After the Fire

Hi Scott,

I was in a pretty horrific accident six years ago -- most of my body was burnt after being in a car accident that was on fire. I will get $900,000 from my insurance company, though I will need to put aside some of it for my future burn surgeries.

I am going through the process of building a house with my partner. Our house and land will come to $490,000, and we will be eligible for the $15,000 First Home Buyers Grant. We both have jobs (I work casual 12 to 24 hours a week as I can’t work more than that). We own both our cars. He still lives at home and I rent with my brother. We have no debts or loans and we each have over $12,000 in our saving accounts. Honestly I am freaking out, because I am 25 and have no idea about finances or what to do with my life. The insurance settlement goes through in just under a month. What should I do?

Danielle

Hi Danielle

I’m so sorry for what happened to you. It must have been horrendous.I know it’s a lot of money, but you don’t need to freak out. You could (and probably should) lock most of it away in a term deposit for 12 months while you take stock of things. There’s absolutely no need to feel pressure. None. If you rush, you could make impulsive, emotional decisions.

Then, when you’re ready, here’s what I’d suggest you think about:

First, talk to your medical team and get an accurate understanding of your future medical costs, and when you’ll need to pay them. Overestimate. Then, if it’s in the next 10 years, keep that money in a high-interest online savings account.

Second, if you can see yourself living in the house for at least the next 10 years, go buy it (if you have enough left over after your medical costs, that is). However, I’d like you to buy it outright, and in your name only. Go and see a solicitor and have them draw up a cohabitation agreement between you and your boyfriend. He can pay you rent and you can split living costs -- which will help, given you can’t work full time.

Three, I’d keep $10,000 in a (separate) high-interest online savings account as Mojo money.

Finally, I’d invest the rest in a low-cost share fund.Good luck!

Scott