Pay Off Debts Or Leave?

vindalooloo

Hi everyone,

We are just about to move house and will have approx £20000 equity left over. Currently we have approx £2500 left on a loan (with 2 more years to pay) at around 8%. We also have around the same ammount on a credit card at 0% for 9 months.

We were originally going to clear our debts completely when we moved. We would then be back to a level playing pitch so to speak and I was going to cut up the CCs. However, I am now wondering whether this is the best course of action.

Would I get more interest just saving the lump sum and leaving the loan to run it's course? The CC is interest free at present, so we wouldn't be gaining anything really by paying this off.

Could anyone advise what they would do, or what would be the best course of action please.

mjdh1957

Hi vindalooloo,

Unless you're able to earn more than 8% interest, it's not worth keeping the loan (unless there are penalties for paying it off early).

So I would say, pay off the loan asap, pay off the credit card at the end of the 0% period.

And enjoy being debt-free!

ltm07

I don't know if this helps but when we sold up 5 years ago we were advised to clear our £10k worth of debts out of the £25k profit we made(20k after solicitors/estate agents fees). Put £10k deposit on our present house & instead of us paying our debts off we foolishly spent nearly all of it. We've learnt our lesson now! With the CC maybe just pay the minum balance until the 9 months is up.

Crown

Hi, I would personally pay both off why you have the cash. The little bit of interest you will earn in 9 months on the credit card to me doesant warrant the happiness and stress freeness of being debt free.

a Lot of things could happen in the next 9 months and if you forget to pay it then the interest they would charge would take a large chunk out of interest you had earned in te savings. Clear the debt and then start saving with your own money. If you want to "stooze" the cash then make sure you are totally organized. Good luck

Rain_is_Insane

I agree with Crown on this.....the money you will save each month by not having these bills going out, you can put back into your savings....it will soon mount up and you don't have to worry about paying each month.

Good luck and I hope you choose to pay it off and become officialy(sp?...never could spell that word) "debt free"

izzybusy23

vindalooloo wrote: »

Hi everyone,

We are just about to move house and will have approx £20000 equity left over. Currently we have approx £2500 left on a loan (with 2 more years to pay) at around 8%. We also have around the same ammount on a credit card at 0% for 9 months.

We were originally going to clear our debts completely when we moved. We would then be back to a level playing pitch so to speak and I was going to cut up the CCs. However, I am now wondering whether this is the best course of action.

Would I get more interest just saving the lump sum and leaving the loan to run it's course? The CC is interest free at present, so we wouldn't be gaining anything really by paying this off.

Could anyone advise what they would do, or what would be the best course of action please.

Oooh if I was in your situation I would pay off the debt with no hesitation. £15k is still a lot of money and you would also be debt free .. imagine how nice that will feel! :beer:

Also weigh up how much interest you will pay on that extra £5k in savings opposed to the interest you are being charged on the loan and CC. I would guess the interest is alot less.

Good luck whatever you choose to do!

rog2

Can only add my opinion to what most posters are saying - pay off all the debts and enjoy some time without having to worry about monthly payments.

fuschia_2

I'm another one who'd say clear your debts. You can then move in to your new house and experience a fresh new start of being debt free!!

Good Luck with the move!!

X

Baron_Greenback_2

Of course because you posted this in Debt-free-Wanabee you are going to get a bias towards pay off debts if you posted in say "Stoozing-Free cash from credit cards" you would get an entirely different response.

The thing to remember is not all debt is bad debt, if you have the money to pay off your credit cards you are overall not in debt, indeed if you have a 0% interest rate on your card and money to clear the amount in full that is a very good position to be in, personally I would pay the minimun amount for the period of the introductory offer then either look at transfering the balance or paying it off in full.

vindalooloo

Thanks for the advice guys!