Fastest snowball option?

2BDs1C

Lendable £11052.86 - 10.88% min £289.32

£5285.24 - Barclays 0% until Apr24 (APR 24.3%) min £200

£2255 - Virgin 0% Dec24 (APR 21.3%) min £30

Hi

I am looking to check I have my calculations right or if there is a faster way of paying this off I am missing!

I want to pay these down as quickly as possible.  

Which way is fastest as I have put in a snowball calculator with the 0% deals and thought it would advise the loan first to throw as much at - however it’s saying pay the credit cards first?

Is this because it’s ignoring the 0% deals and just looking at the highest interest first?  It was the Lemon Fool one.

It says 20 months for all of it gone with the £1130.00 I have to throw at it monthly.

I was thinking better to pay loan first as accruing interest and pay just over minimums of the CCs and then once loan cleared look at finishing the two cards off - possibly may need to see if I can find another 0% deal at this time as will have run out of months to finish off without accruing interest.

Payments planned per month:

£900 - Lendable

£200 - Barclays

£30 - Virgin 

I would be grateful for all advice on fastest option- thank you 😊!

Martico

At first glance I make you correct that the interest-bearing debt should take priority, at least for now while the others are on 0% deals. 
Have you checked that you can overpay on the loan without attracting additional charges?

Ebe_Scrooge

Pay as much as you possibly can to the interest-bearing debt, and pay the minimum to the other 2.  Don't worry about even paying more than the minimum to those - as they're on a 0% promotional rate, this will be flagged as such on your credit report, so the usual issues about only paying the minimum don't apply.

The only problem is that you do need to plan to repay the credit cards by the time the promotional rate expires.  You may be able to do a BT of any remaining balance to another card, but it's not prudent to bank on being able to do so.

Is there any way you can increase the £1130 you have each month to throw at the debt?  A part-time evening job perhaps?  Cut your expenditure down to the bare bones?  A good place to start is to complete an SOA (https://www.lemonfool.co.uk/financecalculators/soa.php ), select the "Format for MSE" option and post it up here.  You may be pleasantly surprised at how a fresh pair of eyes can find fairly easy savings to be made.

Brie

If you pay as you have said 900/200/30 then the Lendable loan will be paid off Jan 2024 and you will have paid about £670 in interest.  But not paid any interest on the other 2.

Then take the 900 you had been paying to Lendable + 200 to Barclays and pay that all on the Barclays as that's the one that's going to start charging you interest first.  It will be half paid off in any case if you've paid £200 a month til Jan 2024 so £1100 a month will clear it before the 0% deal ends.  

At that point you take the £1100 and throw it at the Virgin one and again it will be clear before the 0% deal ends.

As others have mentioned stick the max on the loan and minimum on the others and the interest you pay on the loan will be even less than the £670 I predicted above.  My guesstimate is that you could pay as little as £160 on the Barclays but may have to pay as much as £70 for the Virgin card at least initially.  (based on having to pay a minimum of 3% of the balance)

So that's all very positive - just make sure that you aren't accumulating more debt somewhere else, another card, car finance, whatever.

Martico

My Virgin CC's minimum is only 1% of the outstanding balance or £25, whichever is higher, so I think the £30 will cover that happily. I'm not sure if that 1% is across the board for Virgin cards.  

2BDs1C

Thank you everyone for your really helpful replies - at least I know I’m on the right track 👍🏻

the payments I’ve said I can make are slightly above the minimum on both the ccs - Barclays require 3.25% of outstanding balance and Virgin as you say Martico is £25 or 1% so hopefully satisfying both those.  

I do have opportunity to work overtime at times as it comes up and will definitely throw anything extra at the loan to get that down even faster as I can together with all else extra money made from eBay sales and surveys which I do already.

Really grateful for all your advice and promise to pop back if things aren’t going to plan - but for now I promise I’ve done all I can to trim everything within my means as an old MSE’er who has sadly returned after becoming DF but life circumstances and family have sucked me back into debt again. 

I know personally I will never spend my way into debt again. None of this is down to being reckless or frivolous I promise you. Sadly family and life don’t always think the same. 

I know with all I’ve learned in the past I can get this back on track again - just hopefully enough this time to really add a good buffer in to stop these things and pre-empt life’s curveballs and stop them in their tracks!

Thank you so much and take care all x

JellyphantCastle

Hi there, just to add - the snowball method ranks your debt balance lowest to highest, ignoring interest %. The avalanche method ranks them in order of high interest to low interest, so not necessarily in the order of your balances. If you were using a snowball calc this might explain why it didn’t place your loan in first ranking to pay off (as it’s the highest balance). 

I think some people can find it more motivating to clear the smallest debt entirely first, then move to the next smallest and so on. Whereas with avalanche you might not clear a debt in full as quickly (but you usually end up paying less interest). 

Hope this helps - I use an app called Debt Payoff Planner which is great as you can toggle between the two options to see the profiling. 

kimwp

Don't forget to check if there are any penalties for overpaying your loan or paying it back early.

2BDs1C

Thank you Jellyphant and kimwp I will have a look at the snowball calculator suggested 👍🏻 and I am able to make overpayments on my loan 👍🏻 without penalty so all looking good so far.

I really appreciate all your answers everyone and thank you as always for your wisdom - this place truly is the best to come when you are struggling 🥹 
take care all ♥️