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Paying off Debt

  • 21-01-2016 9:03pm
    #1
    pavb2
    Registered Users, Registered Users 2 Posts: 3,064 ✭✭✭


    I've got about €15k worth of debt between credit cards and bank overdraft.

    Recently I was able to cash in a company pension so have cash taken as a tax free lump sum, some money in an ARF and some in an AMRF.

    My question is that assuming I want to pay off all the debt which pot do I pay it off from. I realise that credit card interest is expensive also that taking from the ARF or AMRF will be subject to tax, and possibly USC etc.

    Any advice appreciated


Comments

  • #2
    coylemj
    Registered Users, Registered Users 2 Posts: 25,622 ✭✭✭✭coylemj


    You can draw up to 4% of the value of an AMRF and/or any portion (potentially 100%) of the ARF in each calendar year but such withdrawals will be subject to PAYE and USC.

    If you can afford to, I'd advise you to immediately pay off the credit card balance and do so from your cash reserves. Over the next few years the rates of USC will in all probability come down and if conditions are right, they may also increase the standard rate (20%) band of PAYE so delaying taking money out of the ARF and AMRF would be advisable until you really need the cash. You should try to negotiate the conversion of the bank overdraft into a term loan with monthly repayments you can afford but get rid of the credit card debt as a matter of financial urgency.


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