The "Pay ALL your debt off by Xmas 2012" challenge - PART 2!!!

kerri_dfw

mf0u1098 wrote: »

So I have to decide whether I'm all squidgy with a hard shell, or have stupid big ears...! :rotfl:

Did I mention how much a I HATE HBSC... and not paying off all my debts this year would really hurt especially seen as how this is my challenge!!! But I need to think with my head...

Ah you see I love them and think they're fab, great customer service, quick to answer the phone, 24/7 call centre and they're British based.

I know this is your challenge and you want to pay it all off by Christmas. But you should also weigh up the cost of doing so. If the cost is a few quid then fine, if it's a months grocery bill then maybe ok, if it's starting to look like a months rent then I'd be inclined to slog it out.

You told us at the start that you want to own a house one day, if Antonia's figures are anything to go by, then you'd have £1k more by slogging it out than you would paying off quicker. That's quite a bit of money to lose out on for being impatient. If you can work out some proper figures then it'll be easier to decide I'm sure

antonia1

mf0u1098 wrote: »

Did I mention how much a I HATE HBSC... and not paying off all my debts this year would really hurt especially seen as how this is my challenge!!! But I need to think with my head...

So in one hand you have freedom from debt and HSBC, in the other you have around £1000.

As for the challenge, as long as you have savings equal to debt and know you are making more by keeping them separate than you are paying in interest then that totally counts. Like people who have £10 000 in 0% credit cards and £10 000 in savings earning 3%.

Quite the opposite to GreenSaints, I have no intention of overpaying my student loan, but it all comes down to personal preference.

kerri_dfw

Ooh and don't forget that's £1k that's going to HSBC instead of £1k HSBC are paying you....and you say you hate them

HelenPie

mf0u1098 wrote: »

Please please help me peeps! I'm so torn...!!!!

I took out a loan with HBSC in 2006 for £18,500 + interest = £24,500 (I'm an idiot I know...)
I have just rang them up to see what my settlement figure would be and it's £7461.39 as of today which includes an interest rebate of £597.37. I then asked her what it would cost to take out a £7,500 loan over the same period at 6.2% APR (as opposed to original of 7.9%) as new loans allow overpayments but my old one doesn't which is why I have been saving up to pay it off in full early. The new loan over the same term as remaining on my original loan would mean that total repayable at the end would be £8100. This tells me that the maximum amount of interest that I could save is £600.

Now, this is where is gets a bit sticky. Apparently when my loan was started there was a special offer of a rebate for allowing it to go to term (i.e. not pay off early) and this is £1521.60 that the advisor confirmed would be paid into my account after the last payment was made in August 2014. That means that I would have to swallow the £600 interest rebate for paying off early BUT they would give me £1500 instead... I have never been told about this rebate before of £1500 and it is definitely not in any of my paperwork as I've gone through it with a fine tooth comb for PPI reclaiming. I know that I need to contact them to get it in writing but can you please confirm that I've got this right?

The thing is that 1) I HATE HBSC and can't wait to be rid of them (although this lady today was actually lovely...) and 2) it means I have to pay this for another 2.5yrs so cannot be debt free by Xmas like I'd wanted.

However, if I still save up the equivalent then it's not like I've not achieved my target so that's not a problem. Also, I'm thinking that it will enable me to save up for a house a lot quicker...

Oh I hate this loan though and have been counting down the days until I can tell them to stuff their account where the sun doesn't shine. The thought of staying with them for the next 2.5yrs so I can get this money back from them is hurting my pride!!!

Please tell me what to do... xxx

Hi Jemma,

I've just had a quick check of the figures and in very simple terms, assuming the loan is £7500 in both cases:

Scenario 1 (keep existing loan):
Monthly repayments: £275
Remaining term: 30 months
Interest rate: 7.9%
Total interest: £733, less £1500 rebate = £767 credit

Scenario 2 (switch to flexible loan):
Monthly repayments: £770 (assuming equal payments)
Remaining term: 10 months
Interest rate: 6.2%
Total interest: £177 payable

That's an effective saving of £944 if you don't switch assuming you get it in writing that the rebate will come.

I know it feels as though you won't be clearing your debt but it's certainly looking to be a better option. As someone else said - if you can take comfort in building a savings pot again, then it may be worth it..

HTH xx

mf0u1098

kerri_dfw wrote: »

Ah you see I love them and think they're fab, great customer service, quick to answer the phone, 24/7 call centre and they're British based.

I know this is your challenge and you want to pay it all off by Christmas. But you should also weigh up the cost of doing so. If the cost is a few quid then fine, if it's a months grocery bill then maybe ok, if it's starting to look like a months rent then I'd be inclined to slog it out.

You told us at the start that you want to own a house one day, if Antonia's figures are anything to go by, then you'd have £1k more by slogging it out than you would paying off quicker. That's quite a bit of money to lose out on for being impatient. If you can work out some proper figures then it'll be easier to decide I'm sure

antonia1 wrote: »

So in one hand you have freedom from debt and HSBC, in the other you have around £1000.

As for the challenge, as long as you have savings equal to debt and know you are making more by keeping them separate than you are paying in interest then that totally counts. Like people who have £10 000 in 0% credit cards and £10 000 in savings earning 3%.

Quite the opposite to GreenSaints, I have no intention of overpaying my student loan, but it all comes down to personal preference.

Thanks both of you (and GreenSaints!).

"So in one hand you have freedom from debt and HSBC, in the other you have around £1000." This exactly my dilema in one sentence.

At least it would allow me to have a deposit for a house effectively 8 months sooner than originally planned... I've been imagining making that final call and paying off the last debt and the feeling of absolute freedom. But am I willing to feel that at a cost of £1000...? I think you can guess at how hard this decision is for me...

I really need to think about this without the distractions of being at work but I think deep down I'm resigned to the answer, I would be an idiot to not take the money even though I have to wait 2.5yrs for it... I think I just need to convince myself that it's the right thing to do and that I won't have failed this challenge as I'll have the money in another account so I can buy a house that much sooner...

You can tell I'm typing as I'm thinking!

AAARRRGGGHHHHHHHH!!!!!!! Why are these decisions so hard?!!! xxx

loubie_lou

BIG FAT URGH!!!!!

Does anybody know anything about Tax? P87s and PAYE Coding Notices?

I cannot think today!

If anybody does can you PM me please?

Much obliged xx

mf0u1098

kerri_dfw wrote: »

Ooh and don't forget that's £1k that's going to HSBC instead of £1k HSBC are paying you....and you say you hate them

That's good way of looking at it! Effectively sticking 2 fingers up at them!!!

HelenPie wrote: »

Hi Jemma,

I've just had a quick check of the figures and in very simple terms, assuming the loan is £7500 in both cases:

Scenario 1 (keep existing loan):
Monthly repayments: £275
Remaining term: 30 months
Interest rate: 7.9%
Total interest: £733, less £1500 rebate = £767 credit

Scenario 2 (switch to flexible loan):
Monthly repayments: £770 (assuming equal payments)
Remaining term: 10 months
Interest rate: 6.2%
Total interest: £177 payable

That's an effective saving of £944 if you don't switch assuming you get it in writing that the rebate will come.

I know it feels as though you won't be clearing your debt but it's certainly looking to be a better option. As someone else said - if you can take comfort in building a savings pot again, then it may be worth it..

HTH xx

Plus when you think about it, if I put the savings in a high interest account then that difference will be more as I'll earn interest on it over the next 12-18months going up by around £1k per month saving for the house deposit...

Thanks everyone :A:A:A:A

p.s. I'm the same as Antonia1 in that I'm not paying off my student loan early as it will cost me more than saving for a house... But as with everything on this forum, everyone is different with different circumstances and that's what makes it so great xxx

antonia1

mf0u1098 wrote: »

At least it would allow me to have a deposit for a house effectively 8 months sooner than originally planned... I've been imagining making that final call and paying off the last debt and the feeling of absolute freedom. But am I willing to feel that at a cost of £1000...? I think you can guess at how hard this decision is for me...

Not to make the decision harder or anything, but the other way of looking at it is this: you become debt free 18 months earlier at a cost of £1000. That works out at £56 per month for freedom and peace of mind.

I'm going to stop now, cos I'm pretty sure I'm not helping!

And can you tell I'm an engineer, give me a problem and I'll write out all the possible solutions but not give you an actual answer :rotfl:!

kerri_dfw

Well I like giving the two fingers to banks, that's why I defaulted on my Lloyds loan because although it's very naughty to do so, I hated their call centres and they kept charging me interest. Now they get 0% interest and I pay the DCA less than I was paying Lloyds wohahaha.
You could do one better, what £1k into one of their 4% interest rate accounts, then in 2.5yrs you'll have urm.... maths... urm... £1100 so you'll have made £100 instead of them making it whoop whoop.

Besides, who will run DFW by 2013? I might have to create a debt of my own by then just so I can stay and play

I'm also another in the not paying off student loan earlier camp. We need some of those WWMD wristbands (what would martin do)

GreenSaints

antonia1 wrote: »

Not to make the decision harder or anything, but the other way of looking at it is this: you become debt free 18 months earlier at a cost of £1000. That works out at £56 per month for freedom and peace of mind.

I'm going to stop now, cos I'm pretty sure I'm not helping!

And can you tell I'm an engineer, give me a problem and I'll write out all the possible solutions but not give you an actual answer :rotfl:!

That's my reasoning - payment freedom! But, I'm fortunate that I have a house, so I don't have the worry of saving up for a deposit (it was hard enough when I did it 8 years ago!) Either way, screw HSBC!

Antonia - what are you an engineer in? I am one too in construction