Help with debts please!

alal211

Hi all,

I would love some advice on the best way to manage a part of my finances. I currently have a budgeting spreadsheet set up and thought I had a plan in place but now i'm not so sure if it's the best way to go forward. I'd like to add that we're not in any financial difficulty.

At the end of the month we have £250 a month left to pay towards our debt, however we don't have any savings or an emergency fund. This makes me anxious as I do not want to add to the debt if anything goes wrong (ie car break down/new washing machine needed etc).

Our current debt is as follows:
PayPal Credit (19.9% APR) £1320.13 - minimum payment £44.00
Tesco Clubcard Credit Card (Interest Free until July 2020, then 19.9% APR) £1996.64 - current minimum payment £25.00 (unsure what the minimum payment will be after interest free period ends)

I would like to save some money to build up an emergency fund while paying down the debt. How much do you think would be a sensible amount to do this?

I have also looked at balance transfer cards or other interest free credit cards but unfortunately I'm not eligible due to credit history.

Any help would be much appreciated!

middleclassbutpoor

Hi Alal and welcome to the forum

I would say £1000 emergency fund for now would be sufficient. Then start overpaying your debt (lowest amount first or highest interest rate first - your preference)

Consider selling things or getting an additional job if you want to build you emergency fund and blast through this more quickly.

You should also set up a SOA to see if we can squeeze some further money from your current income/expenses.

https://lemonfool.co.uk/financecalculators/soa.php

Bizzywizard

Hi,

Have you tried to see if you can get another 0% balance transfer card for the high interest rate card? You can do a soft search on the MSE credit score, to see if you would be accepted. If so divided that money by the months available so its the same amount each month. Then hide the card in the top draw and don't use it.

If this is not an option, I would start with a small emergency fund £25 per month. The rest I would throw at the largest interest paying card. Then do another balance transfer on the card that finishes in July, so you have some breathing space.

Sell stuff on ebay/marketplace. Then chuck this money at the cards. I cleared one credit card by doing this.

I saved money by switching energy suppliers, switching bank accounts (made £300) and spreading my council tax over 12 months not the normal 10. I only spend £100 every two weeks on food for a family of four!

Just a few thinks to think about.
Good luck :j

monetxchange

A better way to manage your money would be not waiting til the end of the month to see what you have left to pay towards debt. Instead, budget tightly on payday and then pay your bills, put your day to day spending budget aside and then get the surplus money paid towards the debt/an emergency fund. It can’t be frittered away during the month if it’s not there to spend!