Please or to access all these features

Add post

Watch this thread

Save thread

Start a new thread

Flip thread

Hide thread

My feed

Active Unanswered threads

Getting started FAQ's

Unanswered threads Acronyms Talk guidelines

Hide shortcut buttons

Talk

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Flip

1 2 3 4

Original poster

I have £300 to pay off towards a debt which should I pick?

82 replies

Marleya · 18/02/2022 08:03

Very catalogue is currently £1083. Interest rate 39.9% APR minimum payment of 7% of balance or £5.

Capital one is currently £397. Interest rate 34.9% APR. Not sure on the minimum payments I normally pay between 15-20 a month

Next account is currently £215. 24.9% APR and I normally pay the monthly minimum payment between 10-15

I am leaning towards paying 300 off to very as their interest seems the highest and it is the one I am struggling to pay off the most

I could pay my O2 contract off at just over £330 (no interest) and reduce my monthly phone bill from £55 to £7 by swapping to a sim only deal... not sure whether to do this and use the money that would have gone on my phone to pay off Very?

Ive been brought up with no financial help so this is all a big hole to me but I am determined this year to pay debts off. I have done really, really well at managing my money so may be able to pay a bit extra on all each month

OP posts:

ancientgran · 18/02/2022 11:35

The logical thing to do is pay off the highest interest debt first as it is costing most.

If you go toMoney Saving Expert there is a credit card section and you put your details in and they will tell you if there is a low or no interest card you are likely to get, if there is one transfer as much as you can to that, it is easy they will ask you on opening the account or shortly after.

Have you tried asking O2 if they will let you reduce you payment? Sometimes they will let you.

MoneySavingExpert is great for advice and remember any extra you can pay off brings the end day closer. Good luck.

orinocosfavoritecake · 18/02/2022 11:48

Assuming you can only shift phone contracts if you pay off O2 then that has to be the priority. Gives you £48 every month to throw at the next debt.

Good work by the way. It’s not easy, but starting is the hardest bit

Original poster

Marleya · 18/02/2022 11:50

Yeah so I am stuck in a device plan with O2 if I paid off the phone I could get a cheap sim deal

I haven't actually ordered from Very since September, haven't ordered from Next in about 6 or 7 months. I never want to spend on them again 🙈 So it is looking like Very is where I should put the 300?

I can't find a credit card or loan

OP posts:

ancientgran · 18/02/2022 12:05

Shame you can't get a better card but if you pay the £300 off and reduce your debt you might have a better chance, it is worth having a look every now and then as month by month the position will get better as your debt reduces.

Any stuff you can ebay? Baby stuff they don't need any more. Honestly every penny you can find will help. The other thing is don't reduce your payments when you've paid the £300 off, keep paying as much as you can.

You've done well to reduce the debt and I know it can be hard to keep the momentum going but it will be worth it if you can.

ancientgran · 18/02/2022 12:07

Do you have access to a credit union? Maybe through work or locally? If you start saving a small amount with them £5 a month or something they might be able to help with a loan at a decent rate in a few months.

orinocosfavoritecake · 18/02/2022 12:29

Then pay off the phone. It’s the biggest saving.

ancientgran · 18/02/2022 12:37

@orinocosfavoritecake

Then pay off the phone. It’s the biggest saving.

Depends how long she has left on the contract. I don't think the OP has said but I might have missed it.

NoSquirrels · 18/02/2022 13:24

@Marleya

Yeah so I am stuck in a device plan with O2 if I paid off the phone I could get a cheap sim deal

I can't find a credit card or loan

Will it give you a bigger psychological boost to pay off a card entirely?

Sometimes the purely mathematical thing to do is not as beneficial as the thing that will give you momentum.

That’s why I’d pay Next or Capital One.

For me Id do Capital One, once that’s all paid add your regular monthly payment to that to the Very payment, and do all you can to raise extra cash and keep checking the balance transfer offers as you go.

NoSquirrels · 18/02/2022 13:27

@Nidan2Sandan

When I was in debt similar to yours, I spoke to a debt charity and they advised to pay off the lowest item first. Then, take that money and pay off the next lowest.

You get the satisfaction of seeing debts clear one by one, and by the time you are down to just the largest debt, you have the biggest amount of available money to pay towards it.

This is what I’d do in IP’s position because it’s 2 small debts then smashing the big Very card. Psychologically it gets easier just to keep track of 1 debt, and as offers open up (which they may well do when she clears the Capital One card - often then try to attract you back in with a 0% offer if you leave £0 on the card) then it will get easier.

ChuckBerrysBoots · 18/02/2022 16:14

And paying off the Next, while not the highest interest, means one is completely cleared which is good credit rating wise than having three debts, presumably?

DorisJoy · 18/02/2022 16:21

I think I’d start with the smallest debt first, clear it and close the account. Then next month add the amount you’ve saved onto the next smallest debt so you’re paying extra. Pay that off and then roll monies saved onto the next debt. While you’re doing this try and pay a little more than minimum payment on the others.

rookiemere · 18/02/2022 17:40

I'd never have thought of recommending paying off the lowest first, but I can see why psychologically it makes total sense.

Avidreader12 · 19/02/2022 06:49

Also Have a look at money saving expert credit cards cash transfer to your bank account, treat it as a loan so take out the amount that’s on your existing very, capital one, next. The interest rate will be much lower for all three. Use the money to pay off all 3 then make monthly payments what you were paying against the new card. But don’t do this if you have an overdraft as when the cash hits your account it will natuarally pay towards your overdraft balance..

Scarby9 · 19/02/2022 07:01

www.ramseysolutions.com/debt/how-the-debt-snowball-method-works

Original poster

Marleya · 19/02/2022 07:21

Thank you everyone... i am going to look further into 0 cards/loans today to pay very and capital one off without the interest. Today I paid off next and paid another 100 to capital one. I feel great for it!

OP posts:

MakeUsACuppa · 19/02/2022 07:42

Well done OP, have you worked out a monthly budget for all your outgoings?

Ignore me if you have but that may help for future budgeting. Money Saving Expert is fab for ideas and support.

Original poster

Marleya · 19/02/2022 07:50

Yes I have, thank you, I can afford £130 for repayments so I'm going to pay £100 to very, £30 to Capital one (though this may be more some months with birthday/christmas money)

Would it be a good idea to use my capital one card for petrol, food shopping, daily expenses etc then pay it off straight away to help my credit score?

OP posts:

MaizeAmaze · 19/02/2022 07:58

No, dont use the credit cards right now unless you can pay off the whole balance. So, right now spend from your bank account, and pay off as much of the credit cards as you can.
When you have zero balance, you can consider spending on every day things and paying off, but it requires absolute discipline to pay off in full every time.

Marmite27 · 19/02/2022 08:04

Pay off the smallest one first.

Use the money you would have paid towards the next smallest one, maintaining the amounts you’re paying to everything at the moment.

When the second smallest one is paid off, snowball the monthly amount to the next highest until everything but the biggest is paid off. Then you’ve got all the amounts you paid to the lower amount debts balled up into one monthly sum and can pay a higher amount off and get it paid.

Original poster

Marleya · 19/02/2022 08:04

Thank you

OP posts:

Chatwin · 19/02/2022 08:18

Well done OP.

Look up My Frugal Year (Clare Seal) on Instagram, she has lots of great advice from personal experience.

ChuckBerrysBoots · 19/02/2022 09:04

Bet it feels good to have one of them gone OP!

Soontobe60 · 19/02/2022 09:14

@Marleya

Yes I have, thank you, I can afford £130 for repayments so I'm going to pay £100 to very, £30 to Capital one (though this may be more some months with birthday/christmas money)

Would it be a good idea to use my capital one card for petrol, food shopping, daily expenses etc then pay it off straight away to help my credit score?

No! You’ll get back into a similar situation. When I was in a bad position financially, I set up standing orders to pay my cards off, making sure I paid more than the minimum, I cut the cards up so I couldn’t use them again and I worked out how much money I needed weekly for food and fuel then withdrew that in cash every Friday so tht I didn’t need to use my debit card. I hid my card in a drawer to reduce temptation. If it were now, I’d also delete Apple Pay or my bank cards from my phone. Cash all the way!

Whitney168 · 19/02/2022 09:16

Assuming your attitude of never spending on them again holds - and make sure you ask them to reduce your available credit as you pay them off to make sure of this - then it should absolutely be Very you pay off first, then Capital One, then Next, ...

You should be paying minimum payments on all but the highest interest ones, and throwing everything possible at the highest interest one over and above the minimum payment to get rid of it as soon as you can.

Money Saving Expert is a fabulous site, and their forums are very active and will help you hugely. They can look at your outgoings and see if there's anywhere you could save a bit extra to pay off.

While you're in the frame of mind to beat this, I would try to treat it as 'sport' - calculate when you'll be debt free if you pay this £300, then minimum payments, and then make it your life's work to bring that date closer and closer by saving bits of money that you then pay off the debt.

Look at raising any extra bits of money you can. Anything that's not used but cluttering your house could be sold via FB Marketplace, and chuck those payments towards it. Seeing your debt free date come forward would be very motivating.

heidbuttsupper · 19/02/2022 09:23

Dave Ramsey is really good
wannabedebtfreeuk.com/2020/06/09/dave-ramsey-baby-steps-uk/

Flip

1 2 3 4