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Wwyd? Clear all debts or put some in savings?

(24 Posts)
WhoNickedMyName Sat 28-Sep-13 10:16:22

Buy any essentials first.

Then put a small amount into savings for emergencies - say about 2k, and DON'T TOUCH IT unless it is a genuine emergency.

Then use the rest to clear debt.

Romily Sat 28-Sep-13 10:13:37

I would pay off all the debt and use the money you will have free from repayments to buy winter clothes. Places like the regatta outlet store and field and trek are good for affordable outdoor clothing as well as charity shops and the usual affordable high street stores.

amicissimma Tue 17-Sep-13 18:08:53

Inflation was 2.7% in August (CPI) or 3.3% (RPI). Take your pick!

If Preciousbane has found the best rate, the most interest you can get is -0.45% (or -1.05). Note the minus signs.

As other posters have said, you'd be better paying off your debts but making a standing order, into the highest rate account you can find, for the sum you would have to pay each month once the 0% rate expires.

Preciousbane Mon 16-Sep-13 18:29:47

Best buy isa I think is 2.25% at Nationwide Anglia but has an introductory bonus that includes this rate.

I am looking for an isa at the minute as well as an isa bond I had has just matured but I tied it up for four years, it was 4% there is nothing with a rate like that now.

MSE has isa info, what your thinking of doing is called stoozing, not done it myself and only for the mega organised which I'm not.

Badvoc Mon 16-Sep-13 12:50:44

Thanks big kid smile
It's been a rough few months!
Lets hope bits of the house don't start falling down again!

Badvoc Mon 16-Sep-13 12:45:26

Hi everyone.
Thanks for all the advice.
Just to reiterate...the cc debt has just been shifted to a 0% card so we will pay no interest for 15 months smile I got the best deal off the MSE forum.
I will look around for a high (ha!) interest savings account and put the savings in there. I reckon 3% is about the highest ATM?
I like your idea splatt....gain a bit of interest and then pay off the whole cc at the end of the 15 months.
Then we would have savings, and money for emergencies (which has been our downfall tbh) and not have to use the cc.
Also, we could pay off a decent chunk each month rather than the minimum repayment.
Sadly we all need winter coats, and winter clothes. I am wearing clothes from 6 years ago and I have lost some weight since then! smile my sister has given me some clothes for ds2 which is great and I got quite a bit off e bay for him a few months ago.
Sorting the overdrafts out will be a big help tbh.
Thanks for replying x

Mum2Fergus Mon 16-Sep-13 11:23:11

Essential winter clothing only (and shop around for bargains), repay debt, start saving what would have been your monthly repayments towards credit card/overdraft...

specialsubject Mon 16-Sep-13 10:06:36

repeat, clear the debt. Savers are dirt at the moment and will be for years. You cannot get interest rates that beat inflation. You need some savings for emergencies but debts COST so clear them.

then get down the charity shops for as much of the clothing as possible.

simple budgeting -

stop buying clothes for adults unless something wears out
don't buy magazines (trash), books (use the library) take away coffees etc
stop buying makeup
go own-brand
make sure you waste no food
shop around for all insurances every year

good luck and glad you have the money!

BackforGood Mon 16-Sep-13 09:15:20

I agree with Splatt34 in theory, If you are very, very good at managing your money.... if you have debt at 0%, then in theory it's better to put the equivalent money into an interest earning account until the 0% comes to an end. But in real life, interest rtes on savings are so low, and, while you have that money witting there, it can be a temptation, so I would actually pay off all debt and then start saving.

Splatt34 Mon 16-Sep-13 09:04:58

If you've just moved the credit cards to interest free I'd pay off the overdraft, buy NECESSARY clothes & put the rest in a savings account. When the interest free period comes to an end use the money to pay off the credit card balance before you start paying interest again.

StrangeGlue Mon 16-Sep-13 08:47:43

It's always more cost effective to clear debt - you're not making savings (mortgage excluded) if you're running debt. Especially as interest rates are crap!

Alvin hall says so and I love him!

Agree with Robothamster.

Pay off all the debt first. You have to. It will be such a relief.

Preciousbane Mon 16-Sep-13 08:40:53

Debt first always and if the clothes are really needed such as a winter coat and boots or your clothes are falling apart at the seams then buy some. If they are not needed then I wouldn't buy anything. Once you have sorted your finances then start a clothes and treats fund, it will give you something to work towards.

bigkidsdidit Mon 16-Sep-13 08:38:35

I would pay it all off - imagine the load off your mind! Then I would set up a standing order to a savings account for the amount you are currently paying onto the cc each month.

And badvoc may I say how happy I am you have nice financial news smile

DameDeepRedBetty Mon 16-Sep-13 08:37:12

I'm uncomfortable if I don't have enough in the bank to buy a replacement car should the head gasket go, or get the boiler fixed if something catastrophic happens to its inner works - about £3000.

Buy the children the essential clothes, put £3000 in the best account you can find on MSE, and pay off whatever debts have highest interest rates with what's left over.

singinggirl Mon 16-Sep-13 08:31:58

Nextphase said it perfectly. Pay off all debt then you can put money into savings every month, which is a very useful habit!

RobotHamster Mon 16-Sep-13 08:30:50

Then once the debt it cleared set up a savings account and a monthly DD for whatever the CC/OD payments were.

Definitely keep a small amount in savings though.

RobotHamster Mon 16-Sep-13 08:29:06

I would make sure you have at least £2k into savings for emergencies, otherwise you'll end up using the credit cards if you have unexpected outgoings. Use the other £8k to clear overdrafts and as much of the CC as you can, then transfer the rest to 0%.

nextphase Mon 16-Sep-13 08:28:39

But the essential clothes, and then pay off the debt!
Then look at how much money was going towards servicing the debt each month, and put 75% of that amount into a savings account the day afer pay day each month. If there is anything left at the end of the month, sweep that across too - you get a savings account, debt free and a little more money to spend each month.

LaLaLeBouef Mon 16-Sep-13 08:25:27

I would definitely put it all towards the debt.

If you have any debt left over, you can then pay it off quicker using the monthly payments you had been making on the now-cleared off debt.

Then once that's gone you can start saving and do some budgeting for new clothes and treats! smile

Alwayscheerful Mon 16-Sep-13 08:23:03

Apply for a new credit card with a 0% balance transfer rate. If you are accepted pay off both overdrafts and use the rest to reduce your credit card balance.

theri Mon 16-Sep-13 08:22:57

If you think long term, paying off some of debts now will mean less monthly out goings, so you gain money

LIZS Mon 16-Sep-13 08:18:40

Interest rates are so low there is no point in paying interest on debt while squirrelling away. Pay off the highest interest rate first , usually cc.

Badvoc Mon 16-Sep-13 08:10:20

My dh and I have been given £10k as a gift.
We have £7.5k of cc debt (moved into a money pit of a house!) and we the dc need winter clothes desperately. We are alo both heavily into our overdrafts.
Dh feels we should pay off the overdrafts and £4.5k off the cc (which we have just moved onto a 0% card) and put the rest into savings after buying the clothes we need.
Forums like MSE say you should pay off all debts first.
I sort of see his point. Not having much in savings was the reason we had to use a cc in the first place.
We are planning to start using you need a budget next month to help us budget better.
Could we do better? Use the money more wisely? I am not very financially savvy sadly.
Wwyd?

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