Savings or debts?! 30 March 2021 at 10:14AM in Debt-free wannabe 3 replies 441 views

savercrazy

Hi, this is my first post, so hope this is right! I currently private rent but really want to own my own home.  As you can imagine, hindsight is a wonderful thing and I wish I treated money differently in my earlier years, however we can’t change the past! We have managed to pay off a lot of debt in the last few years, however myself and my partner both still have a loan each one with 2.5 years remaining, the other 6 years (consolidated recently).  I have a credit card which we have just switched to interest free which with regular payments will be paid off in the next 18 months all within the interest free time scale, and a store card which I pay over the minimum.
(we no longer spend on any credit/store cards)  By the end of April we should have around £8000 saved. As I said at the beginning my aim is to buy a house so this would go towards a deposit.  But I’m stuck between whether to keep this money as savings or to get rid and pay off one of the loans.  I currently save approx £140-£200 a month in to the deposit funds.  As well as £100 in to children’s savings and £80 in to a Christmas savings pot.  If I paid off a loan that would free up £310 a month.  Do I continue paying off the loan as normal and keep my savings for a deposit or get rid of one of the big debts in our lives and restart the saving process? (Meaning I would be further away from my dream of owning my own home!) also, How will the loan and other debt effect my chances of getting a mortgage? Any advice would be greatly appreciated! 

Thanks! 

[Deleted User]

Pay off the debts, then save. Otherwise, your deposit is effectively borrowed.

It will get you to your dream of owning your own home quicker.

enthusiasticsaver

The loans will affect the amount you can borrow so I would repay the debt first then save for a deposit. 

MidsHollie

As someone who owed money whilst buying my house, and then borrowed more for things like blinds etc, I would strongly encourage you to pay off your debts first! 

He is a preachy misogonist, but if you can overcome that, Dave Ramsey’s baby steps are a pretty good starting point to help you get focused on paying debt. I found the debt snowball method really useful. I now only owe on my two largest debts but I found my debt busting feet with the smaller ones. 

You will get plenty of inspiration from here