Spare money each month

milliejon

I have been managing my own DMP with my creditors for 18 months or so and have been lucky enough to have the interest frozen on all the accounts (except the loans which had the interest fixed at the beginning of the loan and is therefore included in the whole debt).

At the end of each month, we are finding that we have around £100 which is spare from the housekeeping money.

My creditors are aware of the housekeeping money that I put aside and have agreed to it. However, we're obviously able to live on less.

Currently, I have been paying £100 off my overdraft with the bank (which isn't included in the DMP). I'm doing this as my bank has sent a circular letter to all account holders to say that they are reviewing the overdrafts for each account on the anniversary of it opening and may reduce it or take it away.

However, I have 10 debts and four of those are under £250 each, all the others are over £1000 and up to nearly £8,000.

My question is should we use the spare money to pay off the smaller debts, therefore, allowing us to increase (ever so slightly) the payments to the larger debts? Or, should I continue paying the overdraft off and then use the money for the smaller debts.

If I should pay the smaller debts, then three of them are for store cards with the same company, so should I save the money until I have the total to pay them all off! I'm afraid that if I pay one off, they will expect me to find the money to pay the others.

We are so looking forward to the day when we can live without the overdraft, but I'm hoping for some advice from you guys.

I hope this makes sense.

brranger

I would keep going the way you are.
clear the overdraft as you have know idea if they may withdraw it making things more difficult in the future.

As for the smaller debts after you clear your overdraft sounds best to save for them altogeter unless you get tempted to spend.

just my opinion.

CLAPTON

as your CC debts have the interest frozen, it is best to concentrate on the overdraft. presumably the overdraft is charging you interest but even if not, the fact that they can reduce or remove this could cause you major problems.
once the overdrat is clear i would save as much as possible in case one of your creditors change their mind about the frozen interest and so you could use the saved money to pay that one off. (subject of course to any undertakings you have given your creditors).

southernscouser

As Clapton says clear the OD then put the money in a savings account!

You maybe able to negotiate a lower full and final settlement figure! For example you said you owe £250 to one creditor. If they are only getting £5 a month they may accept a full and final of £100!

milliejon

Thank you everyone! I thought I was on the right track but it's nice to know that it's confirmed.

Once the overdraft is paid off, I'm going to give the spare cash to my mum in law. She'll keep hold of it until I need it. Once I've saved enough I'll contact the creditors for my smaller debts and offer them two thirds of the remaining debt and see what they say. If they turn me down, at least I'll have all the money to pay the totals.

Thanks again for your help.