Emergency Fund or Payoff Credit Cards

TheLearner2008

I have about 5 different credit cards all of which are on 0% deals which expire in May 2018 and then the rest in 2019 and then I have 2 personal loans at around 5% each. Total debt is around £35k. I have about £20k credit available but if used it would attract immediate interest.

I am currently contracting and using a snowball calculator I estimate that I will be able to pay everything off by July 2018.

I have £3k in a 90 day notice savings account and I have no mortgage I rent.

Given that contracting is not stable employment and my contract ends in April 2018 but its likely I will find another one or get extended but its not certain, its likely, should I continue paying off my cards, or should I just keep the cash somewhere since all the debt except the loans is on 0% cards?

[Deleted User]

Do you currently have a decent amount of space, on any of the Credit Cards?

TheLearner2008

Bedsit_Bob wrote: »

Do you currently have a decent amount of space, on any of the Credit Cards?

Around £20k in credit available but it would attract immediate interest if used.

[Deleted User]

TheLearner2008 wrote: »

Around £20k in credit available but it would attract immediate interest if used.

I see.

A couple more questions:-

How much is outstanding on the 2 personal loans?

What is the interest rate, on the 90 day notice savings account?

TheLearner2008

Bedsit_Bob wrote: »

I see.

A couple more questions:-

How much is outstanding on the 2 personal loans?

What is the interest rate, on the 90 day notice savings account?

£11000 and £7000 for the 2 loans and the savings is minimal like nothing. I am just using that account for money I don't want to touch or get access easily to stop myself from spending.

GambledLife

TheLearner2008 wrote: »

I have about 5 different credit cards all of which are on 0% deals which expire in May 2018 and then the rest in 2019 and then I have 2 personal loans at around 5% each. Total debt is around £35k. I have about £20k credit available but if used it would attract immediate interest.

I am currently contracting and using a snowball calculator I estimate that I will be able to pay everything off by July 2018.

I have £3k in a 90 day notice savings account and I have no mortgage I rent.

Given that contracting is not stable employment and my contract ends in April 2018 but its likely I will find another one or get extended but its not certain, its likely, should I continue paying off my cards, or should I just keep the cash somewhere since all the debt except the loans is on 0% cards?

Is this correct you can pay off the 35k by July 2018 (7 months) I'm clearly in the wrong job?


If this is correct I world focus on paying the loans then cards who's 0% deals expire in May 2018 (Just after your contract expires) if you can pay off full debt in 7 months I'm assuming you can pay these of quicker? id then pay the minimum on your other cars so you can build up an emergency fund if it takes you longer to get a new contract.

[Deleted User]

TheLearner2008 wrote: »

£11000 and £7000 for the 2 loans and the savings is minimal like nothing.

Then, in your shoes, I'd use the £3,000 to pay off a chunk of one of the loans, thereby saving yourself the interest on £3,000 of the debt.

Next, I'd pay down the remaining loan amounts, ASAP, while still paying enough to have the cards cleared just before the 0% periods end.

Once the loans are paid, I'd continuing to pay off the credit cards, in such a way as to clear them before the 0% periods end, and put whatever is left toward an emergency fund.

I know it's a gamble, not having an emergency fund straight away, but you seem to be able to clear these debts pretty quickly, and if, against the odds, an emergency did arise, you do have access to funds (albeit attracting interest ) with which to handle it.

Of course, if it were going to take many years to clear the debts, and/or you had no access to funds for an emergency, my approach would be different.

MrsSave

Have you addressed your spending habits? Your debt has increased considerably over the years, is it still increasing? You mention that you could pay off £35k in 7/8 months, but your current work contract comes to an end before then. If I were you, I'd then keep that £3k and try to add a little to it each month so that you are able to cover your living costs for a short time in case you are unlucky and it takes longer than expected to find another contract.

TheLearner2008

Thanks for all replies.

I have not really addressed my spending and that’s what worries me.

I earn infinitely more money then I did before but I still spend on unnecessary stuff. I would say though that my net debt is going down. I am able to pay off in 7 months yes.

My fear is just that everything goes pear shaped then I have no cash only high interest cards with available balance then I am back to square one.

I think I should kind of do a combination of what everyone suggests:

1. Leave the £3k and continue putting £300 into it each month
2. Pay off Loans first, then pay off 2018 cards
3. Fund emergency savings until the other cards are due and then pay them off with the emergency fund

MEM62

It doesn't have to be either or (and I am not sure why so many look at finances this way) You could put some towards clearing your card debt and some towards an emergency fund.

The nature of you employment dictates that your emergency find should be more substantial that is the case for most of us. Also, that debt - particularly at that level and on credit cards - is far from prudent.

EssexHebridean

If this were me I'd set payments to the cards to a level somewhere above the minimum - this stops payments falling over time and maximises the effect your payments will have.

You've clearly got a good handle on when the 0% periods end - which is great. And I assume you're not adding to the debt now? Ie you're not still using cards - are you?

In your situation I'd look to get the best interest I can on the existing savings, and for now I'd stash every spare penny into the best interest-paying savings account that allows instant access when needed, until such time as you know that you either have a new contract or your current one is extended. then welly the lot off against the cards with the 0% rates expiring, and start saving again ahead of your next contract finish date. when the next lot of cards come up for being interest payable, you can hopefully do the same thing again.

Oh - and while you're about it - do an SOA (Statement of affairs) and start to work to a budget and get a hold of your spending habits. You'll find the SOA link in my signature or in the "sticky" thread at the top of the board.