Clear loans or save money

reb30

Registered User
Messages
13
I am in a stupid position, have borrowed far too much over the last few years and ran up credit card bills, I did have an investment property that I knew would clear all the debts. I have finally sold it and now have the lump sum of about 55k available, which should clear all my debts. What should I do, should I keep one of the loans or clear everything. Credit cards will have to go straight away as interest is high, owe about 15k on them. Struggling financially paying loans and cards every month, adds to about 1100 a month. Also have mortgage to pay and was considering moving this year, so from lender point of view having no loans but no money in bank, is that better than having loans with 35k in bank?
 

ClubMan

Registered User
Messages
44,340
You would probably be better off clearing some or all of the loans starting with the most expensive. List out all of the loans here (amount outstanding, rate applicable, term remaining etc.) so that people can comment. Lenders will generally prefer to see you debt free rather than with debts and savings. In general it makes little sense to maintain savings while carrying debts (other than perhaps mortgage debt).
 
F

Flax

Guest
If I were you I'd pay off all the loans, get rid of the credit cards, and promise yourself never to be so silly with debt again :)
 

reb30

Registered User
Messages
13
Roughly loans are:

Bank of ireland 15,500 - 430 a month, think its 4 years left, rate is 10%, i think.
Bank of scotland 11,000 - 275 a month, 2.5 years left, rate is 8% (i think)
Credit cards, 8500 and 7500, both mbna only pay minimum payment each month on both of them which is bout 230.
Credit union - 8500, only pay 150 a month, rate is 10.9? because only pay small amount loan term is something crazy like 8 years.
 

ClubMan

Registered User
Messages
44,340
If it was me then I would definitely clear all of those loans and save the remaining €4K in a high rate deposit account (see the Financial Best Buys forum). As mentioned above you also need to be careful about not racking up such debts again by budgeting more carefully and living within/below your means.
 

reb30

Registered User
Messages
13
thanks clubman, funny thing is I am usually very good with money but because I knew I would have money coming to me I just went a bit mad. 2008 will be budgeted to the penny so I can get some savings up to move. I actually have 8k in the credit union would I be better off taking that out once I have paid off loan and putting 12k in deposit a/c or keeping that there in case I need to borrow again?
 

ClubMan

Registered User
Messages
44,340
I actually have 8k in the credit union would I be better off taking that out once I have paid off loan and putting 12k in deposit a/c or keeping that there in case I need to borrow again?
Well you will almost certainly get a better rate of interest on the money somewhere other than the CU and the CU may not be the most cost effective (whatever about flexible) place to borrow money in the future anyway these days. Again if it was me I'd clear the CU loan (along with the others) and then take the money out and lodge it elsewhere where it would get a better rate. Maybe leave just enough in the CU account to keep your membership active just in case. In general I find it easier to keep accounts that have no transaction/maintenance charges open rather than closing them and trying to open a new one later.
 
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