paying off 0% debt to reduce monthly outgoings or save?

melissa'smoney

Hi all,
I've got a lump sum of money that i'm not sure what to do with. We have CC debt but it's all on long term 0% that we shift. Also have household items on 0%.
We need to reduce our monthly outgoings as i'm taking a lower paid job to fit in our little one.
I hate the thought of paying off debt that's 0% as that money could be used elsewhere or saved....
What would you advise?
Tia x

pollyanna24

melissa'smoney wrote: »

Hi all,
I've got a lump sum of money that i'm not sure what to do with. We have CC debt but it's all on long term 0% that we shift. Also have household items on 0%.
We need to reduce our monthly outgoings as i'm taking a lower paid job to fit in our little one.
I hate the thought of paying off debt that's 0% as that money could be used elsewhere or saved....
What would you advise?
Tia x

But how long is it going to be 0% for? And what happens when the 0% runs out? Will you have the debt paid off by then?

You say you need to reduce your monthly outgoings, but if you pay off the debt, then you will be reducing your montlhly outgoings as you won't have the debt to pay for as surely you are making some kind of monthly payment to the debt?

sourcrates

melissa'smoney wrote: »

Hi all,
I've got a lump sum of money that i'm not sure what to do with. We have CC debt but it's all on long term 0% that we shift. Also have household items on 0%.
We need to reduce our monthly outgoings as i'm taking a lower paid job to fit in our little one.
I hate the thought of paying off debt that's 0% as that money could be used elsewhere or saved....
What would you advise?
Tia x

Debt is debt, 0% or not, you really need to list what accounts you have, and how much the lump sum is.
I suspect you are up to date with all your payments and therefore all accounts are with original lenders, so full and final offers are out of the question.

northerner999

If you can afford to keep it in a savings account earning some pennies then pay off your 0% deals as they end then do that.

But it sounds like you are on the edge anyway if you need to reduce outgoings, so it sounds lie, you need to reduce whichever deal runs out first.

It sounds lie, you view debt on these deals as something that doesn't need to be worried about, beware that mentality as it is not money for nothing - you will be hit with fees to keep transferring it or stung in interest.

If reducing outgoings is a priority then it is a no brainier to reduce your debt - frankly it would be a sensible option anyway.

bearcat16

I agree to a point, debt is debt, but in my opinion, there is no advantage in paying back 0% debt, even if you have the money on hand.

In the same way that those who stooze have 'debt' but keep the transferred money in an interest bearing account.

Personally, what I would do is this;
From your lump sum, put the value of the 0% balance(s) into a separate, interest bearing account, and every month transfer enough money from this account to your current account to cover the minimum payments.

Then when the 0% period(s) end just pay off the cc from this account. That way you will have earned some interest from the 0% deals, and effectively reduced your outgoings by the amount of the minimum payments.

HOWEVER, as others have stated, it might be simpler from a practical point of view to simply pay off the 0% debt and forget about it. Yes, you'll not have the interest you would have earned, but it would be easier.

I suppose it depends how well-organised you are and if you are disciplined enough not to spend the money that's on-hand.

andyfromotley

bearcat has nailed it.

Thats the right way to do it IF you are disciplined enough. Most of on the DFW forum arent so would probably be better of just paying it off.

If you are going to be in a squeeze then savings have a nasty habit of being frittered away!