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Pay off tax credit debt or do summat else?

(17 Posts)
SophyStantonLacy Tue 05-May-15 18:11:28

Unexpected financial gift of £3k. Should we
a) pay off tax credit debt (paying back circa £3k at £40 a month, no interest charged)
b) put it on the mortgage
c) overpay student loans
d) save it

TheoriginalLEM Tue 05-May-15 18:16:11

put it on mortage i think orany other debt with interest

FromMeToYou Tue 05-May-15 18:55:27

Debt with the highest interest rate, which is probably the mortgage.

Moreisnnogedag Tue 05-May-15 19:07:19

See I wouldn't necessarily but it on mortgage. On my mortgage that would mean paying off just under a year early in 20 odd years time

I wouldn't pay anything on the 0% interest debt either but would look at reducing credit card debt. Would also look at perhaps whether a big ticket thing needed doing like replacing my barn roof

SophyStantonLacy Tue 05-May-15 21:15:22

We don't have any other debts except those listed. I know the "rule" is to pay off the highest interest debt (which is the mortgage), the tax credits debt just weighs on me for some reason... We are going to be paying off a third of the mortgage this year too with an inheritance so also feel like we could put this money towards something else, but maybe we should just add it on to the mortgage overpayment. Hmm.

Lyinginwait888 Wed 06-May-15 12:11:15

Tax credits definitely. Horrible debt to have hanging over you. I'd go for clean slate in a heart beat.

At least property is appreciating all the time, so whilst you might not be paying it off, you're probably still gaining value.

FromMeToYou Wed 06-May-15 21:15:46

Financially it makes sense to pay off the thing that has the highest interest rate.

OrangeJuiceSandwich Thu 07-May-15 12:12:06

Tax credits. I would rather clear it and move on with my life.

Woodenheart Thu 07-May-15 22:32:12

Tax credits, then still put the £40 a month away for Christmas booze presents grin

KateSpade Fri 08-May-15 16:58:40

Just to let you know OP, I tried to pay off my tax credits debt - when I claimed childcare vouchers, but they wouldn't let me.

SophyStantonLacy Fri 08-May-15 17:03:45

Really kate? Why not? Election results making me much more inclined to just pay it off, out of illogical fear!

sockmatcher Fri 08-May-15 17:09:01

Do you have any other savings

Fairylea Fri 08-May-15 17:11:01

Am I the only one who'd spend it on a holiday or home improvements? blush

SophyStantonLacy Fri 08-May-15 17:11:45

Yep we have savings of around £10k.

sockmatcher Fri 08-May-15 20:04:03

Then yes I'd pay off some tax credits

monkeyfacegrace Fri 08-May-15 20:07:09

Holiday without shadow of a doubt. You could be dead tomorrow

KateSpade Sat 09-May-15 19:03:52

God knows, sophy I was going round in a huge circle, I owed £2k & a few days later they sent me a letter saying 'that's not how we do things' they are taking £30/40 a week out of my tax credits,

It's hard work because I haven't had an update/letter/anything in ages & I ring up & no matter what I say, it's like I'm talking a different language!

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