Cash Gift- where should it go?

Mrsb168

Hi all,

I’ve been given a cash gift of 5k by a relative, I currently have the following debt;

1435 cc
988 cc
965 cc
979 cc

490 Argos
300 very
300 next
170 grattan

I’d like to keep 2k as a safety net, going through a tricky time in my marriage and as my salary is quite low under £1k and 550 of that has to go into our bills/ mortgage joint account, I’m not exactly secure should we call time on things.

What am I best clearing/ spending and where? The credit cards bar the 988 one are 30ish % interest, and pretty much to the limit.
I need to get myself into a position where I’m comfortable and picking up on my credit score.

Of course I’m incredibly lucky to have received this cash gift hence why I want to make sure I put it in the right places.

Thanks for reading :beer:

fatrab

Personally, I'd pay off the debts with the highest rate of interest first. So 3 of the credit cards for a start.


What rates of interest are Argos, Very, Next and Grattan?


Cancel the cards as soon as you clear them.


Best wishes

[Deleted User]

I would pay all of them off bar the £988 as I am pretty sure the four store cards attract interest of at least 30%.

While this would only leave £400 or so you should be able to save enough soon get close to your £2000 safety net given that you don't have eight monthly repayments to make.

redux

I'd say similar, but a slight variation.

Pay off all the high rate balances. Keep one or two of the cleared cards, and use them for modest current spending, paying in full each month.

After a couple of months of this it might be possible to apply for a new card with a decent time (couple of years) 0% offer for balance transfers, and move the 988 and a couple of hundred of recent spending across to that. Avoid new spending on this card, or do only a very small total no more than the monthly minimum payment required.

Not having 30% interest on £5000 is going to save £120 a month, and if the balance transfer is also possible that reduces all interest to zero and gives a couple of years to build up some reserves on top of the eventual amount to clear it.

zippygeorgeandben

Make sure you say thank you to your relative and never get into this situation again!

enthusiasticsaver

All the store cards are usually on a high rate of interest so the most cost efficient thing to do would clear as much as possible out of the whole £5k then build up savings again using the money you were spending on debt repayments. This is especially the case if all the debt or most of it is 30+% interest. Get rid of the lot then budget extremely strictly. Have you addressed the reason for the debt in the first place? Can you work more hours or take on a second job?

Mrsb168

Ooh ouch @zippygeorgeandben ! I mean it would have been rude to not have given the biggest most heartfelt thanks with tears flowing when I was first given it don’t you think it was a gift and my brother got the same amount, it wasn’t due to my current situation but of course I said thank you!! And have absolutely no intention of ever doing so again!!


@enthusiasticsaver thank you for those tips. I think i was in a position where I was being offered credit, we had moved to a new build home I was on maternity leave and I wanted to be seen as helping out more. The only thing I can say is this last year I’ve developed less of a desire for possessions and more desire for quality time and making memories. I hope that’s enough to put a stop on those bad spending habits.

beanielou

If I was you I would not keep the 2k.
I would pay off as much as possible to the debt.

beanielou

I would pay off everything apart than the biggest CC.
Still leaves you with 800 quid & you can build on that.

[Deleted User]

pay off 5k to debt then build up some savings with the £ you now use for repaying said debt.

tealady

Another vote for paying off every debt. You can the put some of the money you were paying your debts with to start saving. I find it helps to think of savings as a "debt" to be paid.