Savings or debt

[Waitingformay]

I know this question has probably be asked loads of times but I was wondering what would be the best thing to do.

I have various debts (about £700 car finance to pay off, £900 PayPal credit and £400 on another credit) and about £6000 in savings. Currently the PayPal and other credit are not costing anything but need to be paid off by the summer. I'm reluctant to use my savings to pay off the debts mainly because I don't want to see my savings go down but am I being daft by doing that? I'm also on maternity leave so I am now very aware of the fact that my income is reducing and wondering if my priority should be clearly my debts now.

Am I overthinking this? Is it better to have a pot of savings with debts or lower amount of savings and no debts?

I think the interest charged on debts (when they charge it) is usually higher than what you can get on savings which is why the traditional advice is to pay off the debts. But you have to do what works for your own situation.

The interest rate you will be charged each month is way more then you will get in savings!
Do what you can to pay it off beforehand then use savings for the rest before it goes to interest rate. Alternatively switch it to a 0% balance transfer card (do a soft search credit club is good for this)

Whilst your debts are 0% interest, maxing the interest on your savings makes sense. However, once you start paying interest on your debts it is likely that it will not make sense.

Long term it is good you instinctively don’t want to spend savings. Hopefully this will stop you getting into further debt.

If you do have any spare money each month then put it towards reducing the debt. Focus on the debt that will have the highest % interest.

In your situation I would definitely pay off the debts. You’ll still have a good chunk of savings left!

Pay off debts you’ll still have a decent savings chunk and will probably be able to save more after the debts are paid off.

I think you need to view this as an 'emotional' decision as much as a financial one.

If you're debt free with diminished savings does that make you feel more uncomfortable then having debt you can afford AND still having your savings? If it does then that's your answer.

If your situation is fluid at present then maybe keeping the debt and keeping your savings is the right solution for you, even if financially that's not the most efficient solution.

What would you be paying monthly on your debts once they start charging interest? If you paid them off at that point from your savings, would you have the discipline to pay a comparable amount back into your savings monthly? Or do you think you wouldn't be able to afford that? (In which case you absolutely need to pay your debts off or it will become more unaffordable).

I'd pay as normal 0% debts, would pay straightaway anything that is accruing interest now. Especially that you have savings of 6k and debt of 2k, so you won't spend all your money, but you'll save on interest.

I would keep paying the minimium on the 0% debt, but pay off the car finance (assuming no penalties) as you are almost certain to be paying more in interest on the debt than you are getting on the savings.
Re-valuate in the summer, but id be tempted to pay it all off then too. Still leaves you with 4k.