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Spend savings to clear debt or keep saving?
greenlightluke
Posts: 166 Forumite
Hi,
So I've never had any savings before and it is something I've started to do and i currently have £310 in savings, this is the start to save for a mortgage - i did have more but due to a break up i had to use what i had for a deposit for a new place (very sad to start from £0 again).
I do little things, for example every Friday i will look at my current account and will round down and transfer the change to my savings account.
I'm also reducing my debt and ive reduced it down to £405 on a Tesco credit card, £140 on my first direct credit card - the first direct ill clear next month and i guess what I'm asking is would it be better to use the £300 ive saved and clear majority of my Tesco CC and start again or continue to throw £100 a month onto it instead and keep saving?
I've never saved before and i know £300 isn't a lot and i guess I'd feel sad that what i did have is now gone. But yes, i am aware debt is my fault.
So opinions please and thank you.
[purplesignup][/purplesignup]
So I've never had any savings before and it is something I've started to do and i currently have £310 in savings, this is the start to save for a mortgage - i did have more but due to a break up i had to use what i had for a deposit for a new place (very sad to start from £0 again).
I do little things, for example every Friday i will look at my current account and will round down and transfer the change to my savings account.
I'm also reducing my debt and ive reduced it down to £405 on a Tesco credit card, £140 on my first direct credit card - the first direct ill clear next month and i guess what I'm asking is would it be better to use the £300 ive saved and clear majority of my Tesco CC and start again or continue to throw £100 a month onto it instead and keep saving?
I've never saved before and i know £300 isn't a lot and i guess I'd feel sad that what i did have is now gone. But yes, i am aware debt is my fault.
So opinions please and thank you.
[purplesignup][/purplesignup]
0
Comments
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If it were me I would use the savings to pay most of the balance then clear it completely within the next 2 months - this should mean both cards cleared and, once cleared would add £250 per month to savings, which would build up nicely.0
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I would personally pay the debt off, you will probably feel richer that way too.Mortgage Start - August 2013 £145,000 ************ Balance at April 2017 - £59,000
Target - Overpay by £2,500 each month ************** Mortgage free by December 2018!0 -
I'm going to buck the trend here - you have no other savings, and so no emergency fund? If that's the case I'd say hang on to your £300, in fact top it up to £500 which should be sufficient if you're renting, and THEN throw every spare penny from then on to the debt. otherwise when something happens that needs an input of cash fast (an unexpected car repair, or the kettle or iron blows up) you'll be tempted to reach for the cards. On that subject, are the cards cut up to make it harder for you to use them?🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
£100k barrier broken 1/4/25
Balance as at 31/08/25 = £ 95,450.00. Balance as at 31/12/25 = £ 91,100.00
SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her0 -
Read the MSE guide, here0
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Thanks for your responses so far guys.
I gave up my car and opted for public transport to cut down on expenditure.
I haven't cut up my cards but I've started to divide my income into several current accounts so I allocate so much for entertainment etc and so far this seems to be working in terms of not over spending.
I'll check the MSE guide thank you.0 -
I'm with EssexHebridean on this one.
I don't know how much an emergency fund should be, but think of the foreseeable bad events and how much they cost ; then if you have more than that, you don't need to worry about them ( if they happen one at a time ). I once badly let down a friend, because I didn't have £25 for the petrol to go and see them - it haunts me still.
One idea I tried to help saving, was to put the real money away properly, but use something to have as a stack to look at and encourage me. Monopoly money perhaps, or 2p pieces representing £2 coins, My actual method was 22mm copper tube ( which I happened to have around ) ; a 32mm length being the same size as 10 stacked ( old ) £1 coins. Small rolls of gold-coloured wrapping paper would be cheaper.
I suppose one could do the same thing when paying off debt, though in this case it represents the amount you've paid off. Ditto for losing weight, buy a 250 gram block of lard and photocopy the wrapper a few times, then fold them back to shape and you can make a paper-brick house as you the shed the pounds.0 -
Clear your debts and then build up an emergency fund. After that, save every penny you can.0
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What's the interest rate on the cards? Throwing £100 a month at the cards will already clear them in under six months but you need to think about how much extra you'll pay doing it that way. You know your life, whether unexpected spends come up, and how you react if you do - £300 in savings to dip into if necessary and slower to pay off the cards might be worth it for the peace of mind if otherwise you'll get back on the cycle of putting new purchases on the cards (ask me how I know...!). Perhaps use half of your savings and pay off the First Direct card? That would streamline the debt and give you the satisfaction of paying one off while still leaving you a little bit put away.June 2017: owe £16,818.
June 2018: owe £13,263.0
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