Debt Free by 30?

Libertine83

Evening all. I've been meaning to sign up and post for weeks/months/years but have finally got round to it. I'm just looking for some advice on my approach to tackling my debt really.

I've been in manageable levels of debt since about the 2nd year of uni around 8 (!) years ago but have never got round to reducing it. As I will be turning 30 in around 10 months time it's time to start thinking about the longer term and the expenses of marriage, kids and upgrading to a family house. I'd love to have money to pay for these things without turning to loans or credit cards. So here's my current debt:

Current Debt
Virgin CC (18.95%) - £2,169
Virgin CC (20.95%) - £140
Santander CC (17.95%) - £3,680
Tesco Loan (7.73%) - £4,572
Total = £10,562

The Virgin CC has only been out of interest free for about 2 months and the Santander CC interest free period ended this month. I've put the interest rate for the loan but the interest was added to the total when I first took it out.

I have £5,000 that I recently inherited from my late Grandma and have been in two minds about what to do with it but I've decided paying off the loan may be the best option. The early settlement figure is £4,218. This leaves about £800 to put towards the CC debt. About £1,320 of the Virgin debt actually belongs to my OH and she is now in a position to pay this off. That would leave the balance at about £200 + £3,680 Santander. I've had a letter from Barclays offering 18 months at 0% with a 1.9% transfer fee so (as much as I currently dislike Barclays!) I figure I should transfer the remaining debt and throw the £240 per month I'm currently paying on debt plus any other spare cash i have towards this.

Does this sound like a good approach or should I get rid of the CC debt and stick with the loan (and saving until I can pay it off in a lump sum)? I'm confident I won't need to use CC's in the future as I now save for big purchases such as car insurance and servicing, although I may get a cash back card for petrol etc (as long as its paid off in full by DD each month!).

It's a long winded ask for advice but thanks in advance for any comments!

Time_to_face_the_music

Hi Libertine :wave:

You should always pay off your debts in order of highest interest rate. So you should really completely pay off the 2 Virgin CCs, the put the remainder towards the Santander CC.

Of course to do things properly, you should cancel each paid off card to make sure you don't use it again but you already sound like you have a very sensible approach to this :T

Lensman_2

Since you talk about not needing the credit cards any more, now is the time to prove your mettle. Man up - and cut them up. This is the best step you can make towards the life change you need to make to achieve your goals. Having them sitting in your wallet is too tempting IMO - like giving up smoking and still having a pack of cigarettes in your pocket.

Good luck

mildredalien

Well done for getting round to posting! I've been in a similar position to you - manageable levels of debt for years, but never really getting round to tackling them properly! If only I'd found MSE earlier... oh well, debt free by 31 isn't too bad

Anyway I agree with the previous poster that you should pay off the most expensive debt first (e.g. CCs). Have you used credit recently to get by monthly, or to buy things? It sounds like you have a handle on things now, but the last thing you want is your debt creeping back up on you!

carrielovesfanta

Hey libertine. I guess you were born in 83? You are the same age as me and it's also my goal to be debt free by 30. Please learn from my mistakes and use your £5000 for something constructive. I inherited the same amount from my grandad and all I have to show for it is a failed relationship!

If you pay off the 5k we will be in similar levels of debt and I aim to be debt free in a year. It's not always easy or fun but you will be so proud!

Mach4

the other posters are right in paying off highest interest rate debts first. But only if you cant refinance, you obviously can.

Use the interest free balance transfer barclaycard have offered you. Apply for other interest free balance transfers and move your ccs onto them. You'll probably be accepted if not yes pay off the ccs you can't refinance.

Pay off the loan pay off as much cc as you can move the rest to interest free then save into a high rate isa. When your interest free runs out pay it off out of savings.

Libertine83

Thanks everyone for the responses they've been really helpful.

I'm going to apply for the Barclaycard tonight and providing it's approved shift the remaining CC debt and pay off the loan in full. The £300ish I'll save on loan interest should outweigh the balance transfer fee.

Mach - I really like your idea of saving at a high rate before paying the card off. I hadn't thought of that so will look into it. Thank you for the suggestion. I've never had an ISA before - can you just get the money back out as and when you need it?

Carrie - yes I am indeed a child of 83. Vintage year! It sounds like a challenge you've set. I'll set up a signature and follow your progress. Have you got a debt-free date in mind?

Mildred - 31 is certainly not too bad. I figure our generation will be working until at least 65 anyway so that's 34 years of debt free living! In answer to your question I haven't used it to get by. I use a Tesco CC for petrol but it is paid off in full every month by DD so never any interest. I just do it for the club card points.

Lensman/TtFtM - thanks for the comments. I think cancelling after paying off makes sense and I will remove the cards from my wallet.

Lib x

Mach4

Isas

If you get a no notice cash ISA then yes you can pay money in and out at will. Though you can only add £5640 in this tax year.

mildredalien

Remember to check the interest rates on any cards you can't transfer to 0%, and the timescales of the 0% period - generally savings accounts pay 3-4% interest at the best of times which is way less than any interest charged on debt. Instant/easy access accounts generally give less interest than ones that are more difficult to withdraw from.