On repaying debt before saving

colsten

cryozot wrote: »

It grows further to £662 if the entire sum is locked down for 2 years under 5%.

Without going into the details of your spreadsheet - you could not get a guaranteed 5% after tax anywhere these days for £9,000.

In fact, unless you are a non-tax payer, you couldn't get a guaranteed 5% anywhere for any sum of money.

Aretnap

colsten wrote: »

In fact, unless you are a non-tax payer, you couldn't get a guaranteed 5% anywhere for any sum of money.

You could actually - just about. There are a couple of regular saver accounts paying 6% which (if you open them now) won't pay the interest until the new tax year - at which point it won't be taxable. Assuming that Osbourne doesn't have a change of heart about the new savings allowance in his emergency budget of course, but that's probably a fairly safe assumption.

I haven't done the sums, but there might be a scenario that would work if the OP paid the maximum amount into the reg saver at the start of the year, then switched at some critical point in the year to paying the minimum amount into the reg saver and starts paying off the 4.3% loan instead. It would probably be a fairly complicated way to earn an extra fiver though, given the rather limited amounts you can put into a regular saver.

jimjames

colsten wrote: »

Without going into the details of your spreadsheet - you could not get a guaranteed 5% after tax anywhere these days for £9,000.

In fact, unless you are a non-tax payer, you couldn't get a guaranteed 5% anywhere for any sum of money.

It depends on a Halifax account and fairly small balance but you can easily get over 5% on that with TSB combined to hold the cash and £5 pm for using Halifax. Not strictly a rate as it involves combining the two accounts but it is guaranteed for as long as the accounts offer those features.

kidmugsy

cryozot wrote: »

By the way, is anyone interested in seeing the spreadsheet I used to work out the result for myself? PM me with your email address and I'll post it over.

Your spreadsheet must contain a mistake.

cryozot

Guys, you rock! I spent few more hours with my spreadsheet last night and found an error which made it look so confusing. I foolishly counted the entire fixed term loan repayment towards the debt principal, whilst it's not true, there is an interest rate hidden inside. Once I factored that in, early repayment model became the most attractive. I'm humbled by my own ignorance... that would've been quite expensive mistake.

bsms1147

Thanks for coming back and owning up to the mistake, many people in your shoes would have hidden away never to be seen again

badger09

cryozot wrote: »

Guys, you rock! I spent few more hours with my spreadsheet last night and found an error which made it look so confusing. I foolishly counted the entire fixed term loan repayment towards the debt principal, whilst it's not true, there is an interest rate hidden inside. Once I factored that in, early repayment model became the most attractive. I'm humbled by my own ignorance... that would've been quite expensive mistake.

Thanks for the update.

That's the problem with spreadsheets, its easy to believe their results must be correct.

Its also the reason why a 'common sense' check is vital. Unfortunately, we're not all blessed with common sense or the same level of financial awareness

Always useful to check on here and don't be too hard on yourself - we all have something to learn (especially those who think they know it all)