Please help which to pay first?

abbiejade3

Hi 

I have a the following debts I am trying to tackle and struggling to come up with the best plan. I will be coming into £1500 that I can pay towards these but I don't know which to focus on: 

1. Sainsburys credit card, £912.33 balance, 26.48 APR. I pay £30 per month, minimum payment is £20. 

2. MBNA, £930 balance 0% for 14 months, that will be next summer, rising to APR 28.9%. Paying minimum. 

3. Updraft loan of £5000 for 48 months. Repayed £516.32, through monthly payments of £167.32. Cost of credit is 25.90% per annum but APR 29.20%? Total to repay, £8147.40. States I can repay all or part of the drawdown at anytime and this will trigger recalculation of payments and reduce the loan. 

I'm really overwhelmed with it all if anybody could please help much appreciated
Thank you

frugalmacdugal

Hi,

your Updraft loan is costing you the most in monthly interest, most of what you pay every month is taken up in interest, would suggest reducing that.

Good for you on trying to get on top of things.

Brie

While I agree that the best thing to do is to tackle the debt with the highest interest I also believe that eliminating one debt completely can give you a real boost and making dealing with the rest much easier. 

So I'd pay the Sainsbury's card first and then bung as much as possible against the loan.  Keep on eye on the approaching date for the end of the 0% card and see what you might do to blitz that before it goes to the higher rate.  

My rough calculations suggest that £30 a month is barely making a dent in the Sainsburys card and that paying off the £912 owing on it will only save you about £24 over the course of a year.  But you'd have the £30 currently paid to Sainsburys to throw at the loan.

abbiejade3

frugalmacdugal said:

Hi,

your Updraft loan is costing you the most in monthly interest, most of what you pay every month is taken up in interest, would suggest reducing that.

Good for you on trying to get on top of things.

Thanks so much for your response, I didn't realise or didn't look properly at the interest amount when I signed for it it just seemed like a good option at the time now I'm getting my act together its looking like long term debt unless I try reduce it with all I've got, thank you I appreciate it 

abbiejade3

Brie said:

While I agree that the best thing to do is to tackle the debt with the highest interest I also believe that eliminating one debt completely can give you a real boost and making dealing with the rest much easier. 

So I'd pay the Sainsbury's card first and then bung as much as possible against the loan.  Keep on eye on the approaching date for the end of the 0% card and see what you might do to blitz that before it goes to the higher rate.  

My rough calculations suggest that £30 a month is barely making a dent in the Sainsburys card and that paying off the £912 owing on it will only save you about £24 over the course of a year.  But you'd have the £30 currently paid to Sainsburys to throw at the loan.

Thanks so much for your response, I feel like I've had the sainsburys card forever and the most frustrating thing is that was a 0% balance card but my direct debit hadn't set up and I couldn't access my account online to check so without payment they ended the promotion period almost immediately then it got out of hand so I definitely need to keep my eye on my new 0% card. I think I would feel better with that sainsburys off the list completely. Just feels too much to juggle. Thank you