Should I want to be debt free?

Astaroth

Until recently I was keeping my head above water and slowly paying off my debts. A couple of months ago I landed a very decent payrise at work and stopped to think about my debts:

Sofas - 2 years left (of 3) of £1000 0% APR
Egg card - limit £4500, balance £3000 0% APR
RBS Visa - limit £5500, balance £0 6.5% APR
Student loan - £3000 left APR around 3%
Debs card - limit £750, balance £0 29,9% APR (or something silly)

I currently use the debs and RBS cards for their benefits and pay off in full by DD each month

After my recent payrise I decided to put £300 into general expenditure (have the lifestyle of my new job basically) and £300 is going into a mini-cash ISA (plus any surplus) - when I hit the limit the rest will start going into an ISA in the other 1/2s name.

As far as I can see my earned interest on my deposits is greater than my paid interest on my student loan etc so cannot see any reason why to divert the money into paying off my credit earlier.

Am I missing something obvious here or is this the best route?

Broken_hearted

Yes because life has funny way of messing things up

Astaroth

Was my concern - but then I would have the nest egg which (if needs be) could be used to pay off (or go towards paying off) the debts after having earned greater interest.....

westie666

I agree with broken hearted, I said that and found that it dod not work out right. All it would take is an unexpected suprise and there goes your savings into something else other than your debts!

Ali-OK

If a savings account pays high interest than what you pay on the loans/cc's, then I suspect over on the CC forum they would say save and pay back when you have to, as you'd already have the money stashed away.

On the DFW forum, you're conversing with people who want nothing more than to get shot of their debt!!

Looking at your APRs on the loan/cc's it would make sense to save in a high interest account, after paying the minimums of course, as you'll make on it. But beware of sizeable increase in earnings...the more you earn, the more you spend, the more you borrow and then things do go wrong!

CLAPTON

as ali-ok says ......you're not really on the right board

try the stoozing board...

sarah0404

I've always wanted to have savings!

You don't owe a huge amount of money. And its great that some of your debts are all on 0% cards. Every payment you make will go towards paying them off, rather than paying back interest too. How long will it take you to pay them all back? If you really concentrated on paying them back you could probably be debt free in a very short space of time. Have you looked at the snowball debt calculator? http://www.whatsthecost.com/snowball.aspx

If you had no monthly comitments of paying these debts back then you could put even more money into savings. I believe there is an article on the site about saving vs debts.

gingercordial

Yes, come on over to the stoozing board, the water's lovely...

Technically I have over £20k of "debt", but all of that is in savings accounts earning interest for as long as possible until it has to be paid back.

Make the minimum payments but save any extra, then when the 0% deals run out pay them off but hopefully you will have a little left over from the interest. Be disciplined, save as much as you can and don't be tempted to spend it!