ISA & Savings or Debt

hogan77

Hi all,

Its probably a completely stupid question but one I dont know the answer to and therefore any help is greatly appreciated.

My savings equals £10K in an ISA and £3K in a savings account.

My debt equals 7.5K on credit card (paying £150 a month including payment protection and it goes up by £160 a month)and an overdraft of £2.5K with a £30 ish a month charge.

I am about to pay off the debt of 10K with the ISA leaving me with £3K "rainy day" money (although I do also have redundancy protection insurance should this happen.)

Am I right to do this or should I:-

Carry on regardless and wait for a bonus to pay of the debt?
Carry on regardless until the ISA grows some more?
Use equity on the house to pay of debt (second mortgage)?
Transfer the debt to a interest free credit card and keep the ISA
Or something completely different?

I feel a bit stupid asking this as I guess one of the answers is blatently obvious to anyone who understands money - sadly I dont!

Ps - if it helps anybody to give an informed answer me and my partner bring home about £3.3K a month but with a £1300K per month mortgage plus protections payment, on a 10yr fixed deal.

Any help appreciated

Yours stupidly

Hogan77

Floss

DON'T add it to your mortgage!

Sorry, didn't mean to shout (in a more normal volume!)

*pay off now - IMHO the better option. also cancel overdraft when you have cleared it so you don't fall into same hole again

*can you be sure a bonus will arrive?... Not really..is any bonus ever guaranteed?

*leave it until the ISA has grown a bit? debt may grow too & swallow more of savings

*add to mortgage debt - see shouty message above!

*do interest free thing - only if you promise all the DFW's that you will cut up the card immediately! then save a bit more in ISA until 0% about to run out.

Gives you something to think about....;)

hogan77

Many Thanks Floss

So the debate is reduced to two options.

Pay it off now

or interest free credit card it (marginally I prefer this one to keep the ISA, especially when it was 11K and is now £10k due to stock market issues. Therefore I might interest free it until the ISA grows again and then pay it off - I feel a bit miffed thats is dropped £1K despit me paying in £600 over the time its dropped effectively meaning its currently £1.6K down - although i was quoted the stocks can down as well as up bit!

Thanks again for your help - looks like I have a decision to make!

CLAPTON

ok so the ISA is a stockmarket ISA then ?

i would pay off all the debt.

whether you use the 3000 first or cash in the ISA all depends upon your attitude to risk.
personally i would not think the stockmarket is the right place to be until you have a very solid rainy day fund in savings.

if you want to use 0% credit cards then look at the stoozing boards but pay the debt off first.

postingalwaysposting

clapton that exactly what i wanted to say except the stockmarket thingy but couldnt put it into words, pay off the debt

MrsTinks

Worth thinking about is if it's gone down already then what if it dropped even further? On the stock market you have NO guarantee that it will go up again! I would cash it in and pay the debts off and then find a slightly more secure place for the "emergency fund" Any bonuses you get you add to it or when debt free think about stoozing

luckylukey

pay off the debt!!!

hogan77

Thanks to you all for your replies. Very helpful to a money muppet like me!

With 5 responses stating pay of the debt and no responses to any of the other options I think my decision is made unless the interest free credit card makes a storming second half recovery over night.

Many thanks again