Pay off debt or start emergency fund

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PM22
PM22 Posts: 212 Forumite
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in Debt-free wannabe
I have just received a letter saying Barclaycard are giving me a refund of £566
-something to do with interest and charges paid on my last DMP.

Shall I pay this off my 12k debt or start an emergency fund

currently with PayPlan and token payments until Jan 2023

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  • [Deleted User]
    [Deleted User] Posts: 7,175 Forumite
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    If all your debt is with PayPlan and no interest is being added then I'd be tempted to put it away and keep an emergency fund.
  • Rob5342
    Rob5342 Posts: 1,521 Forumite
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    You need an emergency fund to cover anything that crops up so put it in there.
  • PM22
    PM22 Posts: 212 Forumite
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    Emergency fund it is then 
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,659 Ambassador
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    I agree that it is best to start off your emergency fund. 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • solidpro
    solidpro Posts: 457 Forumite
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    edited 1 August 2022 at 10:42AM
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    If you're already in a decent, manageable debt-paying routine then paying off a little more debt won't potentially create debt.

    Not having an emergency fund could create debt. So I would create one whilst this magical moment exists. A massive thing to tick off in life's 'things to do' list.
  • RAS
    RAS Posts: 32,759 Forumite
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    PM22, if you are worried about emergencies can you split your emergency savings. Maybe talk through with an advisor at a bank within walking distance. 

    An emergency account with a card - which you freeze in a bowl of water. This might fund a train ticket if you need to travel urgently, or a locksmith. Start with £100 in that account.

    A savings account, which you ask them to lock so you have to go into branch. And get a note on saying do not offer card, on-line etc.
    The person who has not made a mistake, has made nothing
  • Andyjflet
    Andyjflet Posts: 564 Forumite
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    Emergency fund of £1000 then start smashing that debt down. 
    Baby Step 6/7 - £64000 saved for emergency fund DEBT FREE !!!
    Currently Negotiating with HMRC !
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