Where do I start?

maddyjones

I am finally in a position to pay more than the minimum payments on my creditc cards but where do I start? which one should I tackle first?

I have 4; one with £11k, two with approx £7k and the last with £3k

So which one first?

Some advice please folks - thanks

cashless_wonder

The one with the highest APR is usually the way to go, the longer you sit on them the more the interest mounts and the more you owe. Work your way through them that way and all you should have left to clear at the end of it all is the 'cheapest' debt.

gfplux

hello maddyjones,

What are the interest rates, the exact amounts and the minimum payments you are making. Finally how much money have you spare to pay extra.

maddyjones

Thanks.

The amounts are as follows:

£11 - 20.9% £220 per month
£8600 - 21.9% £195 per month
£6600 - 17.95% £90 per month
£2800 - 18% £65 per month

I have £150 to spare at the moment but may have more if I get the promotion at work in the next month.

Jibbajabba

Where do I start? – You’ve started by finding this site and posting.

The usual advice is to overpay your highest APR debt first, then snowball that amount to the next highest once that is cleared. The following links to snowball calculators which will show you best how to overpay effectively. I’ve posted both links as the snowball calc. was updated recently but I still prefer the old one as I find it’s simple to read/see.

Old: http://www.whatsthecost.com/snowball.aspx?country=uk
New: http://www.makesenseofcards.com/snowcalc.html

If you continued paying of your debts by minimum payment your DFD (debt-free-date) would be July 2109!!!!! By overpaying by £150 this becomes a manageable end of 2014, and a lot closer still when you get a pay rise. The snowball can get quite addictive when you start adjusting figures.

If you want to squeeze some more money out of your budget then post a SOA http://www.makesenseofcards.co.uk/soacalc.html so that the good peeps on this forum can help you find ways to maximise your surplus money. The grocery challenge, old style savings thread and Payment a Day threads are all good I find.

Your APRs are horrid. Do you have any old/dormant credit cards not being utilised at the moment? Sometimes phoning up to existing cards can give you good deals for balance transfers and usually with no further credit checks. With a DFD of a few years your best bet is to find a Life Of Balance deal with a low interest. Many providers are offering 6.9% for life to existing customers. The Credit Card thread is good for advice on shuffling balances if you are not already maxed out.

maddyjones

Thanks Jibbajabba :T

The links are a great source of calculating what's what and you're right the snowballing calculator is so addictive! I'll also look at the other areas and see if I can make more savings.

Well I guess the first step was admitting the problem and was the hardest to do. I have to say the thought of being debt free in 5 years and enjoy my good salary is certainly something I am looking forward to!

I have also looked at the loans I have (which consolidated previous card balances) and note that they both finish in 2012 so that will free up even extra money. Yippee! :whistle:

Once all this is done I will look to reduce the mortgage too - somehow I think I am going to become addicted to saving and paying things off instead of spending.

Thanks again