Pay off debt or reinvest??

A

Angies

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My husband and I will both have our SSIAs maturing in April and hope to get about €33000. My question is should we reinvest this money or use it to pay of as much debt as possible.

We both ahve good wages and take home about €6800 a month. We have an outstanding mortage of €193000 with UB at 4.45% tracker which we pay off €960 a month, a loan for €22000 at 8.1% with BOI paying back €750 a month for another 3 years, a loan of €18000 at 7.1% with BOI paying back €350 a month for another 5 years, 2 credit cards with about €2000 owing paying back €200 a month at high interest rates as they are with AIB and BOI, a loan for €4000 with CU paying back €200 a month not sure how much longer for, €508 into SSIA, €200 a month into savings for christmas which would hardly earn any interest, about €600 on petrol and other everyday living expenses.

I know it sounds as if we should have a surplus every month but we dont! Husband was off work unpaid and went into his overdraft and cant seem to get out of it.

Should we pay off debt or use the €508 extra a month from SSIA to do this and reinvest the €33000? I think i know that we should pay off debt and live a more comfortable life but what do you think?
 
Angies said:
My husband and I will both have our SSIAs maturing in April and hope to get about €33000. My question is should we reinvest this money or use it to pay of as much debt as possible.

We both ahve good wages and take home about €6800 a month. We have an outstanding mortage of €193000 with UB at 4.45% tracker which we pay off €960 a month, a loan for €22000 at 8.1% with BOI paying back €750 a month for another 3 years, a loan of €18000 at 7.1% with BOI paying back €350 a month for another 5 years, 2 credit cards with about €2000 owing paying back €200 a month at high interest rates as they are with AIB and BOI, a loan for €4000 with CU paying back €200 a month not sure how much longer for, €508 into SSIA, €200 a month into savings for christmas which would hardly earn any interest, about €600 on petrol and other everyday living expenses.

I know it sounds as if we should have a surplus every month but we dont! Husband was off work unpaid and went into his overdraft and cant seem to get out of it.

Should we pay off debt or use the €508 extra a month from SSIA to do this and reinvest the €33000? I think i know that we should pay off debt and live a more comfortable life but what do you think?
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It really depends on your personal circumstances but you've given a reasonably detailed rundown of the situation. My opinion would be use the SSIA "windfall" to eliminate your expensive debt. Pay off the credit cards first. Then the €22,000 loan and as much of the other two loans as possible.

Then look at using the money you were paying into the SSIA and using to finance expensive debt to build up an emergency fund and start pensions for both of you.
 
I think you should 'invest' by paying off your debts it will be hard to find an investment that would give a guaranteed return close to of the rate you're paying on any on your loans.

Pay off the loans with the highest interest rate first - ie your CC bills first

Thats effectively getting a 'return' of 10-15% and freeing up E200 a month
Then pay off the loan for €22000 at 8.1%. Which frees up another E750 a month.

Then pay off as much of the loan of €18000 at 7.1% as you can. Use the extra E200 + E750 from previous loan repayments and E508 from SSIA to pay off this loan quicker.

You'll be debt free in no time! You can then invest all that money you spent paying off your debts every month into a savings or investment product.
 
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I would agree with what the others are saying. I would pay off the credit cards and the full amount of the loan with BOI at 8.1 %. I would pay off an amount from teh other loan of 18,000with BOI. Use the money that you would be paying into SSIA, Credit Card and the higher BOI loan (€1,458) to accelerate the payments on the 7.1% Loan with BOI. Then tackle the credit union loan. You will be debt free before the year is out.
When you have all the debts cleared you will have a nice sum free each month approx 2K. You could increase payments on your mortgage then with some of it and invest the rest.
One other thing, I think don't be too hard on yourself and use 1k or so for a luxury weekend away just as a treat or what ever else takes your fancy!
 
Thanks for that. I suppose everyone was telling me what we already knew but its nice to just get reassured that you are doing the wise thing. When it is all put like that it looks very easy to get things sorted out and hopefully we will be back on track in no time!
 
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