Continue to 100% pay off debts?

Andyjflet

romneym335 said:

For the last 6 months I've been working loads of overtime in order to pay stuff off. I've managed to pay off the remainder of a loan (12k) 2 years early. I now have a 10k credit card left. I estimate this would take me 6-7 months to pay off using all of my left over money after bills etc each month. I have next to no savings at present due to commiting all of my money to paying off debts. 

What's people's thoughts? Pay off the credit card with everything left over or save a bit and use the remainder to pay off the credit card which would obviously take longer.  At present the credit card is interest free till April and I will then try to transfer the balance. 

The answer is quite simple, get yourself £1k emergency fund and then throw everything else monthly at the dent, get it gone in 6 months, I dont see why you wouldnt? Be focused and get it gone ASAP

ukindexinvestor

romneym335 said:

I was going to lump everything at it for the next 6 months or so, around 1500 per month and struggle on with no savings but I'm being convinced to do half and half now or at least until hopefully I get a new 0% and pay the minimum off I need to over 18 months to clear it. Thanks all 

no problem!

Superhoopza

EssexHebridean said:

You’re bound to get many different viewpoints on this, and ultimately can only take the one that feels like it fits you the best. Personally I would be throwing everything I could at the card until April, to make a new deal - or, for that balance, dealS - more likely to be achievable, and I would then be dividing out the remaining balance once new 0% deals were found by the number of months in the deal to work out what needed paying from that point. 

Once you reach that point, you have two options:
at this point in time, my favoured one would be to set the card to a level a little above the minimum payable each month - so for example, for a £207 min payment, I’d set to a £210 DD - and then setting the balance of the month amount off into a higher interest savings account ready to clear the remaining balance the month before the 0% finishes. That way you earn a little interest while also being sure that the monthly payments aren’t missed, and you get the advantage of a set monthly DD having more impact on the balance than a straight “minimum payment” - this method also helps with budgeting too. 

You also have the option of simply paying the relevant proportion of the balance to the card each month - useful if you either don’t trust yourself with the savings quite yet, or if you are concerned that something will come along which would need you to dip in to this money. 

If taking the set monthly DD route, you must not use the card at all (usually advisable with 0% BT cards anyway) and also be vigilant around any changes of terms which mean that the monthly payable might increase. 

Can I ask why paying £210 instead of the minimum of £207 would have more impact on the balance? Having the amount of the DD so close to the current minimum will mean it will more than likely change should the balance go up on the card and therefore not be useful for budgeting?

TheAble

Superhoop91 said:

EssexHebridean said:

You’re bound to get many different viewpoints on this, and ultimately can only take the one that feels like it fits you the best. Personally I would be throwing everything I could at the card until April, to make a new deal - or, for that balance, dealS - more likely to be achievable, and I would then be dividing out the remaining balance once new 0% deals were found by the number of months in the deal to work out what needed paying from that point. 

Once you reach that point, you have two options:
at this point in time, my favoured one would be to set the card to a level a little above the minimum payable each month - so for example, for a £207 min payment, I’d set to a £210 DD - and then setting the balance of the month amount off into a higher interest savings account ready to clear the remaining balance the month before the 0% finishes. That way you earn a little interest while also being sure that the monthly payments aren’t missed, and you get the advantage of a set monthly DD having more impact on the balance than a straight “minimum payment” - this method also helps with budgeting too. 

You also have the option of simply paying the relevant proportion of the balance to the card each month - useful if you either don’t trust yourself with the savings quite yet, or if you are concerned that something will come along which would need you to dip in to this money. 

If taking the set monthly DD route, you must not use the card at all (usually advisable with 0% BT cards anyway) and also be vigilant around any changes of terms which mean that the monthly payable might increase. 

Can I ask why paying £210 instead of the minimum of £207 would have more impact on the balance? Having the amount of the DD so close to the current minimum will mean it will more than likely change should the balance go up on the card and therefore not be useful for budgeting?

The idea's not to spend anymore on the card though so the balance shouldn't go up. As the the balance reduces so will the minimum, so by going the fixed amount route your monthly payments won't be reducing and you'll clear the balance quicker.

That is:

210, 210, 210, 210....

rather than

207, 202, 195, 186,....

Martico

Also, only paying minimums on cards (that are not in a period of a promotional rate like a balance transfer) is more likely to get you a flag for being in persistent debt than if you continually pay over the minimum

Superhoopza

TheAble said:

Superhoop91 said:

EssexHebridean said:

You’re bound to get many different viewpoints on this, and ultimately can only take the one that feels like it fits you the best. Personally I would be throwing everything I could at the card until April, to make a new deal - or, for that balance, dealS - more likely to be achievable, and I would then be dividing out the remaining balance once new 0% deals were found by the number of months in the deal to work out what needed paying from that point. 

Once you reach that point, you have two options:
at this point in time, my favoured one would be to set the card to a level a little above the minimum payable each month - so for example, for a £207 min payment, I’d set to a £210 DD - and then setting the balance of the month amount off into a higher interest savings account ready to clear the remaining balance the month before the 0% finishes. That way you earn a little interest while also being sure that the monthly payments aren’t missed, and you get the advantage of a set monthly DD having more impact on the balance than a straight “minimum payment” - this method also helps with budgeting too. 

You also have the option of simply paying the relevant proportion of the balance to the card each month - useful if you either don’t trust yourself with the savings quite yet, or if you are concerned that something will come along which would need you to dip in to this money. 

If taking the set monthly DD route, you must not use the card at all (usually advisable with 0% BT cards anyway) and also be vigilant around any changes of terms which mean that the monthly payable might increase. 

Can I ask why paying £210 instead of the minimum of £207 would have more impact on the balance? Having the amount of the DD so close to the current minimum will mean it will more than likely change should the balance go up on the card and therefore not be useful for budgeting?

The idea's not to spend anymore on the card though so the balance shouldn't go up. As the the balance reduces so will the minimum, so by going the fixed amount route your monthly payments won't be reducing and you'll clear the balance quicker.

That is:

210, 210, 210, 210....

rather than

207, 202, 195, 186,....

Ok that wasn't explained but I understand.

Thanks

Superhoopza

Martico said:

Also, only paying minimums on cards (that are not in a period of a promotional rate like a balance transfer) is more likely to get you a flag for being in persistent debt than if you continually pay over the minimum

How true is this? Minimums these days are more than just the interest amount, so if you stop spending on the card and pay minimums, you are going to reduce the balance (all be it slower than paying more than the minimum).

Martico

Here's a factsheet from National Debtline on persistent debt

LoulaBelle

Who is trying to convince you to do half and half? I'd personally throw everything at the debts.  Short term pain = long term gain, think how much money you will save once you are out the other side?  Its paying interest on Credit Cards that really hurt believe me I've been there.

Superhoopza

Martico said:

Here's a factsheet from National Debtline on persistent debt

I'm well aware what persistent debt is. Are you aware that minimums these days are above interest charges, therefore if you don't spend on the account, you will end up clearing the balance?