Debt, savings or both?

LolStevo

So I have just got myself a pretty good job with an OK wage while I train and finally in a position to clear debts and be serious about saving for a deposit to buy a house.

I am a mum of 3 children aged 2,3 and 5 and we currently live in a rented house which is £695 a month. This is my biggest expenditure and the reason why I want to buy!

Anyway I have a ccj of around £3500 from university fees in 2009, I pay it when I can but my payment plan is set at £50 a month, a default from an old Halifax account of £2000 however Lowell have said they will knock 40% off if I make a payment plan with them.

I also have 2 capital one credit cards at £200 each which I got to use for petrol to help my credit!

I have had really bad credit in the past and am finally getting out of the very poor stage!

Anyway I have opened up a 2nd current account for my bills as I know most of my money goes on impulse buys and clothes for the kids! Am I best working out my monthly bills and taking that money from my wage and transferring the rest out?

Do I then transfer to savings or do I pay off the ccj and default? I know the ccj will take forever if I am only paying £50 a month but would I need this gone to be even considered for a mortgage?

I don't even know where to start with savings, I have never had the opportunity to save!

Tyrone_Black

I guess the first question is whether you'll actually save, given that you say a lot of your money goes on impulse purchases..?

After that, I think it comes down to weighing up interest rates. I'm in a similar boat in that I'm both saving and paying things off but I don't have any defaults, CCJs etc so it's a straightforward calculation for me.

fwiw: I'm getting 5% on £2,000 from my TSB current account, putting £100pm into a linked savings account at another 5%, and £200pm into a help to buy ISA at 4%.

sourcrates

If CCJ issued in 2009, it should be dropping off your credit file soon, only shows for 6 years, paid or not.
Other defaults can be a problem, the further back in your credit history they are, the less impact they will have, however lenders have tightened up lending criteria somewhat of late, you really have to be sqeeky clean to obtain a mortgage at a good rate !!

LolStevo

Tyrone_Black wrote: »

I guess the first question is whether you'll actually save, given that you say a lot of your money goes on impulse purchases..?

After that, I think it comes down to weighing up interest rates. I'm in a similar boat in that I'm both saving and paying things off but I don't have any defaults, CCJs etc so it's a straightforward calculation for me.

fwiw: I'm getting 5% on £2,000 from my TSB current account, putting £100pm into a linked savings account at another 5%, and £200pm into a help to buy ISA at 4%.

I'm only just in a position to start saving, I have got Christmas out the way by paying for it without credit so now I can start the savings. I have opened up a help to buy ISA and will be saving into that mainly. Hopefully I can set up for £200 a month, or does it look better if I save some into my bank savings account too?

northerner999

i'll tell you "what looks better" - paying off your debts rather than debating the merits of more than one saving account to impress God knows who. You say you had "bad credit", I am glad you stopped before writing rating because one of my greatest bugbears on here is people who need to get out of debt chasing a mythical and meaningless credit rating!

Save any spare money you have into your help to buy isa as an emergency fund, when you've got enough to cover a couple of months' worth of living expenses then spend and spare money you have on clearing debt starting with anything incurring interest. If your £200 credit card is charging interest then I'd pay that before saving, just delaying saving by one month to save you much more.

LolStevo

Thanks I will focus on that for now.