Can I be considered 'debt free'?

Hello,

not posted for a while. I have been hammering my debts for the last couple of years and now owe 20k (which is a lot less than when I started). I am about to inherit about 20K in the next 1-2 months.

At the moment, all of my debt is on 0% cards with at least 12 months left until the 0% ends. I would like to put the 20K in the bank and leave it there for a while. I know it wont earn much interest but it's still better than nothing.

Do you think that I can consider myself technically 'debt free' as my savings now equal my liabilities?
«13

Comments

  • I'd say once you've used the inheritance to pay the debts then you're debt-free, but I'm a big meanie ;)

    Well done on your progress!

    HBS x
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  • sourcrates
    sourcrates Posts: 28,711
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    I would pay everything off as soon as i got the money, the longer you leave it in your account, the less you will want to part with it.

    Pay off the debts, dont run them up again, and thank the stars for your good fortune !!
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  • Happier_Me
    Happier_Me Posts: 563 Forumite
    You are debt free once you've paid off your debt, I would class you as debt neutral if you put your money into savings - you still have a debt to pay but the means to pay it off in full.

    If you have the willpower to NOT spend the money then I would keep it in savings, if you spread your cash around you can still secure some decent rates. But only you know if you can resist the temptation to spend it!
  • I would not even say you are debt neutral given the fact you will pay more on the credit card interest than you would making interest from savings. If you hold off now who knows if you will pay it off by the time that 12 months is up

    Personally, I would not consider you debt free.

    as hard as it may seem. Just pay off that debt. get rid of that weight on your shoulders. you will be glad when you do. then start the challenge and journey of building your savings.

    That's my 2 cents! best of luck
  • FatVonD
    FatVonD Posts: 5,315
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    Pay it off as soon as you get it, if you're made redundant in the next year you'd not be entitled to any benefits and would be expected to live on your savings. I'd pay it off straight away so it can never look like deprivation of assets.
    Make £25 a day in April £0/£750 (March £584, February £602, January £883.66)

    December £361.54, November £322.28, October £288.52, September £374.30, August £223.95, July £71.45, June £251.22, May£119.33, April £236.24, March £106.74, Feb £40.99, Jan £98.54) Total for 2017 - £2,495.10
  • Don't count your chickens ... until that money's in your bank / paid off those debts, you're still very much £20k in the red ...
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  • Ilona
    Ilona Posts: 2,449 Forumite
    Pay your debts as soon as the money arrives, thus removing the temptation to blow it. Then you can carry on saving the amount that you were previously using to repay the debts. It will soon mount up, and get you into the mindset of saving. I don't consider you are debt free until it the balance is zero.
    ilona
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  • moneyfacts
    moneyfacts Posts: 67 Forumite
    No. you have credit card debt
  • Windofchange
    Windofchange Posts: 1,166
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    No you are not debt free, and take it from someone who had very similar circumstances back in the day, don't see it as open season on shopping!

    If you can afford the repayments, and can continue to considerably overpay on the amounts then keep the capital and pay down the debt. It is 0% anyway, so paying off early will make no difference. If you are likely to go waste the money away then just pay your debts off and start again.

    Look for ways your 20k can do more for you - ISA's and funds.
  • Have you got any any other savings?

    If not, maybe keep the 20k spread it across high interest accounts so you have a nice emergency fund, use the interest alongside your own funding to pay down the debt as it's 0% and then transfer the debt at the end of the deal to another 0%.

    This would mean you'd have to be very disciplined though, if you are not then getting rid of the debt straight away all at once and start fresh might be a better option.

    Good luck
    FW
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