# What debts should I pay off?



## Moving_girl (31 Aug 2011)

Hi. I wasn't sure where to post this but here goes.

I have an apartment that I bought in 2001 & am currently renting. Mortgage is 812/month & I get 700/month rent. I earn approx. €3,400/month and the rental income goes towards the mortgage. I moved out last year to move into my boyfriend's house but things are not working out & I need to find a new place. 

To complicate matters, I have a cat so can't move back to my apartment as it's a no pets building (and don't want to as it's rented & almost covers the mortgage) & need a place with a garden/patio/terrace. So I'll be paying quite a bit more for rent than I'd like to. 

So, here is my dilemma. My boyfriend owes me €10k (which he has now put in our joint account) from some things I bought for the house. It was intended to be a long-term move but it hasn't worked out - but I am trying to at least get my finances in order even if everything else is a shambles. 

I currently have €6,500 outstanding on a loan - 15 payments left. 
I also have about €5k in credit card debt.

However, as I used all my savings to put into the house I have no savings so not sure if I want to use the €10k to pay off all my debts.

My loan is currently €447 a month so thinking I should clear that which gives me €447 more to put towards renting a new place. Then I was thinking of putting the remainder of the €10k into a long-term savings account to give myself some security & in time I'd hope to buy myself a new place. My credit card obviously has a higher APR but if I pay off the credit card then I'll still have the €447 a month & at least I can pay off my credit card bit by bit......

By the way I am currently paying €1000/month into our joint a/c towards the mortgage, bills & food at home. So, if I rent a place for €1200/month (which is all I am finding) I won't be dramatically worse off. 

Thanks in advance for your help. A hard time but getting this clear will help.


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## Scotsgirl (31 Aug 2011)

If your loan is fixed and you don't gain anything by paying if off earlier, I think you should clear the credit card off first. If you are only paying it off slowly it could cost you a lot more in the long run.


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## Moving_girl (31 Aug 2011)

Thanks Scotsgirl. The loan is variable at 4.94%APR...so a lot lower than the CC but I suppose I just feel that if I pay off the loan is frees up that 447/month & I can deal with the credit card once I am back on my feet a bit.


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## wbbs (31 Aug 2011)

I would pay off the credit card, you have a large enough balance on it, what is the interest rate?   You mention your rent goes towards the mortgage, is your tax situation with that rental income up to date in case you need some of the cash to fix that.   As the rate on your other loan is variable and reasonable can you extend the term of that to free up some monthly income, would probably still be cheaper thing to do than clear it and leave cc.


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## nai (31 Aug 2011)

clear as much of both as you can - you will still have access to credit on your card in the event of an emergency and you will be starting from an almost clear slate.

With regards your own apartment - if it was me I'd be re-homing the cat and try move back in there.


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## mark1 (1 Sep 2011)

my tuppence worth,If i had €10,000 in your situation in the morning i would open a seperate a/c with no laser or visa debit cards on it and set up direct debits to both your credit card a/c and your loan a/c. loan a/c for the monthly payment and visa for maybe double or triple your monthly payment whatever you are comfortable with. everything is looked after and paid on time and you still have access to some cash in an emergency if needed. €10k is a lot of cash to have and as we all know, you can never tell whats around the corner, Hope it helps


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## Moving_girl (1 Sep 2011)

nai said:


> With regards your own apartment - if it was me I'd be re-homing the cat and try move back in there.


 
Thanks for the suggestion but even if I didn't have the cat I don't think I'd move back in....need to keep moving forwards.


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## Moving_girl (1 Sep 2011)

mark1 said:


> my tuppence worth,If i had €10,000 in your situation in the morning i would open a seperate a/c with no laser or visa debit cards on it and set up direct debits to both your credit card a/c and your loan a/c. loan a/c for the monthly payment and visa for maybe double or triple your monthly payment whatever you are comfortable with. everything is looked after and paid on time and you still have access to some cash in an emergency if needed. €10k is a lot of cash to have and as we all know, you can never tell whats around the corner, Hope it helps


 
That's a really good idea.....thanks I will certainly give that some thought.


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## xeresod (1 Sep 2011)

Moving_girl said:


> By the way I am currently paying €1000/month into our joint a/c towards the mortgage, bills & food at home. So, if I rent a place for €1200/month (which is all I am finding) I won't be dramatically worse off.


 
But you'll still have to pay for food and bills on top of the €1200 rent.

And don't forget tax on your rental income - your mortgage payment is not an allowable deduction, only 75% of the interest portion is allowable, and even then only if have registered the tenency with the PRTB - so even though the rental income is less than your mortgage it's likely you may have a tax liability.


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## PaddyBloggit (1 Sep 2011)

Best scenario financially is to move back into your apartment.


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