Best way to tackle a small amount of debt?

halfajack

Hi all,

I built up a few thousand pounds worth of debt (two overdrafts and credit cards) while I was a student (on top of student loan which is automatically paid off from my payslip at around £80 a month and I don't count as debt I can have any further impact on). At the end of my degree, I got help in the form of an interest free loan from a relative which paid off one of the overdrafts. I've now paid that interest free loan off, however I still have a niggling amount of debt. Here's a summary of my main money managing:

One of my current accounts is my main account where my salary is paid. It has an overdraft limit of around £2000 and, when my salary is paid in each month, the balance is usually minus a couple hundred pounds....then I use the remainder of the available balance to pay my rent and pay off my credit cards.

The other is over £0 by a few pounds and I keep open to dip into the overdraft if necessary.

Credit cards:
Halifax mastercard with a credit limit of around £3000
Abbey mastercard with a credit limit of £250
I used both of these for spending throughout the month where I can use credit cards instead of cash or debit.

A snapshot of my finance at the moment is:
Current account 1: -1400, 600 available
Current account 2: +10, 2760 available
Credit card 1: -940, 2960 available
Credit card 2: -75, 175 available

I have now been working full time for two years and the debt level doesn't seem to have gone down much. I don't go out much or buy lots of clothes or anything else for myself. Anyway, my question is: would it be sensible to apply for a small loan to pay off all the debt, so the next time I am paid my bank balance is +(my monthly salary)? Part of me thinks it would be a good option for me as I'd then see my available money more easily and would be able to see my money grow, with the debt as a side issue being paid off at set monthly amounts. Your thoughts on this are appreciated.

Also, I'm making a big move soon and am not receiving another pay until the end of August. I will probably have to dip a fair bit more into my debt than usual during this time. August will be a half pay, but after that I'll be making around 1,200 after tax. Accommodation isn't sorted yet but it's an area with a small turnover of people and lack of affordable housing so I may have to pay around 550pcm.

GeorgieFTB

I voted no because I was in a very similar position, the way I handled it was to shuffle all the money I could onto the cheapest debt which at that point was my graduate overdraft, then applied for a 0% credit card because that didn't quite cover my most expensive debt.

Then set up DDs for the min payments on everything and overpaid as much as I could on the most expensive card I had left. I focused on that card to see the money go down, rinse and repeat until its all gone.

There is a snowball calculator that will tell you your debt free day for different senarios, I think its on makesenseofcards.com but I'm sure someone else will be along shortly to point you in the right direction and probably give you better advice than me.

G

GeorgieFTB

I found it!!! Play around with figures, try to figure out the cheapest/quickest way of paying off your debt.

Cheapest and quickest not always the same thing...

http://www.whatsthecost.co.uk/snowball.aspx