£4,000.00 windfall. Which debt to pay first?

I have just been fortunate to receive a sum of money just over £4,000.00 and am just wondering which debt should i put this towards.
I have a loan which has a balance of about £3,800 and costs me £335.00 per month at 16.9%. I am thinking i could clear this and then have a surplus of £335.00 per month which would make my life a bit easier and maybe allow me to overpay a liitle on my other debts.
My other option would be to put it towards my virgin credit card debt. Outstanding balance is around £10,500 and the ineterest rate is 29.9%, i am currently paying the minimum on this card and to put £4,000 towards the debt will seem to me not to be making a big enough dent in the balance, when i could wipe one completely.
Also will be speaking with cccs next week about a payment plan for the other debts so do not know whether to wait and hold off until i have spoke with them.
Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.00
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Comments

  • DS4215
    DS4215 Posts: 1,085 Forumite
    Why not try a cheeky offer for a F&F on the loan? Then you can use the rest to pay towards the CC. The normal advice is to clear the higher interest debts first, but clearing the loan will free up £335 towards to other debts.
  • loubie_lou
    loubie_lou Posts: 1,368
    First Anniversary Combo Breaker
    Forumite
    Personally I am paying smaller debts of first. The less number of debts I have is more of a psychological spur for me if you know what I mean?

    With the spare £335 you have left after the loan is paid off you could throw this at the CC with the large balance with whatever normal payment you usually pay on it.

    Good luck......
    In debt no more!
  • antonia1
    antonia1 Posts: 596
    First Post
    Forumite
    I think I would pay off the loan (if they allow early repayment) but then put the £335 towards other debt. If you will be tempted to use the £335 to "make life easier" rather than paying towards other debt, then you really need to pay the £4000 towards the credit card, so you won't be too tempted.

    If you are finding things really difficult, you could try posting an SOA and see if the helpful people on here can find a way to save you some money.
    :A If saving money is wrong, I don't want to be right. William Shatner

    CC1 [STRIKE] £9400 [/STRIKE] £9300
    CC2 [STRIKE] £800 [/STRIKE] £750
    OD [STRIKE] £1350 [/STRIKE] £1150
  • Bored
    Bored Posts: 389
    Name Dropper First Anniversary First Post Debt-free and Proud!
    Forumite
    Personally I would continue to pay the monthly payment on the £3800 loan at 16.8% APR and throw absolutely all available cash (including this £4000) at the credit card - £10500 at 29.9%. Then I would try to move the remaining balance on the card to a low or 0% interest credit card if possible.
    2023 Mortgage-Free Wannabe #19: £11,675.68/£13,000
    Mortgage Overpayment Total: £22,397.1
  • samuel.s
    samuel.s Posts: 102 Forumite
    edited 31 October 2011 at 1:41PM
    I feel a bit like Loubie Lou and psychologically feel I would be achieving more in paying off the loan and getting rid of it. I know it's probally not the best thing to do in saving money but I can put a tick next to it and say that's that one off my back.
    I tried earlier in the year to get a 0% card but got turned down,although no bad credit yet I think it must be because all the cards are pretty much up to their limits.
    I have been prioritising the cards and loans over some living expenses and have fallen in arrears with things like service charges on the apartment I rent. I am juggling constantly trying to service a residential mortgage two buy to let mortgages and a rental apartment I live in. The 335.00 extra per month will easily get swallowed up trying to bring these other bills up to date.
    I have always had a strong desire to protect my credit rating. I don't know why as should have DMP long before now. I am returning to the UK this week and hopefully get to speak with someone at cccs and get the ball rolling.
    Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
    Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.00
  • Why not use the Snowball and see how much you would pay if you paid off the loan or the Virgin Credit Card first. Also post up a Statement of Affairs so that people can help you think about your finances so that you don't run up any more debt in future.
  • sharronej
    sharronej Posts: 578
    First Post First Anniversary Combo Breaker
    Forumite
    I would also clear the loan first from a psychological point of view and the amount of money it will free up - just don't look at it as being £335 better off immediately increase your payment on the credit cards. I'm hoping to clear my bank loan in Jan/Feb (£2500) which will free up £2260 and I will then schedule the £260 as an additional payment on the credit card (0%).

    It doesn't really matter which way you go as long as you don't spend it on Christmas :rotfl: Paying it off your debts is definitely Money saving :money:
  • fatbelly
    fatbelly Posts: 20,217
    Name Dropper First Anniversary First Post Cashback Cashier
    Forumite
    samuel.s wrote: »
    I have just been fortunate to receive a sum of money just over £4,000.00 and am just wondering which debt should i put this towards.
    I have a loan which has a balance of about £3,800 and costs me £335.00 per month at 16.9%. I am thinking i could clear this and then have a surplus of £335.00 per month which would make my life a bit easier and maybe allow me to overpay a liitle on my other debts.
    My other option would be to put it towards my virgin credit card debt. Outstanding balance is around £10,500 and the ineterest rate is 29.9%, i am currently paying the minimum on this card and to put £4,000 towards the debt will seem to me not to be making a big enough dent in the balance, when i could wipe one completely.
    Also will be speaking with cccs next week about a payment plan for the other debts so do not know whether to wait and hold off until i have spoke with them.

    What 'other debts'? What is the balance on them? Have you already defaulted on the contractual payment? Has interest been frozen?

    How can anyone advise what is best to do with a 4k windfall if you don't give us the full picture?
  • samuel.s
    samuel.s Posts: 102 Forumite
    Here is a list of my debts that i am currently getting charged interest on.
    Loan = £3,800 @16.9%
    C/C 1 = £10,500 @29.9% (one monthly payment missed)
    C/C 2 = £7,200 @21.9%
    C/C 3 = £7,800 @21.9%
    C/C 4 = £320 @18.9%
    All the above i have so far managed to keep up to date with at the expense of other bills going unpaid.
    I will on Tuesday submit a SOA
    Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
    Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.00
  • Have you got more that have no interest being charged?
    Pay off as much as you can in 2012 challenge No. 64: 328.75/2,500
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