It was going so well. Which way to pay?

xzibit

Hi there.

Well. I spent a little bit of money this week. £550 to be precise. I bought a laptop and then a wireless router. I wanted to put it off and pay off my debts (£6800 loan, and £222 c/c) but I will have to get one somewhen, and it'll mean I can do drawings for people, and earn more money, so is worth it. Anyway, I bought them on the c/c as I thought it'd give me a little more protection, but I have the money saved up to pay it straight off.

I have worked out last month by posting my SOA that I can afford to make £400 overpayments on my loan, which I have. I also have £2000 in savings. Now, I have about £770 on the c/c, £220 will be due end of this month, £550 the end of october.

What is the best thing to do? I was going not make an overpayment on my loan this month, and pay the £220 and save the other £180 into my savings, then when next months bill comes, again not make an overpayment, and use the £400 plus £150 from the £180 saved to pay off that payment, so the card is cleared (again lol) and I won't have to pay any interest on it.

Is this the best option? This morning, Virgin (my other c/c that I have cleared and put away) sent me some cheques to transfer balance to that card for 0% for lifetime of that balance. Should I use this and then pay it off by say £200 a month and still make £200 overpayments? Or is this pointless?

Or shall I keep paying the overpayments, and use some of my savings to pay the card off?

Anyway, hope you have understood this lol.

lynzpower

which is the high APR, your savings account or your loan

xzibit

lynzpower wrote:

which is the high APR, your savings account or your loan

Loan I think.

LewisC_2

xzibit - pay off your debts. If you have the savings to pay them off, do so! You'll most definitely be paying more in interest on your debts than you're making on your savings. You're currently losing money - pay them off, and you'll be making money!

mrs_deadline

Are there any penalties if you pay off the loan early, xzibit?

xzibit

No luckily. I am gonna keep paying the £400 overpayments, and use the savings for the laptop. No point having the savings if have the debt.

LewisC_2

xzibit - can you let us know the APR of your debt and your savings? It's likely the debt has a higher APR, so you're actually losing money each month. You'd save for the laptop quicker if you paid off your debt first

xzibit

If i didn't have the debt, I could easily afford the laptop as I have worked out I'd be able to save £700 a month!! lol
I have the laptop, and have to pay off the c/c, so need to pay £220 this month £550 next month to avoid paying interest. So will use savings.
I have worked out with the snowball calculator that I should have cleared the debt by March 2007. (Am selling a motorbike worth £2000 which will help).

LewisC_2

OK - sounds like you've got it covered - make sure you have