What are you going to do with your extra money

So the interest rate has gone down again here in the UK.

The bad news for us of course is that it will inevitably mean the pound will fall even further in value against the dollar. Oh well with baby's arrival just over 2 months away we wont be travelling to USA for a few months ;-)

The real good news of course for people on a mortgage that isn't fixed is that the mortgage payments have gone down again. To put it into perspective mine is now less than half it was 3 months ago.

So what do we do with that extra money?

With Christmas coming up it's tempting to go and spend it, I even heard a Government minister suggesting we spend it to help the economy. Incredible that this mess has been caused bu overspending on the banks and general public's part and they are now suggesting we overspend to get out of it!!!

There are 3 levels of advice that coincide with someones wealth mentality.

The poor wealth mentality will go and spend it.

The middle class will use it to pay off debts. Now this is a sensible idea to get rid of high interest consumer debt such as credit cards etc. That's the first place to start but don't take it too far. Don't play too safe, too middle class. We want to be wealthy here, not comfortable. Don't for instance start paying off more of your mortgage.

Your mortgage now is likely to be at a very low rate of interest. The rich way to deal with this is to invest that extra money, you will get a higher rate of return than you will be paying on your mortgage. Invest in an asset (remember an asset is something that pays you money and doesn't include your family home) that will give you a good return and will increase in value.

I can't give individual advice on here but look for an investment advisor and make sure it's one who puts his/her money where their mouth is. In other words ask how much % wise their income is from investments as against commission. Do you really want to be trusting an investment advisor that doesn't take their own advice about investing and only earns their income from YOU - your commission???