Best use of redundancy package

Linds1025

My husband is soon to be made redundant, I will be the main income earner. My question is whether it is better for us to use the money to pay part of our mortgage off, or to clear all credit card debt?

74jax

What rate is your mortgage at and is the credit card on 0% ?

Linds1025

The mortgage is at 4% and the credit cards are not at zero approx 16%

V.Lucky

It's always better to pay off the dearer credit first, so go with the credit card debts.

How are your income and outgoings looking now?

ceridwen

Well - personally - I'd go for repaying the credit card debts first.

Partly because of the higher rate of interest on them - and partly because I'd expect sympathy/help for any problems with keeping my home. I doubt I'd receive either sympathy or help for any credit card debts I had - and I would prefer to be in a position personally where I could make it plain that "I'm good with money - I have no debts" and not have to answer any questions as to why I was in debt.

(errr....yes.....I am the (adult) child of parents who still expect an explanation any time I get in debt.....)

Uncertain

You cannot possibly invest the money (safely) at anything like 16% so pay off the credit cards without question.

The are almost always cheaper ways to borrow money than using a credit card. This site provides lots of help in that direction.

Sunshine12

Definately the credit cards although you could also look at transferring to a 0% credit card (fee free) meantime until you figured out what you wanted to do. Martins page here gives you loads of info.

http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards#lowfee

lilac_lady

Pay off the credit cards. Debt free peace of mind is a wonderful thing.

getmore4less

IT may not be that simple.

Can you live of your income alone.

What does the revised SOA without the income show.

If this shows that you are not not able to make ends meet ou may nd to consider other options.

Uncertain

getmore4less wrote: »

IT may not be that simple.

Can you live of your income alone.

What does the revised SOA without the income show.

If this shows that you are not not able to make ends meet ou may nd to consider other options.

Maybe.......

If the OP can move some or all of the credit card debt to 0% then great but really they should have done that anyway, regardless of redundancy.

However, this does depend on having the right attitude and discipline to keep on top of it and accept that it will have to be paid back.

Otherwise, the interest charged will be bleeding money out of their total assets at a horrible rate.

There is no point in keeping £15K in the bank at 2 or 3% and paying 20% on a card. They could keep the card open as a "lifeboat" but even if they save the interest on it for six months they will be almost £1500 better off.

B.E.N

Be aware that if you are planning to claim Income-Based State Benefits (Income-Related ESA, Income-Based JSA, Housing Benefit, etc), in the near future that if you clear off any of your debts before you needed to, and therefore came under the Capital threasholds to qualify for said benefits, it may be deemed that you have knowingly deprived yourself of capital ("deprivation of capital").

I can't go into the exact specifics (google it for further information) but it's something that you need to consider carefully.