Any Advice Please!!!!

sparra_legs

Any advice would be greatly appreciated, My partner is about to be made redundant, he has received his settlement figure and we were just wondering if it is better to pay off as much of our debt as possible or if it is better to put the cash in the bank for a rainy day and live very carefully.
We are expecting £6.5k and we have debts as follows,

Debt amount min pay apr
Overdraft £500 0 ?%
CC £3400 £85 16.5%
CC £240 £20 23%
Next £350 £30 ?%
St Card £950 £45 24.6%
Family £2350 £0 0% (i really want to pay this back)



I know the money we will received will not cover all this, am just really looking for some good advice on how to handle this. We have payment protection on all the debts so they will be covered but we would really like them to disappear
Also I will work on putting together my SOA so you can all tell me where to cut back. [/font]

Thanks in advance

talana

I can understand the temptation to put it in the bank for a rainy day, but you're going to be MUCH better off in the long run by paying off the debts. Absolutely a no-brainer in that respect.

£6500 will pay off the store cards, the credit cards, the overdraft and about half the amount owed to the family. I know you say you really want to pay back what's owed to the family, but pay off the debts with the biggest APR's first. At 0% apr that one's not going anywhere!

What's that money going to earn in the bank at the moment (with interest rates tumbling and another one expected tomorrow)? 4%? 5%?
......compared to apr's of 23%, 24% on the debts.

If you need money for a rainy day at a later date, there's always overdrafts, credit cards etc available then (providing you keep all the cards in a safe place). And you'll have lost nothing and at worst be back to where you are now (but having paid nothing in the meantime)

dancingfairy

It's a difficult one - we don't know what job your OH is in or what chances he has for finding a job - whether he is in a specialised area - whether he will take anything to pay the bills etc.
It also would depend on how secure you feel your job is and whether you could manage to make the SOA balance with just the one income.
I woud be tempted to keep some back to tide you over for a few months maybe and pay the rest of the debts -starting with the highest interest rates first - I think Next's will be pretty high.
Make sure you apply for any benefits you mayb be entitled to with the change in your circumstances - job seekers/council tax etc.
Best of Luck
df

Kudox

I would say pay off as much debt as possible, absolutely, without question, give priority to the higher interest ones first.
We were in a situation to do this about a year ago and didn't and since, due to circumstances are now in a pretty dire debt situation.
I SO regret not paying off the debt when we had the chance.
Good luck.

beanielou

I agree with loaner.
Hope your OH gets another job soon.

sidnee

Personally I would pay off (in that order):

St Card £950 £45 24.6%
CC £240 £20 23%
Next £350 £30 ?%
CC £3400 £85 16.5%

This amounts to £4940. With the redundancy, dancingfairy makes a good point - you may want some money behind you if your OH cannot get a job straight away.

The overdraft is accuring interest, so you may think about that also, but offseting this with the fact you may only have one income could

Whatever you do I'm sure you have your reasons - but make sure you feel comfortable doing whatever you decide!

sparra_legs

Thanks very much for your replies,
My OH worked for the RAC, he’s currently looking to find work and he will take anything he’s not one for sitting around all day, he’s on gardeners leave at the moment and the house has never been cleaner.
I have run a SOA (will figure out how to post it on here) and the numbers look good I will be able to support us completely. I work in the Computer games industry so I have no fear around my job at all (I run the finance dept).
Think we are going to do as a lot of you have advised, start by paying the higher interest debts off these are also the smaller debts as well so at least they’ll be gone.
Thanks so much again for your advice.

sparra_legs

Just wanted to say thanks for the advice, his final pay slip has come and they've worked it out completely wrong He'll now be getting just under £12k Yippy also he has a job to go to.

Its made my Xmas We are debt free and have money in the bank.

GeorgeUK

Great news sparra.

natsplatnat

Hi Sparra

I have only just stumbled across your notes, but wanted to say I'm glad it has all worked out well!!!

penniesgrowintopounds

Wow, that is a fantastic outcome!:j Congratulations, sweetie, and have a fab Christmas x