How should I do this?

vadersoul

I am there... the light at the end of the tunnel and within 5 months my debt will be good and gone.

However now that it is so close I want to make sure I get there and get there as quickly as possible.

I have £5000 to pay off broken down into the following
(NOTE : Interest is not a factor here as whilst some are high and low interest, over the period of 5 months the difference in managing from an interest perspective is negligible)

Debtor 1# : £530 : £30 a month
Debtor 2# : £754 : £45 a month
Debtor 3# : £240 : £22 a month
Debtor 4# : £22 : £5 a month
Debtor 5# : £1000 : £24 a month
Debtor 6# : £1929 : £318 a month
Debtor 7# : £720 : £30 a month
Debtor 8# : £100 : £33 a month

£5295 @ £507 per month

My options to paying this off as far as I can tell are as follows

Option 1

Pay them off in Order of amount, highest first

Pro : I will have more money per month, each month to pay off the next allotment the following month
Con : I will pay less of the accounts off at once and this may often lead to paying a partial amount off each account rather than clearing the account in one payment

Option 2

Pay them off in Order of amount, lowest first

Pro : More accounts get paid off
Con : Less money each month to pay the remainder off
Option 3

Pay them off in Order of minimum payment : balance ratio, highest payment first
Option 4

Pay them off in Order of minimum payment : balance ratio, highest payment first

(Option 3 & 4 are similar to 1 & 2 in terms of Pros/Cons)



Anyone got any ideas.

I know that in theory, when not considering interest,the amounts paid off will be identical no matter how I portion it.

From a mental point of view I dont know what is better, getting rid of smaller accounts first or the big ones.. has anyone an idea?

antonia1

Hiya, I would probs go for option 2, cos I need small milestones to keep me going and clearing cards would do that.

Giddytimes

If you're not considering interest I'd pay the smallest off first, go for the quick win, there is something very satisfying about paying off and closing an account.

It will help your credit rating quicker too, having too many credit accounts open damages your credit rating and it can sometimes take a couple of months for the credit records to show the settled marker. This way by the time you finish paying them all off you'll have closed 4/5 of them and they should be showing settled.

mrsb83_2

Use the snowball calculator at whatsthecost.com

I know you're not interested in the interest payable given the short timescale, but the calculator gives you a really clear breakdown of when you'll be done paying. I like the layout.

vadersoul

Giddytimes wrote: »

If you're not considering interest I'd pay the smallest off first, go for the quick win, there is something very satisfying about paying off and closing an account.

It will help your credit rating quicker too, having too many credit accounts open damages your credit rating and it can sometimes take a couple of months for the credit records to show the settled marker. This way by the time you finish paying them all off you'll have closed 4/5 of them and they should be showing settled.

Interest isnt a factor (I have a very short period to pay things off and am doing so with funds recently made available (a loan for £400 a month that ended) so any interest lost in not going for the highest interest isnt a factor for me

Credit Rating isnt a factor, I have pretty much screwed it up with around 3-4 payment arrangements for other things (not included above) so my plan is to wait until I have the above cleared and then close off the majority (leaving just 1) of the cards down however I dont plan to be in this position in the future and all my purchases will be made in advance, no more loans or credit cards thank you very much.


The small milestone idea sounds good... I may do that