If you were in £10,000 worth of credit card debt and someone left you £1000

[OnePramAndHisSprog]

Would you use it all to pay off a bit of the debt?
There are so many bits and pieces that we need and we are unlikely to ever get a sum like this again... But it seems like such a joyless way to use the money. And only a drop in the ocean of what we owe.
On the other hand, we are never going to get out of debt unless we prioritise that above everything else. WWYD?

[uhOhOhDear]

Pay off the debt! Don't spend it.

[brettgirl2]

This is exactly why you are in debt op

[Joysmum]

chromicallytired what a superb post. Given some of the answers on this thread it's little wonder so many people are in debt. This isn't about just paying off the £1000 lump sum, it's the savings you make on compound interest that are huge. That £1000 will make a hell of a lot of difference.

[HaroldTheGoat]

At my worse it was 19k that's just my own. It's down to 3k.

The most important thing is changing your mindset it at least stop it getting worse then just plugging away at it.

One thing that stuck with me I think I might have read on MSE was that if you paid for a 50 treat meal out etc on a credit card, think about how long that could take to pay back. That could be years before you clear the balance. Think about how much interest would be applied, so over the years that treat would cost 100s of pounds. Puts you off then.

[mrsjay]

what could you really honestly need that you cant pay of your debt that is a shitload of debt to have on a credit card i am sweating just thinking about it clear some of it off I am sure the stuff you need can wait

[Morloth]

You sort the debts by their interest rates.

Every card gets minimum repayments.

Highest gets anything anf everything you can throw at it. As that one is paid off you move down the list.

Don't fritter it away. Pay the debts.

[mrsjay]

I have been quite surprised by the reactions on this thread. I think I had convinced myself than everyone is in debt these days and our situation was pretty normal.

urm no not everybody is in debt on credit cards I dont think it is normal yes we have been in debt but not that much and not on a credit card and we didnt have a pot to piss in, I think you should get yourself to primark get your coats and boots and pay of some of that debt I know the money in your hand must seem tempting but...

[FestiveEdition]

Good grief. Go to your bank and arrange a loan to resolve the debts on cards. Consolidating at a decent interest rate should reduce what you currently have to pay out each month and will give you a fixed term resolution to the misery so you actually can see a point where you can live in credit.
As for the £1,000 ...it really is about the headset. Wanting to spend it equates to having a "spend" mindset. Not being able to treat yourself with a windfall is rotten, but not as rotten as being debt ridden.

[Syllabubble]

Have a look at Frugal Queen's blog. She and her husband cleared over £40K worth of debt in 2 years. She can be a bit evangelical, but it's a blog I read to give myself a kick up the arse when we're spending too much (not on credit, thank goodness, but spending on stuff we don't need gives me the irrits.)

[FestiveEdition]

OP - an apology, I just spotted that you had been turned down for a loan at some point.
I would go back and talk to someone different, and look at a loan for the entire debt.
Or - consider extending your mortgage if you have one.

[SchrodingersFanny]

Have you contacted CCCS? They are brilliant, un-j
Judgy. I had 19k of debt which I paid off 4 years ago. It took under 5 years. It was a hard few years, but manageable.

Pay it off the debt.

[Trills]

Here's a calculator

I have no idea how much interest you are paying or ow much you are paying off each month, but here's a random example:

10k at 10%
If you pay £200 per month
It'll take 5 years 5 months to pay it off
and you'll pay £2,809 of interest

If you paid the £1000 in now
9k at 10%
If you pay £200 per month
It'll take you 4 years 8 months to pay it off
and pay £2,193 of interest

So you'll be free of debt 9 months earlier, and pay £600 less interest.

(if the interest rates are higher the difference is bigger)

[phantomnamechanger]

I still reckon you can, if you are lucky and have decent charity shops, source second hand coats that are warmer and better quality than new from primark. yes they are worn everyday, but only for a few months of the winter, and then often the child has outgrown by the next winter so the coat has plenty of wear left in it.

[phantomnamechanger]

we are very lucky that DH has a good salary and we have not got credit card debt. It is cleared every month in full.

he gets a bonus once a year, and we STILL use the majority of that to pay off a lump of the mortgage to reduce the term, and interest, just like in trills example, rather than think yippee and go on a spending spree.

we also save up for large expenses like a car or new furniture, rather than buy on credit. I sometimes look at other peoples homes with their massive tellies and matching décor and new furniture everywhere, and think wow, how can they afford all this when they earn less than DH - but then the penny drops - they look like they have it all, on the surface, but are in £££££ of debt. The same people ask me how we can afford music lessons for all 3 DC - well, its about priorities. we put this above sky TV, swanky phones, and package holidays which so many people think they ought to have, even though in reality these are beyond their means.

[samandi]

Yes, of course you should pay it off You still sound pretty feckless. How on earth do students get credit cards anyway?

[mameulah]

Pay it off.

[Tee2072]

I am in much the same boat and making a major effort to pay the debt off. We got into it for various reasons I'm not going to go into online because it's really no one's business.

I know how tempting it is to be handed a wad of cash and want to just spend a it of it on yourself, whether that bit is on necessary things or even just one take away as a treat.

Fight the temptation. If I had £1,000 it would go straight to paying off our debt.

[mrsjay]

credit cards are thrown at students samand dd has been offered 1 from her bank and 1 through the post , she didnt take them but students are offered credit

[MrsCosmopilite]

I'm not in debt yet but will be when I start work. I am a p/t student and had part grant/part loan for my degree. I'm now self-funding my masters (from savings accrued when I used to work). Once I start work, I'll have around £6k of debt to pay off, possibly more.

I try to keep spending low as I have no income (rely on DH), and a small child. Much of our clothing comes from charity shops. We're fortunate that we have around 10 locally. I've also recently discovered local freecycle pages (via facebook), and have been able to keep DD in warm clothes using these options - and hand-me-downs from friends and family.

If you're in desperate need of clothing, put aside £100 and shop in Primark etc. But you do need to pay that debt off. £9000 debt will accrue less interest than £10000.

[GandalfsPointyHat]

Pay it off. The debt is going to go away just because you're delaying payment. It's increasing every day. Do you understand how compound interest works?

[WowOoo]

I'd see it as being £9000 in debt.
Pay it off. As depressing as it is, just do it.

[sandfrog]

Yes, try to clear some of your debt.

[DeathByLaundry]

A few thoughts from someone who is a serial card tart (I bounce from 0% card to 0% card), who got into debt out of necessity (two unplanned children ) and who at last has it pretty much under control:

DO NOT add it to your mortgage. It's madness to turn currently unsecured debt into secured debt. If the shit hits the fan you could lose your house!

Re the £1000. It should go towards the debt BUT if you have accrued the debt because you've had no money put aside for emergencies/rainy days such as car repairs, unexpected dental bills etc, then you MUST change that or you will not get out of debt. So use some of the £1000 to start up a little rainy day fund, how much is up to you but I'd probably say £300. That's six second hand washing machines, so plenty for a start. Then use the remaining money to pay off the card charging the highest interest.

The rainy day fund you start should be something you budget towards monthly. So if is starts with £300 in it you might want to budget perhaps £20 or £30 towards it each month going forwards. There is no benefit to paying more off the cards if you are having to then borrow it back again when things go wrong. Although in general it makes sense to use savings to pay off debts, that is only the case if you are not continuing to accrue more debts. Get the budget right in the first place so you can actually afford the rainy days and the debt will truly start to go down instead of fluctuating.

Onto card management - www.moneysavingexpert.com/credit-cards/ is the bible for checking out your options when low rate deals end. Never sit on a high rate unless you have no alternatives, and this site will give you an idea of what alternatives you have. The forums are also fab. ALWAYS sign up for online banking for each card and get into a habit of checking really regularly. The more you are aware of the balances, payment dates etc the better.

I cannot enthuse enough about www.youneedabudget.com/ and it is genuinely a worthwhile £30 outlay. The free trial is great and it has made a big big difference to how I view out budget. It is a way of budgeting which works with what you have instead of most budgets which allow you to idealise and then fail each month. And their forums are also really supportive and friendly. Just be honest with yourself - you don't want to budget £10 a month all year for children's winter gear but if you don't, it will bite you in the arse.

IMO it is better to have a longer projected time to be debt free but be realistic than to say "I can be debt free in a year if I pay X amount each month" and then fall on your face when your kids need winter boots. I know from experience, this is the first year ever I have had a budget I could stick to and felt truly in control without impending panic. And £20k student loan aside I still owe nearly £3k on cards so it's damn good to feel no panic for a change!

Good luck :)

[DeathByLaundry]

Also, to keep you motivated, think of how much you spend on servicing debt each month (YNAB is great for this - it shows it all very clearly). I am so chuffed that in 2.5 years time I will have an extra £335 a month to spend! This means better savings, less stressing about keeping the food budget down, and possibly even a wee holiday at some point. I cannot wait.

[whatsthatcomingoverthehill]

SkinnybitchWannabe
"Me and my OH are in a heck of alot more debt than you are and if we get any extra cash it goes straight to our debt management company."

I really hope by debt management company you don't mean someone you have to pay a fee to for managing the debt? As others have mentioned on here there are charities who will do the same (probably better) service for free - CAP and stepchange are the ones I know of. Any fees you pay to a debt management company is money that could be paying off your debt!