To clear debt or not?

Pepperoni

I'm pleased to share that I have the amount in my bank that is needed to clear the last of our debt :T:j:beer:.

Now the question I have for you all is, should I pay it off, or keep it in the bank (earning 3% at moment)? The debt is 0% until March 2017. I'd love to clear it to be debt free, and I'm scared about having it in the bank incase it's dipped into. But at the same time, I have no emergency fund yet and I'm due to go onto SMP at the beginning of May for 12 months...

Opinions welcome, please!

northerner999

If you are controlled enough not to spend it then you should keep it in savings and treat it as your emergency fund. Keep saving while you are on full pay to enhance this, and come early 2017 pay off the credit card from this fund. You should then have no debt and an emergency fund, which will have been boosted slightly by the interest payments.

If you do not trust yourself, then pay it off now. The first option is preferable, but be honest wit th yourself and decide whether you can trust yourself not to touch it or not. The worst case scenario is not lay off the debt, fritter away the money then find yourself borrowing more or paying interest on it.

ShakeItOff

Personally, I would pay the debt off and use the money that you were putting towards the debt payments towards an emergency/savings fund, but that is because I am not really disciplined enough not to spend the money (it's a painful process, but slowly I'm getting there).

If you want to save the money instead, can you put it in an account without an activated internet banking option, and freeze the card in a block of ice (or in my case, give it to my mum!). I'm very visual - if I can see it (internet banking or the card), I can spend it.

vlad

You should have a minimum of 3 months income as an emergency fund, so pay off some debt but leave that much in the bank

getmore4less

If you managed to save it in the first place I would just keep saving with the plan to pay it off when the 0% finishes.

THe key is to keep saving if that stops then rethink

HappyMJ

Pepperoni wrote: »

I'm pleased to share that I have the amount in my bank that is needed to clear the last of our debt :T:j:beer:.

Now the question I have for you all is, should I pay it off, or keep it in the bank (earning 3% at moment)? The debt is 0% until March 2017. I'd love to clear it to be debt free, and I'm scared about having it in the bank incase it's dipped into. But at the same time, I have no emergency fund yet and I'm due to go onto SMP at the beginning of May for 12 months...

Opinions welcome, please!

You do really need an emergency fund. If you were to repay 0% debt then require funds in an emergency in a month's time you wouldn't qualify for 0% again.

I'd save it.

Don't worry about dipping into it for a good reason. As stated you must be disciplined to not touch it unless it's a genuine emergency. Paying a bill that should have been expected is not an emergency so make sure you know when all the bills are due for the next year so there is no shock when a bill arrives.