New here...where to start?

mel3510

Hi all,

I'm new here and looking for a bit of advice.

I'm 28 married, my husband is 29 and we have a 13 month old boy.
My husband works full time and myself now only part time since having the little one.

We currently rent and have done for the past 4 years since leaving home.

We've come to find ourselves in a mess....even more so since having our son.

At present we are in debt to the total of £36,000 (Ouch!!)

This is spread over
4 credit cards (two each)
2 loans (one each)
A catalogue account
1 overdraft
sofa repayments (interest free)

We've made the first step.....we're moving in with my parents!
Our rent alone was £550 but when we move in with my parents we'll be paying about £500 in total for half of ALL the bills.

Working things out we should have about £500-1000 spare cash each month to pay off debts so would you advise that I pay off one thing at a time or spread the money across all debt each month?

Starting to feel a little overwhelmed but I can now at least see a little light at the end of the tunnel!

Thanks

dancingfairy

Hi, and welcome.
Well there are several schools of thought on this one:
1) minimise the amount of interest and charges you end up paying by paying off the one charging the highest amount of interest first (while paying the minimum on all the others). This isn't entirely straightforward in your case though as you will need to factor in the sofa expense, as no doubt when the 0% ends the apr will shoot up. There is something called the snowball calculator which should show you the most economical way to pay off you debts. Hopefully some kind person will link to it for you.
2) the second way is to tackle a small debt first, just to get it out of the way and to feel like you have acomplished something. It makes you more motivated to tackle the rest and, of course is one less debt to worry about.

Obviously option 1 will minimise the interest you pay and will see you debt free quicker so I would probably go for that, but it depends on you and your personality etc.
Best of Luck
df

cottage_retreatist

link to the snowball calculator: http://www.stoozing.com/calculator/snowball-calculator.php

agree with dancingfairy - this will help you see where you should focus your extra spends to pay off those debts.

milky1991

It is best to pay off the highest interest first thus saving interest overall I am in a similar position with my debts but luckily my highest interest is my smallest debt,
It worth just keeping a regular check on rates though I have two credit cards with life of balance transfers which means i pay 5.7% on the cards for as long as i have the balance on it but as long as you don't spend further on it as then it goes up,

I've had this a couple of years just paying the minimum on direct debit so I never miss a payment.
I don't know what your credit rating is like but its worth swapping things around regularly to get the best interest rates but make sure you check what the charges are for transferring balances.

its more keeping regular check on what your paying in interest and can you get it cheaper.

But as long you pay it off it's all good.

Best of luck