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Once you get your PPI (payment protection insurance) repayment, it can be tempting to go out and spend it. However, it may be better to save it and get your financial matters in order. You could find yourself out of debt quickly and have the ability to save and invest into your future. Here are some ways to use your PPI repayment for your future.
Pay Off Your Existing Debts
Debts continually stretch the wallet. Even though you are constantly making the minimum repayments, interest is being added and this increases the amount that you have to pay. Just paying the minimum payment on a £1,000 credit card will take decades to fully clear and you will find that you pay thousands of pounds extra. Use your PPI repayment to clear as many of your debts as possible.
It is unlikely that you will be able to clear them all, especially if you have a mortgage. If you are considering paying off your student loan, stop! This is one debt that does not affect your credit rating and you will only have to pay a set amount based on your earnings.
Make Those Home Improvements
If you have a washing machine that needs to be upgraded or piping that is coming to the end of its life, using the money for home improvements will help you save in the future. There is more chance that there is a fix available instead of having to replace everything. There is no need to worry about whether you will have the money in the future or wondering if the next wash is when everything will break.
Save for a Deposit
Your PPI repayment could help you save a substantial amount for a new home. The average payout is no more than £10,000, which would give you a 10% deposit on a £100,000 house. With your own savings, you will find that you lower the amount that you need for a mortgage and will have more chance of gaining approval.
There are some payouts that are much higher than the average and some have gained up to £80,000. This would be enough to put a large deposit down for a home and, with your own savings, possibly buy a house out-right. The housing market is an excellent investment and 2013 is the right time to buy while property prices are at a low.
Look into Other Investments
Depending on the amount that you gain, putting the full amount into savings is not worthwhile. You will start to pay interest on the interest that you gain and will not gain the best rate of return. It may be better to look into other investments – although do your research to lower the amount of risk involved. Investments will help you save for the long term and could help offer a lucrative retirement pot.
Use your PPI repayment carefully to make the most of it. Start by clearing your debts and then save the rest for your future. Investments are beneficial, whether you opt for the stock market, the housing market or other investment opportunities. Gladstone Brookes is dedicated to helping you gain your PPI repayment, whether you have your policy agreement or not.
Author Bio: This post was written and supplied by Gladstone Brookes, a PPI claims company in the UK. Gladstone Brookes have helped tens of thousands of happy customers reclaim their mis-sold PPI’s on their credit cards, loans and mortgages since 2006. Regularly writing and sharing personal finance and money saving advice.
Editor’s Note: I have been reading a lot about how people have been overcharged for PPI. If you have payment protection insurance, then make sure you have not been overcharged and if you have, go get your refund. There are many services that will help, including Gladstone Brookes.
Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net