Debt advice - what would you do?

[KellyM1998]

Hi all, no judgement please :)

I have the below debts:
£150 - Argos card
£140 - Lloyds Credit Card
£700 - PayPal
£3,000 - NatWest credit card (19 months interest free)

My goal is to get most of this (if not all) paid off by the end of the year

Which debts would you tackle first? Argos are charging roughly £4 a month interest , PayPal is £10 and Lloyds is around £2. NatWest interest free.

Just trying to get my head around where to start (I didn’t realise I had mounted up this much but feeling hopeful and motivated to get it paid off).

thank you!

How much spare do you have to put towards the debts, and what are the current minimum payments?

So for NatWest the minimum is £35, Argos it’s £7, PayPal is £25 and Lloyds is £5. I could probably afford between 200-300 per month (I’d like to put a bit in savings at the same time just in case). Just didn’t know which debt to start with really.

You need to know the interest rates. Prioritise paying off the one with highest rate first.

PayPal and Argos are the same I think, might start and pay the £150 off Argos next month in one go then move onto PayPal …

This. And leave the NatWest one until last (unless the interest free period is about to run out).

Can you consolidate the first three debts to an account with lower interest? Maybe add them to your NatWest account if there’s an interest free offer (sometimes you have to pay a small fee, but this may work out cheaper overall). Alternatively get a balance transfer offer on a new credit card (and then destroy credit card).

Firstly just pay the minimum on the cc until you clear the others as it's interest free.

I would normally say start with the debt with the highest % interest rate, pay as much as you can off that whilst paying minimum on the others, then pay off next highest etc.

Harder to say in your case as the amounts are quite low. Depends on what you've been paying on them up to now/how much spare cash you have to throw at it per month.

Post the interest rates, minimum payment on each and how much in total you can pay each month. Also post how long the natwest card has left interest free.

I’d say I have around 200-300 per month I could use, I want to save alongside just in case but motivated to try get everything paid off. I might clear Argos next month and then move onto PayPal. I should be able to clear the Lloyds credit card, PayPal and Argos in 4/5 months then I could move onto the NatWest credit card

Interest rates for Argos and PayPal are the same around 22% and then the NatWest credit card is interest free for the next 19 months.

This sounds sensible.
Good luck!

It’s silly to save when you’re accruing interest on debts. I’d work on paying off things before you start to save.

Yes I think I might just bite the bullet and pay it all off instead of trying to save. I will be able to do it by the end of the year just wasn’t sure where to start with it all

I would pay off the ones you are paying interest on ASAP. Then I might split the payoffs between the main credit card and a small savings pot for 2 months, with a view to having a pot of £300-400 untouched. I'd put that in a high interest instant access account. I'd then return to paying off the no interest credit card until it was gone.

The trouble with having zero savings is that it leaves you vulnerable to putting an unexpected bill on the credit card. Having a small pot cushions you against that.

This is what I would do (+ make any minimum repayments):
Month 1: Clear the £140 and £150, no savings.
Month 2, 3 and 4: Clear paypal £235 and £65 in savings.
Month 5 onwards: £200 to Natwest and £100 savings.

Once I got to a comfortable amount of savings about £1000 which would cover car issues or appliance replacement then I'd put anything additional into the Natwest. If you are on a low income look at the Help To Save scheme, it's well worth it.

If you put the debts and interest rates in the Debt Repayment Plan app, it'll work it out for you and give you graphs and estimated debt free dates too which is useful. The app is free and has a light blue icon.

£200 per month clears the Argos this month and @£50 off the Lloyd's one .
Next month clears the Lloyd's one completely and takes £100 off the PayPal one.
Leaving £600 on Paypal. I'd pay £150 off that subsequently (4 Months left) and £50 off the big one. So by the end of August you'll be at zero balances with Argos, Lloyd's and PayPal and then you'll have less than £3000 of the Nat West to pay.
At £200 a month it'll take just over another year to clear (15 months)
So you'd be debt free Nov 2024.
If you could put £300 a month you'd clear the first two this months, two and w bit more months for Argos (paid off by July). and then 10 months to clear Nat West. Done by May 2024

Looking at how much you can potentially throw at this a month, I would:
Month 1 pay min on everything, and pay off Argos.
Month 2, pay min on everything and pay off Lloyd's.
Month 3, pay min on Natwest, and as much as you can spare on PayPal. Repeat this until PP is paid off, then use everything to pay off Natwest.

There is no point saving while you have the debt.