help please re paying off debt

sunnysea83

Hi

Basically I have some debt that I really HAVE to pay off by August 2011.

My debts are as follows:

CC - £950
Store card £230
Catalogue £720
Overdraft (interest free for another year or so) £1600

I have worked out how much I can afford each month, about £250 in total and I am going to be paying the store card off this month in full . The overdraft is my least importance to pay off as interest free.

So with regards to the CC and Catalogue I am unsure what todo.

I was planning on paying £150 of the catalogue every month and £100 on the CC and then once the catalogues paid off put more to the credit card but now im wondering if I should pay just the minimum payment on one and put the rest to the other.

I also have £750 in savings left to me by a relative but I do not really want to use this because I know I will never pay it back in to my savings but on the other hand it would clear another one of my debts and Im saving to do a masters and this is a good start. I should also mention that I will only be working part time from september hence needing to get these debts paid before I lose my wage

I would be grateful for your thoughts and advice please.

thank you

sunnysea83

Having just re read some of the advice on this website from Martin regarding savings v debt and discussing with my other half im wondering if I should use the money from my relative to pay off the catalogue (has highest interest rate) and then have the credit card paid off by May.

Does this sound the best solution to everyone else?

Dawning

I'm still learning about all this, but definitely pay off whichever debt is the highest interest first. Obviously you still need to make payments on your other debts but focus on the highest.
How much interest does your savings account attract for you £750? You will find that you are paying more out than is coming in. If it bothers you to use all of it, how about £500 towards Additions?

This is a great tool to help you prioritise, work out how much you can afford to pay off your debts - in your case it's £250, plus you can add some or all of your savings, then do the numbers in here..

http://www.makesenseofcards.com/snowcalc.html

It will also tell you when your debts will be cleared.

Dawning

What is the interest rate on the Additions debt? I just went to their site and it appears to between 35.9% and 45.9 % :eek::eek:

If that's what you are paying definitely prioritise that one. I am guessing the store card is the next highest.

PNPSUKNET

normaly 39.9 additions is

sunnysea83

Hi

the additions isnt too bad on interest but thats because a lot of it was bought on buy now pay later schemes and they all start needing to be paid from Feb so the interest will go higher. the interest on my accounts at the moment are

CC approx £25 pcm APR is 30.40%
Additions APR is 39.7% :eek::eek::eek: currently £9.17 (but as I said a lot is buy now pay later) my balance without the buy now pay later stuff is about £340

I have decided to use the savings to pay of additions and then pay more on the credit cards and hopefully have it paid off by May and then can save the money I would have used for this to put back in to savings.

Dawning

PNPSUKNET wrote: »

normaly 39.9 additions is

Wow...I always thought store cards were the highest, I am really shocked at this amount!

Dawning

sunnysea83 wrote: »

Hi



I have decided to use the savings to pay of additions and then pay more on the credit cards and hopefully have it paid off by May and then can save the money I would have used for this to put back in to savings.

This sounds like a good plan to me! :beer:
I know how hard it is to use your savings, I've battled with this myself.

sunnysea83

Yes I just feel a bit bad using it for paying off debt but I will pay it back in using the money I would have used to pay the debts and if I pay off the additions it will save an awful lot in interest to both additions and credit card co so I feel better thinking like that.

sunnysea83

Dawning wrote: »

Wow...I always thought store cards were the highest, I am really shocked at this amount!

My store card is only 19.9% which compared to my credit card and additions is not a lot!

Dawning

sunnysea83 wrote: »

My store card is only 19.9% which compared to my credit card and additions is not a lot!

I noticed how high your credit card was..it just shows how we need to be vigilant about these interest rates. I'm going to check all mine because I was assuming my M & S (credit card not store card) was the highest but it may not be..
Im still sitting here in shock about high much Additions is!