Shall I go Debt free or not? UPDATE- DEBT FREE !!!

lynzpower

Hi all

As many of you know I have finally sold my flat, and I now have significant amount of money at my disposal.

I am feeling like :T :eek: :j :beer:

So I thought Id ask you lot as to whether I should go DF or not.

Heres a synopsis of the state of play in regards to my finances as they stand right now.
INCOME
Currently on JSA will need to sign off today as I now have more that 16k savings.
Starting new job on the 5th feb with income of 17k for the first 3 months, then dropping to 10k plus commission.

DEBTS
4k to parents 0%
1K - 2 x OD with Smile @0%
600 OD with A&L ( 0%) want to close this carp account asap so opened a 2and smile one for this purpose
600 OD with Ltsb @ 16.5%
1400 egg card @ 0% till August

My Credit rating is GOOD

Bank charges
I have 2 more claims to undertake totalling abnout 700 plus interest.
Ive been waiting to move house before starting these claims, they should be started in the next week or so

Other income
I have about 350 quid from here and there ( refunds from expired services from old address ( eg council tax overpayments etc)
I have 200 in one of my smile accounts ( the rent/ bills account)
the balance of the money from the flat sale is in the other smile account ( current) at 37500.

Pros of paying debt off now
1) improve my CR a bit
2) be debt free which might be useful when I drop to 10k and I have debts to service

Cons of paying debt off now.
1) Ive not really successfully learned the budgeting thing. I might talk the talk, but I have not put anything away for dental, Xmas, and all that jazz, mainly through going onto nil pay. I tend towards thinking i need to stay in debt for a while in order to consolidate my efforts in budgeting terms and once and for all "get sorted"
2) I could make quite big money on my equity, whereas Im paying 0% everywhere else aside from the lloyds tsb account which I intend to pay off & close.

I know many will say this is a no- brainer, but Im really struggling here

Your help please, will be ever so appreciated

Lynz
xxx

Cazzdevil

If it were me personally I'd want to just clear it all down and start afresh, debt-free (wait a minute, that's what I DID do... Lol), but I can see the logic in putting money away to gradually pay off the 0% items.

Tough call Lynz, sorry I'm not much help!

gingerfurball

me too...same as the above poster.

mjdh1957

Looking at the 0% figures, I'd say keep the debt for now but make a plan to pay it off before the end of the zero period out of earnings from your new job.

And good luck with whatever you decide.... It looks like you'll be debt free soon anyway!

Imelda

I had the same problem Lynz, I have enough in my savings to pay off my 0% card but the 0% runs out in May. I have decided to keep the savings (although the vast majority said to pay the debt off).

I would pay your parents and all interest bearing debt off, lock the rest of the money away in a notice account so you can't touch it. And then learn to budget on your new income, I know you can do it!

FatJock

Lynz,

I think Imelda is right. Pay of the debt and lock the rest away. At least that way you can concentrate on learning to budget and may have the o/d to slip back into if you run into problems.

Good luck with whatever you decide to do.

Regards,
FatJock

bananakinz

Like Imelda, I would pay your parents and the interest accounts off.

I take it you will be using your money to get you through until your first payday? Set yourself a budget until then and put the rest away where you cannot be tempted to spend x

nearlyrich

Anything that costs more than you can earn in interest should be paid off and the loan from your parents of course. There is no point in paying off 0% debts if you can keep the money to pay it off in an interest bearing account, welcome to the world of stoozing.

Don't forget to put yourself on the role of honour because if you have the money set aside to pay off your 0% dents you are debt free congratulations.

ZTD

lynzpower wrote:

Hi all

As many of you know I have finally sold my flat, and I now have significant amount of money at my disposal.

Well that is good news - not like you don't deserve some.

lynzpower wrote:

So I thought Id ask you lot as to whether I should go DF or not.

Well there is a question an a half.

lynzpower wrote:

DEBTS
4k to parents 0%

Pay them off - forthwith if not sooner.

lynzpower wrote:

1K - 2 x OD with Smile @0%
600 OD with A&L ( 0%) want to close this carp account asap so opened a 2and smile one for this purpose
600 OD with Ltsb @ 16.5%
1400 egg card @ 0% till August

My Credit rating is GOOD

Pros of paying debt off now
1) improve my CR a bit

Why do you want to do this? (This is not a rhetorical question)

lynzpower wrote:

2) be debt free which might be useful when I drop to 10k and I have debts to service

Bit of a red herring - you can service them out of these "savings".

lynzpower wrote:

Cons of paying debt off now.
1) Ive not really successfully learned the budgeting thing. I might talk the talk, but I have not put anything away for dental, Xmas, and all that jazz, mainly through going onto nil pay. I tend towards thinking i need to stay in debt for a while in order to consolidate my efforts in budgeting terms and once and for all "get sorted"

Do you really think you can fool yourself into thinking "Help I'm in debt and don't have a big wodge of cash stuffed into an account"?

lynzpower wrote:

2) I could make quite big money on my equity, whereas Im paying 0% everywhere else aside from the lloyds tsb account which I intend to pay off & close.

Yes - you could. But equally - from 1) above - you could start frivolous spending again. It that old thing of "Don't consolidate as you will always think there is an easy way out and so won't work at your spending" - isn't it?

lynzpower wrote:

I know many will say this is a no- brainer, but Im really struggling here

There are very few no-brainers in this world. Except me, early in the morning...

My opinion is this:
Pay off your parents - because you should.
Pay off LTSB - because it's interest bearing.
Put the rest of the money (minus a small amount) away in a savings account. Set up a standing order to withdraw the amount needed to service the 0% debts.
Use the "small amount" to live on until you get your first pay. Anything left over goes into that savings account. You do not touch this savings account.
Live on your wage. No more debt. Become a regular confessor on "How much have you spent"
Save from your wage. This is to go into a seperate savings account. If you need stuff, whether emergency or whim, the money comes from here. No more debt.

When all the 0% things are finally paid off - then you can review your situation.

How does that sound?

halloweenqueen_2

I'd just want to see it all gone, even if it is interest free its still a debt, good luck to you!!

oops_a_daisy

:j Hiya Lynz - Great to 'see' you on here and happy that you have got moved.

Sorry havent been on here for a while, met a man on New Years eve and wellllllll lets say I have been a bit pre occupied

I know your dilemma - I managed to get savings above 0% debts last year but I still wanted to clear the debts. Im not very organised so for me it is best to pay it off and not have to worry about 0% deals running out. As you know Im not that good at budgetting either but a lot of the time the things that you learn on here come as second nature now so you dont have to be so hard on yourself. Its difficult because you have been through so much in the last year that if you did pay it all off you would be closing a door on all of that and you may be ( sub consiously ) holding onto it because it is what you know ??????

You give so much good advice on here and have been a massive help to countless people so Im sure you will reach the right decision.

Good luck and all the best OOPS

edit - please ignore my signature - its waaaaayyy out of date