over the weekend....

winkle1

i worked out that i can pay off my loan this year if i stick to my current level of saving.

i know everyone says you should throw all your money onto your debts and then save, but i want to have some money behind me just in case. i would rather make 1 lump sum and then it will be cleared.

at the end of the year i am going to use the money i have saved to pay off my HSBC loan - and then I will be debt free! then i can build up my savings up my savings again quickly.

this is my incentive to save, save, save!

so watch this space!

Annie_Fanny

Do you understand WHY people say you should throw all your money onto your debts and then save though?

winkle1

wat do u think i should do?

Annie_Fanny

Well it would be good to understand your debt situation in greater detail - have you posted this before? What debts you have? Aprs etc? Are you able to overpay on your loan/is there an early repayment fee?

Have you read Martin Lewis' article on this topic?
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1103213261,45760,

Annie

winkle1

the only debt i have (apart from student loan) is a HSBC graduate loan - i paying it back over 3 years, i currently owe £8384.26, pay back £271 a month and i have 31 months left to pay.

i have worked out that at the end of the year I will owe £5866.

at the moment i have £3,000 in a savings account and am saving £500 a month (give or take the odd £100 - depends how good i am being!). if i carry on saving then i can pay this back in 6 months and still feel like i have some money behind me.

then in january, i can save the £500 plus the £271 i am paying on the loan and build my savings abck up again quickly.

Annie_Fanny

What is the apr of the graduate loan? Are you able to overpay? Can you pay it off early without a penalty fee?

What is the interest rate of your savings account?

winkle1

the apr is 6.9% - i cant over pay on it.

i dont think there is a penalty fee for paying it back early - i have never asked. i will email them now.

the interest rate of my saving account is 4.75. i also have an ISA for around the same rate. (sorry, not 100% sure on the interest rates)

Annie_Fanny

Yes best to check about the penalty fee...best to be informed.

But so far yes it appears that you are doing the right thing considering that you can't overpay but if you could then it would be financially unsound to pay 6.9% on the debt when your savings account is earning less then 5% interest.

It's great that you are getting into the habit of saving though - well done!

winkle1

thank you for your replies and your help.

Annie_Fanny

No worries - glad to be of assistance!

Hope there is no penalty fee on the loan

Bye for now

A