Clearing multiple debts with inheritance. But which ones take priority?

abaka

Hey.  First of all condolences for your loss.

I had a similar situation...I received £10k last year from the estate of my deceased uncle who was effectively a father figure in my life.  At the time of the money clearing, I was 29k in debt.  I used around 4,000 to clear the highest interest bearing and then used the rest to put aside and used the rest to do some home improvement, holiday for our family and then put the rest in saving.

It is tempting to pay it all off....However, like others have said.  There is a risk that you don't learn the lessons and don't fall into debt again.  Second, this was advice I got when I was considering using all of my inheritance.  Would your nan really want you to use that money to give to banks/clear debts....Maybe use a percentage and put the rest to good use, investing in property, treating yourself or saving for a rainy day....

I would say use around 50% and looking at your debts

Pay 3k each of the following:
MBNA Credit card  
Updaft loan
Updaft loan

The RBS loan is low interest and you only have over a year to go so I'd play that one out.

You could also perhaps look to transfer the MBNA to another card which is 0%, and I believe MBNA is 2.5% minimum payment, even a card that offers a 1% min payment can make a huge difference.

If you could transfer the MBNA balance to a 0% card with 1% min payment, I'd be tempted to pay the 9k across the Updaft loans, clear one and pay the rest of the other.

hoverFrog1

You might be able to clear them completely if you make them a full and final offer for the debt of at least 55% of the amount owed. As you haven't defaulted and you're paying interest I'm not sure if they'd entertain that. It is worth asking to clear the full balance by paying a smaller sum. The worst they can do is say no.