Clean slate and start again? Debt free.

Colliemix

Hi we are in the lucky situation to own a small rental property ( my family home) lately I have been considering selling it paying off the small mortgage (£30k) and with the balance clearing all our debt( 16k debt) and putting away an amount into a savings account. (25k left to put into savings account)

We are not behind in any payments for credit card or loans but are living month to month with no spare cash at all. We cannot even begin to think of saving or an emg fund etc.... The rental is currently empty so we are covering the cost of the mortgage on it on top of our home mortgage, which has made things tighter money wise. We both work, car, children just your normal family with the expenses that everyone has.

So sell, clean slate start again no debt and a bit of savings for the first time in our lives ? Be able to not worry month to month about what's coming next ?

OR

hold onto the property and keep going, we are not behind on payments, the loan will come to an end in a couple of years anyway, then we can pay down the credit card ( 6k). Keep to my original plan of selling the rental house once the mortgage on it is clear (15 years) and this is my pension pot.

Very confused , one day I'm yes let's sell it and start again debt free, next then I'm not so sure ? I know that we're lucky to have a chance to get debt free as many people don't have that option. Fresh eyes on the decision please ? I think I'm just overthinking myself and have totally confused my own head on what to do next. Many thanks.