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  • FIRST POST
    • Sean91
    • By Sean91 12th Oct 17, 7:07 PM
    • 16Posts
    • 3Thanks
    Sean91
    No Brainer?
    • #1
    • 12th Oct 17, 7:07 PM
    No Brainer? 12th Oct 17 at 7:07 PM
    Hi Guys,

    So my partner has around 5k worth of debts which consist of credit cards store cards and a bank loan.

    The credit card is also about to come out of the interest free period, The debts would currently take around 38 months to clear..

    Now she has 10k in savings, what I have told her to do is pay of everything with 5k of her savings and treat it as a sort of consolidation loan paying back whatever it costs from what she saves in monthly outgoings whilst also saving on interest.

    Is this a good idea or am I missing something?

    Thanks
Page 1
    • fatbelly
    • By fatbelly 12th Oct 17, 7:25 PM
    • 11,638 Posts
    • 8,773 Thanks
    fatbelly
    • #2
    • 12th Oct 17, 7:25 PM
    • #2
    • 12th Oct 17, 7:25 PM
    Yes, she's going to pay more interest on the debts than she makes from the savings account.

    She should pay them off
    • Fireflyaway
    • By Fireflyaway 12th Oct 17, 8:15 PM
    • 1,353 Posts
    • 1,362 Thanks
    Fireflyaway
    • #3
    • 12th Oct 17, 8:15 PM
    • #3
    • 12th Oct 17, 8:15 PM
    Yes I agree. If the debts can be cleared in one hit and she will still have 5k savings seems a sensible plan. I second - the interest charged on debt will be greater than the interest paid on the savings.
    • EssexHebridean
    • By EssexHebridean 12th Oct 17, 8:51 PM
    • 8,202 Posts
    • 43,440 Thanks
    EssexHebridean
    • #4
    • 12th Oct 17, 8:51 PM
    • #4
    • 12th Oct 17, 8:51 PM
    Another here who agrees. Get her to overhaul her budget though, and it wouldn't be a bad idea to set up a regular monthly transfer to her savings account to make sure the money DOES go back there rather than risking it just getting frittered.

    Oh - and tell her to cut up the cards and close the storecard account as well. And next time she wants to buy something, save for it...
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£656.45 (20/11/17)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
    • Mnd
    • By Mnd 13th Oct 17, 7:17 AM
    • 253 Posts
    • 288 Thanks
    Mnd
    • #5
    • 13th Oct 17, 7:17 AM
    • #5
    • 13th Oct 17, 7:17 AM
    Get straight with the debts by using the savings, then make sure that she stays debt free, if she's built up savings while using credit she sounds as though this won't be a problem. Good luck
    • datlex
    • By datlex 14th Oct 17, 11:00 AM
    • 1,449 Posts
    • 1,235 Thanks
    datlex
    • #6
    • 14th Oct 17, 11:00 AM
    • #6
    • 14th Oct 17, 11:00 AM
    Hi Guys,

    So my partner has around 5k worth of debts which consist of credit cards store cards and a bank loan.

    The credit card is also about to come out of the interest free period, The debts would currently take around 38 months to clear..

    Now she has 10k in savings, what I have told her to do is pay of everything with 5k of her savings and treat it as a sort of consolidation loan paying back whatever it costs from what she saves in monthly outgoings whilst also saving on interest.

    Is this a good idea or am I missing something?

    Thanks
    Originally posted by Sean91
    It would not be a consolidation loan. It would just mean her committed payments were lower. Of course her savings would be temporarily be lower too. However, if she can afford the payments and now adds the money she was paying to her savings. She will build them up again. If she can't she should adjust the payments. What is important with savings is to do it on pay day.
    • z1a
    • By z1a 14th Oct 17, 2:18 PM
    • 809 Posts
    • 650 Thanks
    z1a
    • #7
    • 14th Oct 17, 2:18 PM
    • #7
    • 14th Oct 17, 2:18 PM
    It would not be a consolidation loan. It would just mean her committed payments were lower. Of course her savings would be temporarily be lower too. However, if she can afford the payments and now adds the money she was paying to her savings. She will build them up again. If she can't she should adjust the payments. What is important with savings is to do it on pay day.
    Originally posted by datlex
    Op knows all that!
    • enthusiasticsaver
    • By enthusiasticsaver 14th Oct 17, 3:13 PM
    • 4,826 Posts
    • 9,111 Thanks
    enthusiasticsaver
    • #8
    • 14th Oct 17, 3:13 PM
    • #8
    • 14th Oct 17, 3:13 PM
    Yes you are right. It makes no sense to have savings and debt although if on 0% it may be worth keeping the money in a savings account until the deal expires to get the interest.

    She can direct the money she was putting towards debt into savings then.
    2 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
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