Advice please would be great 13 July at 12:35PM in Debt-Free Wannabe 8 replies 479 views

DMtryingtobesavvy

Afternoon. I am changing jobs and now receiving a lot less salary from September but also received a payment for leaving. I have read other bits related to clearing your debt and want to ensure my long term finances are secure as the new job is for a year. I should be able to raise about 15k and have two large debts apart from mortgage and car. A loan with 16k left and credit card with 8k on it. Thoughts are clear credit card as 22%APR and loan will take four and a half years to pay although costly at 400 a month at 9%. If I clear credit card then will have the remainder in case of no employment next year. Any advice would be welcome.

RobM99

Pay highest interest debts up first. £8,000 on a 'normal' credit card will cost £160 a month (roughly) in interest (assuming it's a 2% a month card).  In my opinion!

leninspot

Could you transfer at least some of your credit card debt to an interest free switch? Even if it saved a little for a few months it all helps?

sourcrates

Whatever you choose to do, please try and address the reasons why you ended up with 24k of debt in the first place.

Better budgeting, and trying to live within your means may stop you from being in this position again, good luck.

sharpe106

If you want some advice on budgeting etc complete  a SOA

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

RAS

sourcrates said:

Whatever you choose to do, please try and address the reasons why you ended up with 24k of debt in the first place.

Better budgeting, and trying to live within your means may stop you from being in this position again, good luck.

And check any early redemption penalties on the loan and include that information in the SOA.

ohdearhowdidthathappen

If you can't raise another £1k to clear the loan, then I'd definitely pay off the credit card.  You don't say what your income vs expenditure is with your new job.  If you do a budget and can manage your outgoings on your new income, then I'd put £1K into savings as an emergency fund and put the other £6K towards paying the loan off early (if there are no penalties).  You'll have the money you'd usually pay into the credit card spare too to save towards clearing it.
Good luck

DMtryingtobesavvy

Thanks all, if I was able to raise the 1k would you consider paying the loan off first. Getting some financial advisor as well but always value a range of advice. I could then look to focus on clearing the credit card after sorting the loan. Take care all

theoretica

The credit card is costing you the most interest - pay it off first.  The lure of paying off the loan is getting rid of those monthly payments, but you need to keep your payments to debt up to get rid of it all, not be tempted by easier cash flow to spend more.