Clearing debt and saving strategy

cococoladebt

I'm really not sure how to go about this so I'm hoping I could get some good advise.

I have total debts of £20,971.65 after reducing this from just under £25k. £8,417.55 is from a student loan at 4% interest and the rest, £12,554.10, is on credit cards. All my card debt is 0% until oct/dec 2012 with the exception of one card which has a balance of £4k (19% interest) and this will also be transferred to a 0% shortly (just waiting for barclaycard approval on this card).

Instead of paying these cards off during the 0% period, I am looking to save as much money as possible to build up a pile of cash - just in case I am made redundant and have money in the bank and then pay these cards off at the end of 2012 or transfer the balance again. Is this the best way to go about it?

I have about £2.5k in my personal bank right now. I have £2.5k worth of shares. I earn £24k so i can save about £800 a month from my day job.

What would you recommend?

cococoladebt

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DVardysShadow

Keep out of overdraft. Build a cash pile to see you through a few months. While you can get a higher interest rate on savings than you pay on your loans, keep savings. But the Student loan looks like one to pay off, as long as you are confident you can keep yourself going with 0% deals or pay off the rest of the credit.

cococoladebt

It's a catch isn't it... I think it'll depend on what happens with Barclaycard. If they give me a credit limit of £4k then I won't have a problem but if they don't approve my card then I guess I will need to attack the card which has an interest of 19%.

cococoladebt

Another question. ... i cleared my overdraft on my rbs account ( i have 3 bank accounts) to 0%. Should I close the account down or just remove the overdraft facility of £2k?

CH27

If you have £800 per month spare why are you in so much debt?

cococoladebt

Hi,

I graduated in 2007 with over 6k debt. I was unemployed for a long time, suffered from depression, self-harmed etc got into a vicious cycle - in this period my debts just went up and up. Then got a job, wasn't paid for it ... now finally earning 24k since Sep 09 and so I am now in a position to spare £800 per month.... I'm living at home so this helps for keeping costs down to a minimum.

CH27

Glad you've been able to get yourself sorted.
Personally I would pay as much as possible off the student loan each month.

cococoladebt

Why should I pay off the student loan as much as possible. It's only costing £10 a month for £8.4k. Sorry, sorry. I have just checked the interest rate and it's only 1.5% and not 4%.

CH27

cococoladebt wrote: »

Why should I pay off the student loan as much as possible. It's only costing £10 a month for £8.4k. Sorry, sorry. I have just checked the interest rate and it's only 1.5% and not 4%.

Because at the moment it's the only debt charging interest at the moment.

cococoladebt

Fair enough. I may do this if barclaycard 0% doesn't come through. Otherwise I will pay down the 4k card earning 19% interest.