Does the extra few quid here and there REALLY make a difference?

*Dusty*

Just curious, if you are paying an extra £5 or £10 per month off your debts, does it make that much of a difference?

KingElvis

*Dusty* wrote: »

Just curious, if you are paying an extra £5 or £10 per month off your debts, does it make that much of a difference?

It would depend on the debt in question and the interest being charged....

If interest has been frozen it will make a difference, if it's still going on at say 34.0% then probably not that you'd notice unless you lived to be 100,000 years old.

You can get a decent bottle of vodka for £10 though, that's what I'd do

Good luck

*Louise*

I guess it's better than not paying ANY extra.....:)

*Dusty*

KingElvis wrote: »

It would depend on the debt in question and the interest being charged....

If interest has been frozen it will make a difference, if it's still going on at say 34.0% then probably not that you'd notice unless you lived to be 100,000 years old.

You can get a decent bottle of vodka for £10 though, that's what I'd do

Good luck

I was literally just thinking today, I mean it has to make some kind of a difference obviously but does it mean you'll be cleared up a bit quicker? In some cases probably not, in others I suppose yes.

I've recently transferred a couple of CC balances to new cards at 0% for a handful of months, so I'm really on a drive!!!! :T

Percy1983

Just to do a bit of a snowball calculation using a very general example, if you owe money at 29.84% APR if you pay £10 right now, you will save the following interest:

1 Year £2.98
2 Years £6.86
3 Years £11.89
4 Years £18.42

Of course a lower APR or higher overpayments all have an effect, but as you can see in this example if you have a debt which will take you 4 years to pay at 29.84% APR £10 now will save you £18.42 in interest as well as clearing £10 off the debt anyway, in basic terms £10 now is worth £28.42 off what you will end up paying.

In short as much as you can't see a big difference straight away every penny really does count, evenmore so over longer time periods.

*Dusty*

Percy1983 wrote: »

Just to do a bit of a snowball calculation using a very general example, if you owe money at 29.84% APR if you pay £10 right now, you will save the following interest:

1 Year £2.98
2 Years £6.86
3 Years £11.89
4 Years £18.42

Of course a lower APR or higher overpayments all have an effect, but as you can see in this example if you have a debt which will take you 4 years to pay at 29.84% APR £10 now will save you £18.42 in interest as well as clearing £10 off the debt anyway, in basic terms £10 now is worth £28.42 off what you will end up paying.

In short as much as you can't see a big difference straight away every penny really does count, evenmore so over longer time periods.

Thats a brilliant response, I hadn't thought of things that way. Thanks!

Broken_hearted

It makes a massive difference over time. If you can overpay I would.

danothy

Additionally anything subject to compounding effects (like interest) is also sensitive to when it's paid, so paying off a little extra earlier on is better than the same overpayment later on.

JimmyTheWig

KingElvis wrote: »

If interest has been frozen it will make a difference, if it's still going on at say 34.0% then probably not that you'd notice unless you lived to be 100,000 years old.

Quite the opposite, in fact.

Lets say you owed £5000 and are paying £100 a month. You consider whether to up this to £110 a month.
If interest had been frozen then previously you were clearing £100 a month from your balance. With the new plan you will be clearing £110 from your balance - an increase of 10%. Worth doing, but not incredible.
If interest was 20% APR, you'd be paying around £83 a month in interest. So previously you were clearing £17 a month from your balance. With the new plan you will be clearing £27 a month from your balance - an increase of 59%. Much more noticable.

picasso2

Maybe it was a coincidence but last year I started making small overpayments. Didnt make a lot of difference to what I was paying off each month but 6 months later one of my horrible CCs dropped the interest rates I was paying and 2 month ago I got accepted for a 0% balance transfer card - now that is making a difference.

churchrat

absolutly it makes a difference. When we started on our dmp I thought I would be very old and grey before it finished, but we overpaid where we could and finished MUCH earlier than we had expected-so still grey but not quite so old. We now over pay on the mortgage and have saved £100's (if not more ) and will finish in less than 2yrs, instead of nearly 5.

I think that it is an attitude of mind as well as an overpayment. We just got used to paying where we could and for me it became addictive, I loved seeing the balance go down each month. If you start seeing £10.00 as a worth while amount of money you don't spend it on rubbish, but maybe save it instead. How much would be worth while ? £20? £30? When do you decide if it is worth doing?

Perhaps if you dont want to put the odd £10. directly onto your debts you could save until you have enough to offer a f&f ?

good luck with it all

churchrat