Advice on debt options needed!

AJ1980

Hi Guys,
Im new to the forums here so hopefully this is in the correct place to get some advice...

In spring 2013 I took out a decent ammount of debt and used the majority of my savings to invest in a business. Thankfully the business is doing well and as of the end of this season (Novemeber 2016), I will be in a position to take some money from the business to pay down so debt (or not).

I would say I´m fairly financially minded and certainly not a beginner when it comes to loans / credit cards etc.. However, i´m a firm believer in 2 heads are better than 1, so I would be very appreciative to hear from others who may be able to offer a different take on the best options or those that may have had similar experience and can offer some useful advice on what they did. Here´s my situation in a rough summary:

Mortgage debt - 38k, 3.5%, 5 years left on term (not extendable) costs me 700pcm
Tesco Loan - 19k, 7.5%, 7 years left on term (not extendable) costs me 300pcm
Credit Card - 4k, 15%, costs me 100pcm interest only

Available funds in November will be around 30k. So I have the options to:
1. Use all 30k for debt repayment
2. Use part of 30k for debt repayment
3. Do not repay debt, use capital for investment? (I have already allocated some funds earlier in the year to the business so this would be in the way of personal shares / investment funds)
4. Other??

I would describe my risk level as medium to high or 3.5 out of 5.

Thanks in advance for any help.

Muttipops

How secure is your business?
Do the prospects look good?
Any life events coming up like a wedding/ children?
How sustainable are your debt payments right now and percentage of your income?


Difficult to assess how much of a risk things are in this decision without extra info.


Also, needs people to come along with a business brain, which I haven't got!

AJ1980

Hi,
Yes, the business is secure and apart from the money taken out, I have accounted for money left in the business account for a rainy day so the business doesnt need to be considered. No life events up and coming and the debt repayments leave me with enough at the end of the month to do what I want without any extravagances... Obviously reducing monthly payments would be good but not necessarily needed.

emma_1981_2

I think my one track DFW mind says get rid of the debt as in the CC and the Loan.

Leaves you £400 a month extra and then you can overpay your mortgage up to whatever limit it allows. Then should a worse case scenario happen you have less overheads away from the business. (Touchwood that never happens for you of course).

After that only you can really answer if you want to expand, save for something big or fancy dabbling in investment instead with the remainder. I wouldn't invest without clearing debt that isn't 0%.

andyfromotley

very few people ever rreport that they refret paying off their debt! Loan and CC then throw the rest at mortgage or keep in an emergency fund?

If you used it all and kept the same level of repayment you could shift the remaining mortgage in super quick time.

Muttipops

Members on this forum are pretty smart cookies. Just like that, the two respondents above in a couple of sentences come up with excellent advice and plans that make sense. Who needs paid advisers when you have got the MSE forum to ask questions on?

enthusiasticsaver

So long as you keep a reasonable emergency fund (for your business and personal finances) I would throw the rest at debt. Certainly the credit card and loan should go and whatever else you can spare on the mortgage although that is not as critical as you can probably get more than 3.5% on high interest current accounts.