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  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Difficult to judge without a full picture. 

    As long as the interest is not charged paying off the car may be an option but running cars is expensive but sometimes the convenience over the other options is worth it.
    It might be you can share one car and use public transport. 

    Sofa is interest free just uses the capital put the money aside and pay it off slowly. 

    The CC zero% will end so that needs to be looked at along with the loan. 

    Stop saving for the kid you are in effect borrowing at high rates for that. 

    In 14 years time you can sort that out. 



  • Difficult to judge without a full picture. 

    As long as the interest is not charged paying off the car may be an option but running cars is expensive but sometimes the convenience over the other options is worth it.
    It might be you can share one car and use public transport. 

    Sofa is interest free just uses the capital put the money aside and pay it off slowly. 

    The CC zero% will end so that needs to be looked at along with the loan. 

    Stop saving for the kid you are in effect borrowing at high rates for that. 

    In 14 years time you can sort that out. 



    Some valid points there. Just for clarity The CCs are stopped so I cant use them and thats what I want too.  They say they want the money back over 3-4 years and no interest payable under persistent debt ruling.  Basically its the least worst option for them at least they get repaid over time and they've already had a fortune in interest.  On that basis I was leaving them until last and paying "their recommended payment amount".  I would like to get my life back and be done with this sooner rather than later though. The only thing I pay interest on is the car loan and the personal loan of which both I was going to pay off.  
    That in my mind made the saving feasible for my daughter but again Im not thinking clearly, would you definatley know it on the head and use the money towards the debts, she gets £50 a month.


  • AskAsk
    AskAsk Posts: 3,048 Forumite
    1,000 Posts Fourth Anniversary Name Dropper Photogenic
    mandb2014 said:
    AskAsk said:
    mandb2014 said:
    AskAsk said:
    quite a lot of numbers flying around in your original post OP. 

    but to summarise, you now have a debt of 17k and you are wondering if you should use your 16k of redundancy pay to pay that off?
    Sorry I wasn't very clear, the stress of it all is getting to me as not thinking clearly.
    Basically I have 25k debt (both of us together). £16k redundancy and 1k in savings plus both still have jobs.  Is it best to side 3-6 months emergency funds and the rest on the debts?  What would be the best strategy? 
    Appreciate usually its the debts are costing you money and usually it makes sense to pay as much as you can.  Im not sure in the uncertain world whether another redundancy isn't round the corner and I dont want to be left with absolutely nothing.
    i see.  that makes more sense.

    how much interest are you paying on the 25k debt?  and how much of that 16k are you thinking would be put aside for the emergency fund?
    £1000 sofa 0%
    £1200 car 37% (ridiculous but I was backed into a corner as old car broke and didn't have anything to get another and needed it for work, this is more than 50% through agreement so can be given back if needs be)
    £15000 on two credit cards on 0% this is persistent debt where creditor has stopped the cards and wants its money back
    £8000 on a loan at 19% 
    As you can see we arent in a good place but the situation was much worse than this believe it or not a year ago.
    I was hoping to put back 3-6k for emergencies but Im not sure whether to just pay off the full £17k and just hope for the best as it would clear up 75% of the above horrific mess.

    sofa - don't pay off as it is 0%
    12k car 37% - pay off (this is critical)

    15k on credit cards - how come this is 0%?  what is the consequence of paying this back in a year's time?

    8k loan 19% - pay off - the trade off is potentially here, where you keep the remaining 4k from your redundancy pay for emeergency or pay this loan off and take out another loan if it all goes wrong again.
  • JReacher1
    JReacher1 Posts: 4,661 Forumite
    Part of the Furniture 1,000 Posts Name Dropper I've been Money Tipped!
    Pay loan off
    pay car off
    thats £9200.

    The rest is all on 0% so put the rest of your money in savings In case you need it. There is no need to pay that money off at the moment. 
  • pjcox2005
    pjcox2005 Posts: 1,018 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I agree pay of loan and car as a must given the interest rates. If you can do without a car then great, bus pass sounds sensible. If you actually think you'll buy another one in 3 months though then I'd just keep the car now it's paid off and factor it into the budget.

    I agree about child savings, whilst nice I'd sort your situation first and then build up savings if the options arrive. For example if you kept debt at 19% for a year when you had £3k in the bank then it's cost £570 over that period.

    The other part is you've now got a "spare" £8k in the bank from redundancy and presumably a short period out of work till the next job. Do a budget for those months (and future) to work out what you've got to spend rather than fritter the redundancy away. Potentially even look at short term jobs although there may be less with events not being run.

    Given your incomes then your situation doesn't look too bad, and sounds like you've got to grips with it, but I would do a new budget and perhaps share on debt free forum so that you keep improving and basically spend the money on areas you feel the benefit.
  • Xbigman
    Xbigman Posts: 3,915 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Have you defaulted on the credit cards to get the 0%? If you have that might bring up the option of a full and final offer on one of them. But that's definitely something for the DFW board.

    I'd pay off the sofa now. Those 0% purchase deals seem to have a high aggro factor when trying to pay them off, And the money will earn peanuts in interest.

    I also agree the child savings don't make sense. 


    Darren
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    As you don't already have a budget/plan for the next 5 years start with the SOA format.
    https://www.lemonfool.co.uk/financecalculators/soa.php
    Get everything down, with a new job starting in Jan I would do a mini one till the end of the year then a full years for 2021 that can be used for a 5 year plan to pay off the debt and reclaim the life balance.

    Once you know your finances you can plan better.

    A realistic plan will work better than one that is too aggressive.
    Once you have the SOA you can see how much is available for the debt payments
    With help from the debt board you can address any outgoings than can be reduced, most can find something even when there are no more savings to be made. 

    With £50k net £3k+  
    if you take the £25k debt before interest it is 
    1y £2,084pm
    2y £1,042pm
    3y £695pm
    4y £521pm

    You said you have done about £8k since Oct  that's  around £800pm(+interest) that means there after the mortgage there is £2kpm going somewhere(some on interest) the SOA will help identify where it is all going

    Add the £50pm going into the kids funds a 3 year plan is going to be comfortable, with the redundancy money  2 years should be doable maybe even with a push and more saving found end of 2021.

    Once the debts are paid off a couple of extra months saving will have topped up the £600py currently going to the kids fund

    With the 4 months left this year that should nail the car and start on the loan and have got the £25k total down by around £3000

    £4k kept back will see you through 6 months on loss of of one salary, to cover both for 6 months you are looking at nearer £13k.
    A SOA will help identify what that can be got down to with some of the debts paid off and the other on min payment plans.

    If you just look at the £15 CC debt on the assumption you can pay of all interest bearing debt by Jan
    12m £1,250
    18m £834
    24m £625
    36m £417
    48m £313
    With a 24 month plan for that you have some wiggle room with the current £850pm to build up savings
    There is a trade off here committing to a higher payment to get it paid off or keeping money back in case the income drops
    With it on 0% doing a bit of both target 3-4 years but save as if it was 18 months then you can pay off bits when you feel comfortable.

    Looking further ahead guessing the mortgage is say £38k  2% £230pm 16years 
    In a couple of years that will be down to £34k with 14y to go
    With the debt paid off then a new payment of £630pm( add 1/2 the £800 going to the debt) you will have that paid off in under 5 more years(should be done in conjunction with retirement planning and potential house moves).

    After 5 years using that money for the kids savings you have £7.5k+ in 12month  that's the £10k saved for the kid 5 years ahead of the current schedule. 

    It looks and feels a lot worse than it is as you don't have a plan yet and the job loss risk can be quite worrying. 
    With a grip on where all you money is going a workable plan that has a safety net, a vision with goals for the future  life will be back on track fairly soon. 






     
     

  • @sourcrates can you move this to the DFWB board, OP requested it on the first page.
    Mortgage started 2020, aiming to clear 31/12/2029.
  • garmeg
    garmeg Posts: 771 Forumite
    500 Posts Name Dropper Photogenic
    edited 2 September 2020 at 10:16AM
    AskAsk said:
    mandb2014 said:
    AskAsk said:
    mandb2014 said:
    AskAsk said:
    quite a lot of numbers flying around in your original post OP. 

    but to summarise, you now have a debt of 17k and you are wondering if you should use your 16k of redundancy pay to pay that off?
    Sorry I wasn't very clear, the stress of it all is getting to me as not thinking clearly.
    Basically I have 25k debt (both of us together). £16k redundancy and 1k in savings plus both still have jobs.  Is it best to side 3-6 months emergency funds and the rest on the debts?  What would be the best strategy? 
    Appreciate usually its the debts are costing you money and usually it makes sense to pay as much as you can.  Im not sure in the uncertain world whether another redundancy isn't round the corner and I dont want to be left with absolutely nothing.
    i see.  that makes more sense.

    how much interest are you paying on the 25k debt?  and how much of that 16k are you thinking would be put aside for the emergency fund?
    £1000 sofa 0%
    £1200 car 37% (ridiculous but I was backed into a corner as old car broke and didn't have anything to get another and needed it for work, this is more than 50% through agreement so can be given back if needs be)
    £15000 on two credit cards on 0% this is persistent debt where creditor has stopped the cards and wants its money back
    £8000 on a loan at 19% 
    As you can see we arent in a good place but the situation was much worse than this believe it or not a year ago.
    I was hoping to put back 3-6k for emergencies but Im not sure whether to just pay off the full £17k and just hope for the best as it would clear up 75% of the above horrific mess.

    sofa - don't pay off as it is 0%
    12k car 37% - pay off (this is critical)

    15k on credit cards - how come this is 0%?  what is the consequence of paying this back in a year's time?

    8k loan 19% - pay off - the trade off is potentially here, where you keep the remaining 4k from your redundancy pay for emeergency or pay this loan off and take out another loan if it all goes wrong again.
    I wonder if the car loan is £1200 as per original post (seems low) or £12000 as you state - OP how much is the car loan?
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    £1,200 fits with a total of £25k  and other comments made.

     we have about £25000 of debt which is made up of a loan, credit card debt, a car loan and a sofa payment.


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