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  • FIRST POST
    • New_Guy_2016
    • By New_Guy_2016 26th Dec 16, 9:31 AM
    • 107Posts
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    New_Guy_2016
    Which Debts to pay
    • #1
    • 26th Dec 16, 9:31 AM
    Which Debts to pay 26th Dec 16 at 9:31 AM
    Hi All,

    Looking for some advice on what to do with an up and coming lump sum of money. The idea is to reduce debt as much as possible but want to make sure it is the right debt long term and not just picking the highest amount I can pay off.

    In summary I have 13k coming to me in a couple of Months and have significant debt which although I am comfortably paying every month this lump sum gives me an opportunity to get rid of a lump and potentially put me in a good position for paying the rest off.

    I have listed my debts below with amount owed and payments. In terms of the loans they are all due to finish within the next 3-4 years. My initial view is to pay off as many credit cards as possible as the other debts have an end date already so no risk of going past that unlike credit cards. Also the credit cards are likely the highest Interest. Also for other reasons a portion of the debt will go to paying back some of a loan from my parents.

    Another option before I go ahead paying the debts is could I offer my credit cards a final settlement figure and maybe get a bit knocked off and use that money on something else. Likely a long shot as they would have no reason to offer me a settlement figure I presume.

    Debt Amount Monthly Payment Pay Off Monthly Savings
    Capital One £2,550.00 £83.00 £2,550.00 £83.00
    Capital One 2 £200.00 £7.00 £200.00 £7.00
    Barclaycard £1,200.00 £44.00 £1,200.00 £44.00
    IHG Credit Card £5,000.00 £143.00
    Vanquis £2,000.00 £98.00 £2,000.00 £98.00
    Aqua £1,600.00 £80.00 £1,600.00 £80.00
    Vanquis £2,000.00 £50.00
    Barclay 2 £1,200.00 £65.00 £1,200.00 £65.00
    MBNA Credit Card £1,500.00 £50.00 £1,500.00 £50.00
    Tesco Credit Card £250.00 £10.00 £250.00 £10.00
    Dorothy Perkins store Card £250.00 £10.00 £250.00 £10.00
    Very Cataogue £1,500.00 £10.00
    Car Loan £9,508.74 £250.23
    DFS Furniture Loan £1,263.36 £60.16
    Evolution Second Mortgage £21,155.04 £440.73
    Parents Loan £7,582.00 £223.00 £2,230.00 £223.00
    £58,759.14 £1,624.12 £12,980.00 £670.00

    Amount
    Lump Sum £13,340.00
    Debts paid £12,980.00
    Lump Sum Left £360.00
    Monthly savings £670.00


    I have already above just picked out the highest Interest Credit Cards along with my parents loan to pay off initially as this gives me the highest monthly saving I can see to then start ploughing those savings into the other dates to get a snowball affect you could call it.

    Any help appreciated and apologies for the formatting of the list as for some reason I am not able to upload an image
Page 3
    • New_Guy_2016
    • By New_Guy_2016 14th Mar 17, 6:39 PM
    • 107 Posts
    • 25 Thanks
    New_Guy_2016
    It is very difficult to give accurate advice without the interest rates charged by each debt - the apr. Can you not edit to show this for each debt? For example I am assuming your parents loan is 0% but you are making 7 payments upfront presumably so you can direct the £223 to another debt.

    I can see the logic behind you paying off the debts with no fixed repayment term and leaving the loans to run their course but without knowing the rates you are being charged it is impossible to say definitively this is the best use of your lump sum.
    Originally posted by enthusiasticsaver
    Sorry thought I had stuck the Interest rates on but have added below what I believe them to be

    Payoff

    Capital One - Balance -£2,550.00 Interest - 2.47%
    Capital One 2 - Balance - £200.00 Interest - 1.97%
    Barclaycard - Balance - £1,200.00 Interest - 2.21%
    Vanquis - Balance - £2,000.00(partial settlement of £1,762) Interest - 3.43%
    Aqua - Balance - £1,600.00 Interest - 3.14%
    Vanquis - Balance - £2,000.00(partial settlement of £870) Interest - 2.84%
    MBNA Credit Card - Balance - £1,500.00 Interest - 1.81%
    Tesco Credit Card - Balance - £250.00 Interest - 2.75%
    Dorothy Perkins store Card - Balance - £250.00 Interest - 2.84%
    Parents Loan £7,582.00 £223.00 - Paying £1,561 off so have 7 months without the payment - Also 0% Interest

    Not Paying Off

    Very Catalogue £1,500.00 Interest - 2.84%
    Car Loan £9,508.74 Interest - Unsure
    DFS Furniture Loan £1,263.36 Interest - £4.76
    Evolution Second Mortgage £21,155.04 Interest - Unsure
    Barclay 2 £1,200.00 interest - 2.21%
    IHG Credit Card £5,000.00 Interest - Unsure
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 7:43 PM
    • 4,691 Posts
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    enthusiasticsaver
    That helps a little although that is monthly interest rate rather than apr but at least gives a general idea. In that case I would pay off the Very catalogue as that is 34% over the year instead of the MBNA which is only 21.7%. Same balances although I realise you may be looking at monthly payment I am looking at the debts which are most expensive interest wise.

    So priorities should be be the Vanquis, Very, Aqua, Dorothy Perkins, Capital one, Tesco, and if any left over MBNA and Barclaycard. If you are left with the car loan, DFS, the second mortgage and IHG that is only three or four debts but I would still find out what interest rate you are paying on them.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 7:49 PM
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    enthusiasticsaver
    Was the Evolution second mortgage in connection with a business venture? They appear to be a commercial mortgage company
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 7:52 PM
    • 4,691 Posts
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    enthusiasticsaver
    Oh no, beg your pardon. It seems they also do debt consolidation mortgages (: I strongly advise you check on the rate for that and maybe in a few months time when some of this debt is off your record you perhaps move some off on to 0% credit card if you are able. I suspect that is an expensive loan.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 8:01 PM
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    enthusiasticsaver
    Also just so you know the £10 you pay to the Very Catalogue every month does not even cover the interest -no where near so the debt must have been rising. You need to look at interest rates as well as monthly payments when deciding which debts to target.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • New_Guy_2016
    • By New_Guy_2016 14th Mar 17, 8:41 PM
    • 107 Posts
    • 25 Thanks
    New_Guy_2016
    Thank You, my idea was to just try and get rid of as many credit cards but I can see the sense in getting rid of very instead of say MBNA.

    My evolution 2nd mortgage is a standard one.

    I am trying to close as many credit cards as possible however I have looked at trying to get 0% Interest on my credit cards and then using them to pay off other debts and then clearing the credit cards before the 0% ends
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 8:51 PM
    • 4,691 Posts
    • 8,808 Thanks
    enthusiasticsaver
    Thank You, my idea was to just try and get rid of as many credit cards but I can see the sense in getting rid of very instead of say MBNA.

    My evolution 2nd mortgage is a standard one.

    I am trying to close as many credit cards as possible however I have looked at trying to get 0% Interest on my credit cards and then using them to pay off other debts and then clearing the credit cards before the 0% ends
    Originally posted by New_Guy_2016
    Yep that makes sense. If you are still getting offers of 0% it is worth taking them up.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • New_Guy_2016
    • By New_Guy_2016 27th Mar 17, 8:54 PM
    • 107 Posts
    • 25 Thanks
    New_Guy_2016
    Well just want to thank everyone for their help as tomorrow is the day when all the debts I have identified get paid off
    • enthusiasticsaver
    • By enthusiasticsaver 27th Mar 17, 9:50 PM
    • 4,691 Posts
    • 8,808 Thanks
    enthusiasticsaver
    That's great to be able to knock such a chunk off your debt in one go.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • New_Guy_2016
    • By New_Guy_2016 28th Mar 17, 8:14 AM
    • 107 Posts
    • 25 Thanks
    New_Guy_2016
    It is indeed but this is only step 1 of a longer process for me.

    This money also allowed me to stick a chunk in savings so happy with that and now my monthly money is allowing me to live comfortable but also start chucking money into the other debts I have.
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