What would Martin say?

Merlin139

I myself will be in a similar position in about 3 months that I will have around £40K to use:

I have worked out that I will:

1. clear the Mortgage 22K

2. Pay off wife's car loan 8K 4.2% APR

3. Wife has a 0% balance on a CC for £2600 (Put money in savings try to get best possible rate until March 2020 when 0% runs out)

4. My car on 0% so put Balloon payment of 7K (Put money in savings try to get best rate until July 2021 when due)

5. Money that was going to pay mortgage each month will then go into 2 Regular Savers where we can get 2%

No other debt and still manage to save around £200 a month.

AnotherJoe

Sharon87 wrote: »

So instead of switching cards when the deal runs out that's when you use the money to pay the remaining balance of the card.

If you're not good at organising things financially it may be best to pay off the debts now so there's no temptation of spending the money. Either way it's up to you.

I personally would put the money in a savings account, but I have spreadsheets galore and a budgeting app to manage my money so know where everything goes. If it was me 5 years ago I'd definitely pay off the cards!

Exactly.

Put aside the amount needed to pay off the cards in an account earmarked for that purpose, say
Marcus, and when they come to an end pay them off. Keep the amount saved entirely separate so there's no doubt it's not really your money. And if that's too difficult then just pay them off now and cancel them so you are starting again from a clean slate.

Lakedistrictlover

Thank you all. Very helpful. The reason I was thinking of maybe paying off the zero interest cards was to try and manage the monthly incomings and outgoings better because there was less going out. But I see your point about putting the cash in the best paying interest account and paying off the cards when the zero rate expires. Not thought of that. My original intention was to have a bit more money spare at the end of the month than I have now. Swings and roundabouts I guess!

Zero_Sum

Lakedistrictlover wrote: »

not sure what you mean, earmark the cash.... are you saying stash the cash and not pay off the cards?

Yup.
As long as you pay then min payment for the 0% period, you're better off not clearing the balances

Lakedistrictlover

I guess the best plan is to keep all the lump sum money separate from my current account so i don't dip into it too much. Plus if I got hacked I may lose it all, so maybe best policy is to keep it separate or even in two accounts.

colsten

Lakedistrictlover wrote: »

Plus if I got hacked I may lose it all, so maybe best policy is to keep it separate or even in two accounts.

Your best policy is to avoid getting hacked in the first place.

Lakedistrictlover

Well yes, that goes without saying.... but these things do happen. Cards can be cloned no matter what precautions one takes.

badger09

What is your longer term plan for this inheritance?

You say you have no mortgage. Have you paid it off, or are you renting? If renting, have you thought about buying somewhere to live?

How old are you?

Do you have pension provision? Enough?

Would you consider investing, rather than saving in cash?

Lakedistrictlover

badger09 wrote: »

What is your longer term plan for this inheritance?

You say you have no mortgage. Have you paid it off, or are you renting? If renting, have you thought about buying somewhere to live?

How old are you?

Do you have pension provision? Enough?

Would you consider investing, rather than saving in cash?

The mortgage is paid off, I am in my 60s. Pension provision quite good. Wouldn't consider investing because I'd like to be able to access the cash quite easily when emergencies occur. The payments to the credit cards are nearly £200 per month so I'd like to save that per month really which is why I considered paying them off even though they are zero percent. I can see the points made here though, that not paying them off could be better because I can get interest on the savings. The main aim is for me to budget better on a monthly basis and have some spare cash to enjoy. Thanks for your interest.

msallen

If you put the full amount that is on 0% into a savings account for the duration of the 0%, but withdraw enough every month to cover the minimum payments you're making on the cards, so that in effect the amount in the savings account falls as the debt falls and stays roughly the same, then you'll achieve both your increased monthly spare cash and earn some interest.