Which debts to service first

[Roger Woods]

Hi all, pretty sure what I think I'm going to do but thought I would ask the wise people of PH for a sense check.

I owe 34 grand on the mortgage of our main house which has 7 years left
92000 grand on a UK holiday home 18 years mortgage left
Mortgage free on our USA holiday home

about 15000 on Credit cards

I have been working abroad quite a few years and will be returning to UK within the next year or so.

I will have about 70 grand to service debts with.

So I'm thinking sort the cards first then about 30 grand off the holiday home then rent that and it will pay for it self until we want to to use it in a few years time.

Do I keep the rest for rainy day or finish the 34 off the main house as well with very little cash left.

I have looked at this so many times its not really clear what to do.

Any views any one?

Edited by Roger Woods on Thursday 7th April 14:49

[Roger Woods]

Both Mortgages are on 2.49% currently but with out a doubt get shot of the Credit Card debt that has crept up with 4 kids.....

[johnfm]

You can claim the interest on the rental property against the rent for tax purposes, so you are better off clearing the home mortgage as you cannot claim the interest on that, no?

[Haighermeister]

May I ask what you do to support 4 kids, 2 mortgages, 15k on credit cards and save 70k?

Serious question BTW,not taking the piss.

[fergywales]

Worst "I've got 3 houses and £70k in the bank" thread EVER!

As an aside, does a 'Pensions & Benefits Manager' not have any form of financial planning accreditation?

[Roger Woods]

Work in investments in the Middle East...Tax Free ...

[Roger Woods]

almost 12 years in Saudi Arabia working for a British Company looking after Expats, no financial advice being given as its looking after an in house scheme, just asking for a sense check, no bragging to fellow PHers

[cailean]

Clear credit cards first then mortgage debt with no tax relief.

[ringram]

Roger Woods said:

Work in investments in the Middle East...Tax Free ...

In which case shouldn't you be more financially aware of how to manage your own finances?
No wonder the majority of the worlds finance firms failed in 2008!

[Eric Mc]

General advice is always to get rid of Credit Card debt first.

[Roger Woods]

ringram said:

In which case shouldn't you be more financially aware of how to manage your own finances?
No wonder the majority of the worlds finance firms failed in 2008!

Ringram - I take it you had a bad day?, Did you happen to give the Mrs a slap when you got home to?

[Roger Woods]

Tonker - You talk sense, Thanks, we have had the States house many years and to be honest its worth around the same as when we bought it, I did think about taking some money out of it but decided to ride the storm there. UK holiday home almost ready to rent, just finishing the bathroom and kitchen etc and hopefully will be ready yo rent when we are back in July.

[Roger Woods]

Swerni Cheers for your note, I had thought about that but currently as I'm non resident for Tax Purposes I'm told I cant have an off set account, things will change when I get a job back home and I move back to the family home. Theres loads of options for me but I'm clear that the Credit Cards will be sorted ASAP.

[louiebaby]

Credit card debt needs to be paid off. Get it done.

With what is left, I would think about other holiday lets. If you're DIY minded, and do some study on running a business, whatever is left over is at least a start into building a holiday letting business.

Personally I'd pay off my personal mortgage first, knowing my monthly outgoings were very low would enable me to sleep better whilst I started my own business. I'd look into how the company was structured so the paid off family home was never at risk due to the business dealings.

I don't know one in the particular area, but a good accountant would be useful in this situation.

[choading]

ringram said:

In which case shouldn't you be more financially aware of how to manage your own finances?
No wonder the majority of the worlds finance firms failed in 2008!

And that's what sitting in front of a computer all day does to you

[Fatman2]

Personally I'd get shot of the credit card first of all. With the rest I would ideally remortgage the house (with the £34k) with someone like First Direct and take out an offset. If you release the amount of money you would have paid off and then pay off the rental then you can stick the liquid cash you have into an offset account so that you benefit from the tax free aspect. As your money is still in the bank then you keep your liquidity (this would be important to me in this current climate).

A funny way of doing things perhaps but something I would do myself. Of course liquidity may not be important to you.

[BoRED S2upid]

I can't give any better advice as has been given but its interesting why you have such a large Credit Card debt but on paper are financially well off that does suprise me.