Should I use half of my savings to pay of debt?

lodonnell9213

Hi all

So I’ve managed to stash away around £1000 as a safety net, but I’m thinking starting this payday to reduce it to £500, and use £500 to pay off some debt and maintain it at £500.
I use a credit card for small daily purchases and fuel and pay it off in full every month, so I was thinking after bills + credit card to use whatever is left at the end of the month for debt, unless I have to use my savings for say the car, if that’s the case I’ll top my savings.

thoughts?

thanks

enthusiasticsaver

How much debt do you have and what interest rate are you paying for it?
I would always advise a minimum of £1000 as emergency savings unless your debt is charging high interest. Well done on using your credit card sensibly by paying it off in full each month.  I presume the debt is on other cards other than your daily use credit card  then? 

sharpe106

How much are your bills each month? basically how long would your emergency savings last you for.

lodonnell9213

So bills (including debt) is around 1100 a month (this includes house things also) 
interest rate (I only have one with any interest rate) is about 10% and stands at £800 (I expect it to be shifted in the next 3 months or so)
other payment is car but that’s on 0% finance and I’ll own it at the end.
my income a month is about £2100 pre tax but the credit card normally is about £250 a month.

ryanm8655

If you’ve only got £800 left I’d just clear it and build the savings back up, personally.

theoretica

At the moment you have in effect borrowed money just to put it into savings.  I'd get rid of that £800 immediately.

Andyjflet

Pay it off and have zero debt, then build emergency fund again. 

monetxchange

Agreed, pay it off. It's also important to not think of your emergency fund as your "savings". I've put mine into a separate saver clearly marked emergency only. Then my actual savings are elsewhere. Helps with the mindset of only using it in an absolute exceptional circumstance (and not of the Dominic Cummings variety) and not as a back up to your spends.

DrEskimo

lodonnell9213 said:

So bills (including debt) is around 1100 a month (this includes house things also) 
interest rate (I only have one with any interest rate) is about 10% and stands at £800 (I expect it to be shifted in the next 3 months or so)
other payment is car but that’s on 0% finance and I’ll own it at the end.
my income a month is about £2100 pre tax but the credit card normally is about £250 a month.

I don't think it matters either way whether you pay it off now, or wait a few months. It's costing you about £5/month so it's not changing the bigger picture much...the interest on your debts is rarely the issue.

I would personally keep the £1,000 emergency fund and look to pay down the debt fast as you can over the next few months, but my concern is that there is a general sense of vagueness about your incomings and outgoings. Get a full written budget up and look at what all your spending is over an entire year. Make sure you are budgeting for the regular monthly payments, as well annual bills (insurance, TV license, Xmas, Birthdays, car maintenance, etc etc.). Once you have done that, then you can plan exactly how much you can move towards clearing this debt. A Statement of Affairs (SoA) can be a good way to help you go through all these costs.

The last thing you want to do is not budget for something then realise you have to rely on credit again. With a accurate and clear budget, you can be sure to avoid debt for good.

Best of luck with it all

Sncjw

So your bills are 1350 then if you include day to day spending on your credit card. I would pay the debt off then you save money. 

Theroadtoruin

How secure is your job? I'd normally agree with everyone else but there are going to be a lot of people losing their jobs over the coming months and if you're at risk any accessible cash is a godsend.