again ), then dump the rest into your home loan like Moo said.

 

[The_Eagles]

buy bulk pills and sell them for 40 bucks each

 

[Butane]

Buy USD.

 

[bullish23]

Kanga, I would put it into your loan. As others have said you are probably paying 8% plus IR and I doubt you are going to get that return on any investment vehicle in this market.

Do you have an offset account, because you can put the cash into that and reap the benefits of reducing your interest. However the bonus is, the cash is always there if you need to draw-down for any reason. You sound like a sensible bloke, best of luck for the future.

 

[STFUJEFF]

buy a couple of houses in Detroit with it

 

[Chief]

Into your loan. You're not a professional investor so might as well get rid of some debt with the ability to re-draw.

 

[Kanga.18]

Thanks to everyone for your feedback. Any credit card debt due to Christmas will be quickly erased, and the rest will go on both cars geting a full service, a new set of tyres, and then the remainder on the loan.

Thanks again