Pay off debt or keep saving??

21yrold

Hi,

I fear i know the answer already :

I have 4.3k on 0% Barclay card for another 15 months i think it is.
5.1k remaining on a loan from halifax.

I've hovered around these levels of debts for years, they hang around me and I've got used to them....i earn enough not to worry about the repayments so i tend to brush them off as not an issue.

I have been with my GF for 3 years and we are starting to save for a house, we both live at home atm, we save £300 each into my isa each month and have about £3k.

I have debt, she doesn't have debt...We really want to move out when we can but don't want to rush, renting or buying we are not sure..we are just saving up and seeing how we get on.


If we were to buy a house on a combined salary of about 50K with my 10k debt and say 10% deposit on a house, would we stand a chance?

I respect its impossible to give me a answer, I just feel I'm letting her down having debt, if i pay my debt off instead of save its going to be another 3 years +..... We are 27 and i feel we should be moving onto our own lives not living with parents, i've wanted to move out with her since we met

What would you do, or suggest...I suspect paying off my debt first and foremost?

egoode

For the credit card the mortgage company is likely to insist it is paid off before the mortgage is allowed. i know that's been the case for every mortgage I've been offered. However I've not had other debts before so not sure if they will expect the Halifax one will also be expected to be paid off.

Is your girlfriend aware of the level of debt that you have? If not I think you really need to sit down together and work out the best way forward and personally I think that's to pay off the debt first before saving for a deposit.

Another thing you should aim to do is actually save the amount it would cost you to live out of home so look at how much a potential mortgage will cost, council tax, utilities etc. That way it won't be such a shock when you finally get your own place and if possible save even more on top of the figure you work out to take account of house repairs and interest rate increases. While you are living at home is the best time to save as much cash as possible and if you have never lived out of home you are likely to have a massive shock when you realise how expensive it can be.

21yrold

Thanks for the reply

Yes i did think that would be the case with regards to the mortgage.

She knows, its not a worry as such as i cant pay my bills...its more of a worry I'm useless with money lol, I save £300 and pay rent of £200 then my loan and credit card repayments are about £400 a month (over paying), i could save more or i could repay more...I'm just useless

I have no chance of the buying a house if i have debt basically so my best option is to clear the debts asap and then save up from there, i would be able to save maybe £800 even £900 a month after that on my own...

It's just frustrating that's all, i know what i have to do...i just needed to know 100%...Venting my anger in myself almost haha

27col

It's in no way amusing to brag that you are useless with money. With that mindset you will find it difficult to improve your knowledge of finance. The principles of basic money management are simple enough to grasp. There are not many of them.
Far too many people seem to think that debt is a good thing. Me, I have always hated the idea of paying interest.
Egoode is giving good advice.

21yrold

When have i bragged about being in debt or being useless with money???

I've come on for a bit of advice and to release some stress, I've been on this website long enough to know its my own fault.

Some of us have been far to lucky to avoid getting into debt, don't judge me.

Thanks for your input either way.

FireWyrm

Pay off the debt with savings. The interest on savings cannot equal the interest paid on debt. Once you are out, free and clear, THEN you can save with a clean conscience. Just be sure to remove all temptation by never using a card again. A credit rating is not necessary for life if you have a good deposit for your house. All that happens is that they manually do the underwriting as apposed to pushing a button and letting the computer decide. If you run your finances properly from the get go, you will never need a credit at all and your file is irrelevant.

I'm sure what 27col meant was that you should be looking to learn how to run your finances properly going forward. Put it this way, if you owned a business, would you allow some bloke with half an idea of how to spend money to oversee your business finances, or would you employ someone with a proper qualification in the subject? As it happens, the subject is easy to grasp consisting of basic arithmetic. Once you have grasped the principles and provided you have a reasonable model or plan, there is no trick to running your finances efficiently as long as you adhere to the Micawber Principle.

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

This was true 100 years ago, it is true now and it will remain true for the rest of your life. Learn it, live it and you will never need credit.

[Deleted User]

Are you paying £287+ per month, on the Barclaycard, while not spending on it?

If yes, then you will be able to clear it, without paying interest.

If no, then my advice would be clear it ASAP.

21yrold

I'm paying £150 a month, what i normally do is just transfer it between my Virgin card and Barclay card as they seem to run 0% at different times, again this hasn't helped me as i would transfer from my Natwest card over.

It sounds a mess but its really not, i know a decent amount about money savings etc I'm just to weak to put it into action basically!

I don't have the cards for either my Barclay card or the Virgin one (£zero balance don't worry) and nor do i want them, I've had the accounts years just swap the balance over when the other deal runs out

Thanks for the advice, it's going to be a hard slog but I'm far better off being debt free before i get a house etc, well we are both far better off for it !

[Deleted User]

21yrold wrote: »

what I normally do is just transfer it between my Virgin card and Barclay card as they seem to run 0% at different times

Until the day you can't get another 0% BT.

At the rate you are currently paying (assuming you aren't spending on it), there will be £2,050 left on the Barclaycard, when the 0% expires.

Try running that through the Snowball Calculator, to see what will happen, if you can't get another 0% BT.

21yrold

Original loan amount:£7,500.00
Original loan term:60
Opening date of loan:27 Nov 2012
Monthly loan repayment amount:£198.73
Next loan repayment date:17 Aug 2014
Remaining term (months):40

+ £4,154.94 (sure its 15 months from June 2nd 2014)

I can re-pay extra on the loan so i could have that clear in 10 months then work on the credit card.

I've not got an overdraft or any other debt on other cards etc

£292.21 in total per month (at the minimum for the CC)

I could afford to pay £500 a month easy i think including the current £292.21, so it is possible, I just need to do it rather than think about it!!

[Deleted User]

By my calculations, that loan has an APR of 20%. :eek:

1/3rd in, you still owe about £500 more than you borrowed. :eek:

I'd definitely overpay it, as much as possible, if I were you.