snowballing help please? logic vs moral

rubydoiwannabee

Hi everyone
Can you help me with the best way to approach my debt repayment please?

DH and I have £25237.40 (to be precise!) debt at this moment in time. I had my LBM about 2 months ago and have taken the last two months to adjust our spending and budget around to get things under control. Only now do I feel ready to consider the best way of paying things off and have done a new snowball today with todays figures.

We can afford to pay £580 a month to these debts, which is enough to cover the minimum payments on everything (I have allocated £70 per month to the OD). This leaves me with £40 ish a month to overpay.

Debts are:

Name

Interest

Balance

First Direct CC

17.90%

£6,496.33

Laptop

21.80%

£793.58

Capital One

0% until Feb 09 then 19.90%

£573.61

Halifax loan

6.70%

£12,496.87

FD Overdraft

12.19%

£4,877.01

£25,237.40

The snowballing is obviously saying pay the laptop first, but I would really like to throw everything at the OD, because we have left this account behind and are now using a different bank without an OD each month. Then there is the 0% card, this has cleared a balance on a next directory card that was 26.49% and paid a car bill, so I would love to overpay that to reduce it as much as possible before the 0% runs out.

I don't know what to do for the best... I am worried that FD will get very upset and withdraw the OD anyway on review in Feb, what will that mean. We are not using the account anyway, if they withdraw the OD facility, we will still owe what we owe and by Feb we will have paid them 7 months of at least £70 a month.

Any advice please?

You guys have helped enourmously and so would appreciate your help on this issue as well.

thanks
x

GeorgeUK

Can you tell us the limits on the cards? (Just list them in order shown)
And have you had late payments for these? If some of them, can you specify?

Also what is your income?

rubydoiwannabee

GeorgeUK wrote: »

Can you tell us the limits on the cards? (Just list them in order shown)
And have you had late payments for these? If some of them, can you specify?

Also what is your income?

Hi George, thanks for your reply.

No late payment fees, our joint income is £3058 (monthly expenditure other than debt repayment now down to £2477.32).



CC1 - FD £7000 limit
CC2 - Capital One - £4000
OD authorised limit - £5000

Thanks

GeorgeUK

The overdraft could be a concern, but i don't think there is really anything you can do about that for now unless you were to try to get another 0% card that did super balance transfers (like virgin)

Personally, i would put the extra money towards the Capital One Card. Hopefully after you clear this, you could then get an incentive to keep the card open - 0% or LOB.

The laptop, although the highest interest rate, does not have any other advantage to clearing early. At least this way there is a chance you could reduce your debt by more and it would be a greater saving than that of the laptop interest.

Note: You can usually have about 3 credit checks in a 6 month period so make sure you do not apply for too much or too close together. Also if you will be requiring credit or a re-mortgage later, make sure to allow for this in the number of searches you do.

Lula-Hula

Hi ruby,

I'm by no means an expert ( :rolleyes: ) but if they were my debts I would want to clear the first direct cc first, but alongside this I would also attempt to clear the capital one cc before the 0% runs out (more scrimping & I' m sure you can clear £700 odd in 6 months ).

Frankly though I wouldnt take any notice of me because I'm paying my lowest balance & interest rate cc first - against all advice - just because I know I can do it quicker & will then transfer the remaining balance on cc2 .

Well, I say I can do it quicker . . . might help if I stop using it though :rolleyes:

good luck

lula x

rubydoiwannabee

Thanks George and Lula for your thoughts and advice.
It is all a worry.

Like you George I have been thinking I will pay £60 a month to the 0% to make the most of it, then re-think when that ends. That £60 would leave us £191 to pay find before Feb, which I'm sure with a huge effort we could do.

I was also considering DH applying for a 0% CC, because I am the only one at the mo with them and then transferring the laptop (which is also in his name) on to that. At least that way we save on the monthly interest, even if we are only paying a small amount to it each month.

Thanks again, I will continue to ponder....

It could be worse, 3 months ago we were looking at a DMP with only £105 a month to debts, so I am trying to stay positive!!!

dfw844

Sounds like you're doing really well!

I don't really have any advice, I just wanted to say that.

rubydoiwannabee

dfw844 wrote: »

Sounds like you're doing really well!

I don't really have any advice, I just wanted to say that.

Thanks very much, kind of you to say so.

Jacks_xxx

Hiya sweetie,

Well done on getting to grips with it hon. Once you get the plan settled you'll feel loads better I promise.

Have you thought about working out how much a month you'd have to pay on the Cap One card in order to clear it before the interest kicks in? If you did that you'd actually be able to pay off the overdraft sooner because you wouldn't be paying the interest on the Cap One card after February and the money you'd been paying Cap One would be free to reallocate.

Never underestimate the psychological boost of having a debt done and dusted! :j

Or the horrible soul destroying hopelessness and feelings of failure of planning to clear something whilst its at 0% and then not getting it cleared in time.

(Can you tell we've been there!;) )

Having said that - if it's the overdraft that's keeping you awake at night then perhaps it would be best to concentrate your efforts there.

But if it was me, I'd hit the Cap One first to get rid of it before the interest kicks in and then look at the lap top cos that should be looking very "get riddable" by next February - but I'd promise myself that any extra money or unexpected windfalls could go towards the overdraft once those two are done and dusted.

Just a few months of hitting those two as hard as you can and you'd have another chunk of dosh to throw into the overdraft pot.

I had an "irrational" urge to pay off a debt because I hated the company it was with - so I promised myself that all my little drips and drabs of money from Amazon could go towards it. It's amazing what a difference all those £3 here and £4 there payments made.

God I do bang on honey don't I?!

Love Jacks xxx



PS Of course if you can get any 0% or low interest for the life of balance transfers then it's a whole other ball game!

rubydoiwannabee

Hi Jacks,
Thanks for taking the time to reply, it has been a real help to me, really it has. I think the plan is to pay everything we can to cap one until Feb, whilst at the same time getting DH to apply for a LOB or 0% card elsewhere so that we can reduce the interest amount for the laptop. (there is no reason why he cannot get one, in fact he has received about 4 in the post recently!!) I will continue with the £70 to the OD in the meantime and throw any additional ebay sales, or mystery shops that way also.

I can only do my best!! Whilst we were using the account with the OD, it wasn't having any payments made to reduce it, so this has to be a positive step. Also if by the end of Feb we have managed to clear the cap one card, it means we can almost double the OD monthly amount, which feels great, especially as this is the month the account and OD are up for review, so I will feel much happier offering FD an increased amount as a payment plan.

Thanks again to everyone, it has made me relax a little about things.

Kind regards

Jacks_xxx

Hey sweetie! :wave:

I like to read other people's opinions (and give mine!) because it's good to see that there are a lot of different "right" answers, several perspectives and plenty of good directions to move forward.

(And cos sometimes I get tunnel vision when life is a bit :wall: :wall: :wall: so it's good to see things from someone else's angle.)

I have no doubt that you'll get there honeybun. And I love that it's a team effort. It took me and Hubby a bit too long to start working together on this one - but once we did the progress was phenomenal so I'm always happy to see other people doing it together.

Just keep on doing the best you can my lovely - that's all any of us can do innit?

Love Jacks xxx