Paying off 0% interest debt or grow savings???

Mrs_Toast

Hi

I started a debt free diary in January and have paid over £1100 off our debt since then which is brilliant. We've been really scrimping over the last few months and with our second baby due in August, I've been rethinking our debt repayments.

At the end of June we will start on a repayment mortgage instead of being on interest only so there will be £180 less a month to put to debts. Also our 2 credit cards and tax debt is all on 0% interest until September 2014 at the earliest. Our house needs a fair bit of work doing to it including a new bathroom and I'm fed up of it being like this. We've been in this house 6 years and only done the 3 bedrooms and the kitchen.

I was just wondering what everybody else was doing with regards to savings. We do put away approximately £200 a month away into various savings pots which we've never done before. At the end of this month we'll be able to pay for 6 months road tax without taking it out of the joint account which we've also never done before.

Firewalker

I would say that there is no point paying off the 0% debt off before the time to pay it off has come. However, it is very important to make sure that you have the money to pay it off and it is not moved around indefinitely; or incurrs high interest when the current deal is over.

Firewalker

Mrs_Toast

Thanks Firewalker.

I have worked out that to pay it off by the time the 0% finish I only need to pay £110 between both cards so very manageable and more than the minimum.

jessie4109

If you didn't want to pay off the cards just yet could you put that money you would normally pay them into a savings account ready for when you need to pay it off. Also the extra interest (although not a lot) would be a bonus.

Mrs_Toast

Thanks Jessie4109. I've had a discussion with DH and he's suggesting what you've said so think I will do that from June.

I've had a look at my spreadsheets with my revised plan & it looks to work out really well. Will still be able to pay everything off and repay mortgage as planned and still save over £2000 in different pots by the end of the year.

Thanks for the advice everyone

jessie4109

No probs. I've just set up an isa with Nationwide as it paying 2.25% compared to 0% I get with my basic Halifax account. Putting money away each week so I can pay annually for my car insurance.