Do I pay off debt or save?

lilly81

Im in a bit of a situation and ned some advice,

I have an old debt of £4780.26 which has been taken over by another company and I do not pay any interest on this debt.
I make a regular payment of £25 per month to clear this debt.
Another one of my debts I paid off last year with a settlement discount.
I have just started full time work and within a year will have earned enough to clear my debt.

My question is do I put all my spare money to clear the debt or put it into a savings account earning interest then clear the debt when i have saved enough?
Also do I pay in full or ask for a settlement discount?

moneymabel

Hi lilly,
not sure about the settlement side of things but someone will be along soon who does
as the savings side of things goes then yes you should definately do that if your debt is not accruing any interest-put it into an ISA or an easy access savings account and earn yourself some cash!
Good luck on your debtfree journey :-)

savingholmes

Hi Lilly - not my area of expertise either - but from reading other posts - it seems to be better to save up enough to be able to offer some kind of settlement, which may be less than what you owe. I'm sure someone with more expertise will answer your question.

Glittermonkey

I asked a similar question yesterday as it will take me forever to clear some of my debts.

An ISA was mentioned to me, so maybe you could look into this? Still pay your minimum payments but save up in an ISA too and when you have a fair amount ask them for a F&F.

I'm not in the position to save yet as I couldn't trust myself from spending it but it is something I will think about.

lilly81

I have been thnking about buying a satnav and a flat screen for my computer- so I think that answer my question!
At least if I put it on the debt I cant spend it!!!!

SunderlandBlackCat

Hi Lilly

Personally, even when I got the last of my debts onto 0% interest I still carried on paying them off as quickly as possible even though putting the money into a hight interest Cash ISA or savings account made more sense mathematically.

I just felt more comfortable getting rid of the debt & I would guess which way you go will depend on how comfortable with having the debt you are as well.

It doesn't have to be all or nothing though. You could split your money between paying more of the debt & building up a smaller savings account.

GeorgeUK

I'd actually save the money - you may be able to offer about £1200 saving you 75%. Then you will be able to but the satnav and flatscreen without feeling guilty.

Quincifer

I would pay off the debt, i have come into some money a couple of times and spent it and wished I'd paid stuff off afterwards.
I guess it depends on your situation and stuff though.

x

Mozette

So you want to get out of paying some of what you owe, but buy a satnav & a flatscreen. :rolleyes:

Words fail me...

lilly81

I have decided to work my butt off to clear my debt, but use any money i make from ebay to buy a satnav.

Mudbath

Personally i'd pay of the debt too. We have some on an interest free credit card and I just want it cleared. For me, having the money sitting there is too much of a temptation!!! If I was you i'd look forward to your Sat Nav and flat screen when you're debt free!