What should we pay off first?

JimmyTheWig

Alabma,

It sounds like you have simply been spending more than you've had coming in. (Though I guess that's obvious!)
What I would concentrate on if I were you is getting your budget right and sticking to it. I think there is much more value in that for you than there is in shaving small amounts of your bills.

Having just paid out for those car costs is the perfect time to start budgetting for them. Work out an annual cost and divide it by 12. Put this money aside each month. How you put it aside is up to you. The best way, financially, is to leave the money in your bank account, thus reducing your overdraft, but keeping track that it is there and so if you are £7000 overdrawn and have £200 set aside for annual car stuff then you are really £7200 overdrawn. But you have to find a system that works for you. If the above seems too complicated then put the car money in a seperate account. Or even a tin in the cupboard. The interest saved or earned isn't as important as actually putting the money aside.

zarazara

Pay off the overdraft first,then start paying down the 0% card so its cleared by the time the )% offer ends. Also start to build savings for unexpected expenses. Even £2 a week is better than nothing.

Alabama

thanks jimmythewig and zarazara. Yes definitely spent more than we were earning in the past especially when we were already in debt. Am going to go through last years payments for car insurance, MOT etc and try to work out the amount we need to keep aside. Sounds like another spreadsheet coming up!

chivers1977

You could consider doing what we are doing - we have opened up a new account away from our OD. Then all DDs are coming out of the new account and we are leaving some in the OD account so that it gradually reduces. This means that you don't have the temptation to touch the account and get into the cycle of never clearing it!

We have moved from HSBC to Lloyds who we are really happy with. We have 1 jt account for bills, a sole a/c each which weekly spending/petrol money goes into, and then savings accounts that you can name on the online banking ie Christmas, car, shopping where monthly standing orders go into. The layout with the accounts being named means that you can see exactly at a glance how much you have in each "pot"

rictus123

As others have said, clear the most expensive one first. Just work to a realistic budget that gives you the money to pay off debts you would like. Those cards wont be 0% forever,sort it before it gets worse.