Which debt should I pay off?

staffordUK

Hi,

Ive got £9000 in savings, but a £3000 loan and £13000 cc (on 0% interest deals) in my name and my wife has £5000 outstanding on a loan from before we were married.

I'm thinking of paying off the 2 loans with the savings as these would free up £400/mth, whereas the cc minimum repayments are £130/mth.

BUT I have full time, my wife stays at home looking after the children...I understand I'm not liable for her debt, and she doesn't earn, so do we have ony options with her loan ad use the savings to reduce debt in my name?

Thanks in advance for any help you can give!

Catslovelycats

People with more knowledge will post soon, but I do know that the advice is generally that you should pay off the loan with the highest interest. As for whether you pay off your wife's loan or focus on those linked to you, I suppose the choice is yours.

Mort

There might be an interest refund from the loans which you could then put onto the cc.

camuk81

When does the 0% end and what does it revert to after that. Personally pay off your loan and your wives loan. The extra £400.00 could be put toward the credit cards and to reduce them.

http://www.whatsthecost.com/snowball.aspx

I'm not sure I understand the last line though is it you work full time and she stays at home?

Is that not a full time job?

[Deleted User]

I would say that as you are now married then your debt & your wifes debt are one combined but thats just how I look at it.

Pay off anything that is accruing interest then pay the 0% ones last.

Dxxx

staffordUK

Hi All

Thanks for your replies. The 0% I have managed to move onto new offers for another 18 months. Essentially, we are currently living off about £350/month (after bills, mortgage, etc) for food, petrol, etc for a family of 5 so things are tight - the £400 we really need to live off, and would struggle to afford to use much of it for additional cc repayments.

I wasn't implying that my wife doesn't work btw, I know how hard looking after 3 kids is, just meant she didn't have a paid employment - and also wasn't trying to pull a fast one with her loan, was just wondering if there was any 'accountancy magic' that could reduce that or its repayments due to it being from before we were married and her not having a wage (hope that makes sense)

camuk81

Oh if only! Nope that went with the marriage taxation, though speaking of that it would be worth looking at moving her allocation to you if the conservatives get the next bill approved on taxation and married couples

hp48910

If things are tight why do you have 9k savings?

Am quite new to this but have read Martin's advice never to save if you have debt as the interest is generally higher than that on the savings. I'd pay off all you can with the savings, knowing you'll be £400 better off, that's more than double what you were managing on. You may even find that the interest saved by settling the loan sooner, gives you enough to clear the credit card, if not it clear a considerable amount off the balance. You could set up a regular monthly payment after that to ensure the balance is zero by the time the 0% ends. You will have no debt repayments that way and a regular dd/so to cover the small balance on the card. You could even afford an emergency fund with some of your available budget as I'm guessing the savings were important to your peace of mind....

oldtractor

Welcome to the board. I would pay off the debts with the interest attached out of the savings. Then I would save as much as possible and aim to pay off the 0% debt with whatever is left of the savings and what I am able to save up. Meanwhile cut up the credit cards and dont get into more debt. Maybe a savings cushion of £1000 for emergency such as the washing machine breaking is a good idea.