Did you clear your debts before you started saving?

[DarylDixonsHair]

Had a conversation with a friend last night and he mentioned that he's had to dip into his savings in order to keep up debt repayments. It never crossed my mind to start a savings pot while I have outstanding debts. I have a few overdrafts, store cards and credit card but nothing huge like a mortgage or car loan.

I always thought I should pay off everything and start at zero before putting into savings. I'm on a low income, so it will take years before my debts are clear but I am making slow progress. Have I been a financial idiot all this time?

I follow Dave Ramsey. Have an emergency fund as well as a sinking fund for things like car expenses so you don't go further into debt for emergencies.

[quote DarylDixonsHair]@libertine80 How do you consolidate different debts together like that? Is it possible with a poor credit rating? I'm scared to apply for balance transfer credit cards in case I get turned down and wreck my credit rating even further.[/quote]
I transferred the balances of four different credit cards (including one that was maxed out twenty years ago) and my overdraft onto a 0% interest credit card. I then changed my bank account to a different bank with no overdraft. I had got into the habit of thinking the overdraft was money so I needed to change that mindset. I know my credit score has gone from poor to exceptional in the last two years. An important one was not paying the minimum payment on the credit card (I read that on here as a way of boosting my credit score).

@libertine80 Thanks, can I ask which credit card you used? Also, how do you transfer bank overdrafts, is there a box to tick when you apply?

[quote DarylDixonsHair]@libertine80 Thanks, can I ask which credit card you used? Also, how do you transfer bank overdrafts, is there a box to tick when you apply?[/quote]
You use a specialist money transfer card to pay cash into your bank account. The cash clears your overdraft, so you owe the card instead, but at 0%. I used Sainsburys as they had the best rate at the time but I'm sure there are loads out there which offer this.

Nope - I have a very small (under 1k) debt on a 0% credit card I could pay off but am able to clear with my salary before the end of the year- and a lump sum in savings which I add to.
My credit rating is very good so I’m not worried.

@libertine80 Ah, so that's what the cash advance is! I always thought it was weird that they offered a credit card plus cash 😁