Slow and steady or plough on through?

a_silver_lining · 10 March 2018 at 11:41PM

I keep feeling up and down about debt repayments.

As it is a family loan, from a well off (so no pressure) but not close (so no emotional pressure) relative, I could just pay £100 a month indefinitely. This would take me years and years. I could save and feel well off and ignore the debt.

Allocating £250 extra a month takes me to 17 months, which feels like years and years. With this I can still save and feel like I have some security.

Chucking every penny I have, for debt and saving, directly at the debt clears me in 11 months, but leaves me feeling more financially insecure... but satisfied with the end date.

How do people decide what to do, and does a shorter term or more room for saving/ spending tend to work better?

January2015 · 11 March 2018 at 12:02AM

I'd go for somewhere inbetween £100 and £250 per month. I would then stash away as much as I could and hopefully I would be able to present a lump sum to my relative in about 11 months to clear the loan.

This option gives the flexibility of being able to save an emergency fund whilst still showing commitment to clearing the debt.

That's what I would aim for anyway

Edit: Meant to put, this way if something cropped up that you need funds for you will have them without having to ask to borrow more. That would add some time to the end repayment date, but if all goes well you will be able to repay the debt in full in 11 months anyway.

fatrab · 11 March 2018 at 7:34AM

A lot can change in the timescales you are referring to. What if you ever need help from the relative again? If you make the best effort now, or at least stick to whatever agreement you made in the first instance, it will be remembered. I agree with the comment above, an early repayment of a lump sum would be well received.

Do a detailed, realistic budget, work out exactly what you can afford in total towards the debt repayment then pay half and save half. You'll quickly build up savings to settle the loan early and you'll be paying the debt off faster.

a_silver_lining · 11 March 2018 at 9:33AM

January2015 wrote: »

I'd go for somewhere inbetween £100 and £250 per month. I would then stash away as much as I could and hopefully I would be able to present a lump sum to my relative in about 11 months to clear the loan.

This option gives the flexibility of being able to save an emergency fund whilst still showing commitment to clearing the debt.

That's what I would aim for anyway

Edit: Meant to put, this way if something cropped up that you need funds for you will have them without having to ask to borrow more. That would add some time to the end repayment date, but if all goes well you will be able to repay the debt in full in 11 months anyway.

Thank you Janurary2015. The £250 option does leave me with room to save alongside it, so perhaps I should focus on that option.

I think my issue is that I got three years into having the debt having only made a tiny dent in repaying it and having gone in and out of my other debt. When my other debt ended I felt free and then suddenly remembered this big family debt I was chipping slowly at. I was so excited to save ready to move home and so I'm now going up and down in momentum to pay it back.

I think slightly higher monthly repayments and as you said built a lump of savings. Then if I get to a point where my savings outnumber the debt and I think I can pay the lump off and keep an emergency fund I'll do that.

a_silver_lining · 11 March 2018 at 9:38AM

fatrab wrote: »

A lot can change in the timescales you are referring to. What if you ever need help from the relative again? If you make the best effort now, or at least stick to whatever agreement you made in the first instance, it will be remembered. I agree with the comment above, an early repayment of a lump sum would be well received.

Do a detailed, realistic budget, work out exactly what you can afford in total towards the debt repayment then pay half and save half. You'll quickly build up savings to settle the loan early and you'll be paying the debt off faster.

Thank you Fatrab, The half and half might work for me. I'm a homeowner with an old boiler, so I know how quickly a big bill can hit. I think maybe I need to relax a little and stop focusing so hard on the timescale.

I feel lucky to have a good bit of spare money now I've changed my ways (through MSE) and reduced bills and spending habits greatly. I don't think I want to squeeze any tighter as I've started feeling guilty and unhappy about spending which is even included in my budget! So I'll step back a bit and keep logging my process but try and stress less.

Slow and steady or plough on through?

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