What order should I pay my debt off in?

Hi,

I really don't know how to tackle this. I have low income as I work part time due to chronic illness and my minimum payments are increasing:

Vanquis cc: £1000 min: £58.20
Creation: £1500 min: £52.86 will increase as bnpl periods end - this is for different items
Sainsburys cc: £1000 min: £31.21
Capital one: £500 min: £26.54
Zable: £185 min: £10
Overdraft: £400 min: £12.32 4 weekly... always living in this
Dad: £690 no min no due date owed for about 7 years

These cards have all been taken out in the last few months. My credit score has gone from 800 to 300. I've tried the stepchange thing online and it says DMP but I'm scared of that and I can't get a cc to consolidate. I can get a lendable loan but its 49% interest I'm assuming because of my crap credit. I want to get a mortgage in a couple of years but I don't see how I could with all this.

I get about £800 4 weekly and have about £100 spare.

What would you do with this order?

Thank you so much for your help.

Comments

  • x_raphael_xx
    x_raphael_xx Posts: 4,306
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    It makes sense to pay things off with the highest interest first.
    However, personally, if you have £100 spare a month, and Zable is £185, I would clear this one first for the mental boost and a little breathing space. One ticked off your list and £10 more available towards the next target.

    Then I would clear your overdraft, which gives you space for 'emergency money' should you need it. Also the bank could remove your overdraft. They did that to me! I had £950 overdraft I was living in, and they suddenly reduced it to £400 without much warning.
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  • It makes sense to pay things off with the highest interest first.
    However, personally, if you have £100 spare a month, and Zable is £185, I would clear this one first for the mental boost and a little breathing space. One ticked off your list and £10 more available towards the next target.

    Then I would clear your overdraft, which gives you space for 'emergency money' should you need it. Also the bank could remove your overdraft. They did that to me! I had £950 overdraft I was living in, and they suddenly reduced it to £400 without much warning.
    Thank you for your help
  • It makes sense to pay things off with the highest interest first.

    So after those two, you would go by highest interest?
  • x_raphael_xx
    x_raphael_xx Posts: 4,306
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    It makes sense to pay things off with the highest interest first.

    So after those two, you would go by highest interest?

    Yes, that's what I would do, clear the small one just because you can get rid of it quickly, then the overdraft, then go highest interest :) good luck!
    Debt Free as of 17/01/2009 Turtle Power!!

    EF Challenger #3 £126.70 / £5000
    MFW 2024 #100 £00.00 / £10,000

    MFiT #40 Jan 2025 Target - £99,999.00
    Mortgage at 30/09/22 £113,694.11 | Mortgage at 24/01/23 £110,707.87
    Mortgage at 21/04/23 £107,701.01 | Mortgage at 20/07/23 £106,979.65
    Mortgage at 04/10/23 £106,253.77 | Mortgage at 10/01/24 £105,324.57
  • Having looked at your debts and the situation you describe, its good to see you've realized that things are going south quick, most of us have been there, I definitely have.

    As a quick win, definitely clear the Zable, it'll give you that little boost, I did the same with my smallest debt.

    List the debts without Zable, with interest rates, on your income I would advice the debt avalanche because you really are in a situation whereby you have to get the most worth i.e debt paying off power from your money.

    Stop looking at consolidations etc, its too far gone now cause look at the interest rates.

    Unfortunately your dad will have to be paid as your final debt, that's essentially 0% forever.


  • elsien
    elsien Posts: 32,247
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    I do have to ask, why if you’ve got £100 a month spare you needed to take out more credit cards? 
    How accurate do you think your budget is?
    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,276
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    edited 14 October 2023 at 4:24PM
    I think if you only have £800 income and realistically no chance of increasing that in the near future then a mortgage in  a few years is not going to be achievable. Is your chronic health condition likely to improve and your income rise? 

    You would normally go down the DMP route if you cannot make minimums.  Given you have taken all these credit cards out recently I would say that you do not have money spare and are in fact using credit to live unsurprisingly.  

    You need to go cold turkey and stop using the cards and the overdraft altogether and start to work out a budget you can stick to. If you have money spare a DMP is the way to go but I would hazard you will not even be able to make a DMP payment. A debt relief order would be another suggestion but given you have a health condition and only around £5k debt you may achieve success in getting that written off down the line.  Is a claim for irresponsible lending a possibility? 

    Whatever you do, do not consolidate or take out any loans.  It will just make things worse. 

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  • sourcrates
    sourcrates Posts: 28,508
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    To start with, stop looking to borrow your way out of debt, that is the worst thing to do in your circumstances.

    Also the idea that you could afford a mortgage on such a low income, when you can`t service 5k of credit debt, well, you need to re-think that one, it`s never going to happen unless your income increases significantly.

    What is it about debt management that appears to scare you ?
    It`s a well worn path to becoming debt free, there is no other sensible option for you aside form ignoring the debts completely and hoping they will all just go away.

    Yes that last bit was sarcastic, but you should consider debt management, its all very simple, if you go with stepchange, they do all the donkey work for you, for free, or you can do it yourself, just stop paying, advise all your creditors you are having financial difficulties, take some time to get your mind in the right place, do some research, very important you know how to conduct yourself in this situation.

    When the time is right, re-evaluate your budget so you have enough to pay your essentials, what`s left distribute to your creditors, how do you manage on £100 a week ?

    Are you claiming all benefits you are entitled too, universal credit/housing benefit/PIP ???
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it 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 [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
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