Lump sum in my pocket!! Pleae help me decide what to pay off

alicemary

Hurray for a windfall! My husband was made redundant last month, and compensated to the tune of 10K.
He is now working again (hurray!), so we have this 10K to do something with...

We currently have the following debt:

Credit Card at 15% APR, balance 2000
Loan at 4% APR, balance approx 5500
Student loan at 3.8% APR, balance 12000 (aaaaaaaaaargh)

My first plan is to pay off the credit card, then hide it away for emergencies.

The loan is ticking over nicely, we pay off 100 pounds a month. We would need to agree to a settlement to pay it off early. Is it worth doing this, as we would end up paying more for the privilege of clearing it early.

The student loan we are nowhere near able to pay off in full, and it is accruing interest while we do not pay it off...we are still under the repayment threshold (pre-1998 loan).

The highest savings account I can find here runs at approx 3.5%. There is therefore more point in paying off some debt? Or not?

lilian1977

Leave the Student Loan alone, if it's pre-1998 you have a great deal there.

Can you clear the CC and the loan with the 10k, taking into account the settlement figure?

claireabelle_2

My mum cleared my loan for me last month due to such a low return on her savings - she thought I may as well pay her back as bank of scotland and save the interest!
She had to pay a redemption fee of one month's interest.

Could you pay a 2k lump off the student loan as the interest is higher than possible savings... is it also worth making a small monthly payment if you can afford it to start eroding that nasty capital?

Hope that helps!

jenjade

you need to think about making some full and final offers so the money can get rid of as much debt as possible. i would try to get rid of the 2 credit cards!