I Want To Get Out Of Debt!!!

Hi guys

ive got £12,500 (7.9%) loan with Egg and have got £500 in savings. Currently i pay off £300 a month over 4yrs (only made 2 paymets so far)

I currently earn £1029 with my main job and approx £300 in my second job (Second job makes the payments on loan) out of my main jobs wages i have around £450 in which i can save or i can pay off in additional payments on my loan (or go out and have a good time :beer: ......only joking!!)

What i really need to know is would it be better for me to make over payments or should i put it in my ING direct saving account? and is it wise to have the £500 in my savings account or should i use that to make an over payment on the loan??

cheers guys

James240
Savings Total so far for 2023: £8,062.58
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Comments

  • Eliza252
    Eliza252 Posts: 449 Forumite
    You should pay off your loan as quickly as possible - I have not heared of a savings account that offers more than 7.9% interest rate - so you will simply be pouring money down the drain if you sit on savings (not that technically you would be able to call them savings of course! :D ). Have you thought about looking for a cheaper loan that you could transfer your existing loan to?
    nb - I am not an expert on loans! so please dont anyone MSE bash me, seems like the most logical suggestion though - non?
    You can always post a detailed account of your income/outgoings on this board - then you might find that people will have suggestions for more ways you could save money - that way you could pay it all off and get the opportunity to go out and :beer: quicker!

    oops - forgot to say you should check that there is no hidden penalty for paying off your loan early first - sometimes they charge you extra interest for doing that - Barclays have hit me with that one before :rolleyes:
    I've made my debts bite-size too depressing to look at all at once so am handling them one at a time - first up Graduate Loan £1720 paid off! only £280 to go!!!
    Money to raise for tuition fees: £3000
    When you get to the end of your rope, tie a knot and hang on!!
  • Murtle
    Murtle Posts: 4,154 Forumite
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    Eliza252, not sure I like the idea of an MSE bash.... unless it's a ball...and I can get all dressed up.... ;)

    however, your advice is right!!!!

    pay before save (sometimes it's useful to have a little in reserve for those nightmare months, like when the car packs up etc!!)

    at the moment though by saving you are paying the bank to hold your money for you, as the interest rate is higher!!
  • Eliza252
    Eliza252 Posts: 449 Forumite
    'MSE Bash' should I think become an official term - its for when you post and then someone comes along and totally slates what you've said - oooo... its not nice!
    I like the idea of a party better!! - :D :beer:
    I've made my debts bite-size too depressing to look at all at once so am handling them one at a time - first up Graduate Loan £1720 paid off! only £280 to go!!!
    Money to raise for tuition fees: £3000
    When you get to the end of your rope, tie a knot and hang on!!
  • Murtle
    Murtle Posts: 4,154 Forumite
    First Post First Anniversary Combo Breaker
    Eliza252 wrote:
    'MSE Bash' should I think become an official term - its for when you post and then someone comes along and totally slates what you've said - oooo... its not nice!
    I like the idea of a party better!! - :D :beer:


    ooo no that's not very nice, hope it doesn't happen very often???!! Hope it doesn't happen at all!!!!!

    party is the way to go....

    x x x x
  • James240
    James240 Posts: 16,387 Forumite
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    PARTY PARTY!!!! Party round your house then myrtle? lol
    Savings Total so far for 2023: £8,062.58
  • Murtle
    Murtle Posts: 4,154 Forumite
    First Post First Anniversary Combo Breaker
    James240 wrote:
    PARTY PARTY!!!! Party round your house then myrtle? lol


    ha ha ha - maybe when I've cleared my debt too..... :beer:
  • Hey James,

    Having been stung by car breakdowns and the like, I would keep an emergency savings fund (£500 sounds reasonable, but whatever you're comfortable with) and then concentrate on the loan - thats what I'm doing with my loan and it works for me (when I haven't been on a bender,see my other threads!)
    Quit smoking 18/08/07
  • James240
    James240 Posts: 16,387 Forumite
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    yes i have seen your other threads youngandreckless lol same problem with me i go out with a set sum and end up getting drunk and spending far more than i would have if i was sober!! my debt free date at the moment is 15th of May 2009 so am going to try my hardest to get that down as quickly as possible!! :T
    Savings Total so far for 2023: £8,062.58
  • ms_london
    ms_london Posts: 2,852 Forumite
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    It makes it easier that you have your debt in one place, and an APR of 7.9% isnt bad. If you credit rating is good however, and you could find a loan with a better rate it might be worth taking out a new loan? What are the terms on your current loan with Egg? As another poster says, is there an early repayment penalty? Can you just overpay each month or would it have to be in one lump sum?

    Could you cut your other outgoings at all? What you have to decide is whether, if you carry on paying the £300 per month, can you live with being debt free in 2009?

    I have a loan with Lloyds (its a refinanced loan at 2.3% - very lucky, they "refinanced" my original loan & overdraft, id been in their "collections" department for 2 years, and once i proved i could make the repayments they offered me this.). The loan is due to expire in December 2009, but although the monthly repayment is only £179.88, i didnt want this hanging over my head for the next 4 YEARS!!!!!! (plus i want to go travelling etc etc).

    I made the decision to pay it off this year, so at the start of the year it stood at just over £10,000. I have been making the usual £179.88 payment each month, but saving my spare money in an Ing account & mini cash Isa. Come December I will have enough money in my isa to pay the loan off in one lump sum, i currently have just over £4,000 saved, so not long to go now, yaaaay!!

    I think it depends on what you want to do. Do you want to have to keep up your 2nd job for the next 4 years? You will probably have to if you want to stick to the original loan term, otherwise you could just overpay as and when you feel like it.

    Check out: https://www.whatsthecost.co.uk - this way you can see how much interest you will be paying, its amazing how a few overpayments here and there can dramatically bring down the cost of total interest paid.

    I suggest you keep the £500 as an "Emergency Fund", but use it only as that. I would recommend posting a SOA (Statement of Affairs), there might be other ways you could increase your income/reduce your outgoings.

    Ive been doing a 2nd job like you, for the past two years. Something i do enjoy, but cant see myself doing forever, and thankfully come December i wont NEED the money, but i will probably WANT the extra money :0)

    If you need any advice just ask, but well done on wanting to be debt free :0)

    Ms_London
  • James240
    James240 Posts: 16,387 Forumite
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    by the way if i over pay on my loan with Egg, do i pay off interest as well with my over payments or will i be paying off chunks of the main part of the loan i.e. with out interest? If anyone knows i would be grateful............ :money:
    Savings Total so far for 2023: £8,062.58
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