Plan of action

Cryptoguy

Hi everyone,

Just after opinions and some advice In regards to my current finances.

I'm due to receive some inheritance shortly totalling around £38,000. This will enable me to clear the majority of my debts freeing up around £1100 per month.

I will still have the following debts outstanding:

Very £3205 - various items coming off BNPL from December currently paying £13 per month.

Creation £3326 - paying £67 per month with various items coming off BNPL meaning this will increase to around £130 per month

Sainsburys loan £9544 paying £287 at rate of 8.90%

Once I have paid off the majority of my debts through the inheritance, I was thinking of getting a 0% credit card and paying off Very and Creation then closing these accounts. Chip away at the 0% card and then move it onto a different card at end of promotional period.

Not too sure what to do with the Sainsburys loan.i was thinking regular overpayment of around £200 per month rather than refinacing it onto a lower rate loan or even potentially another zero percent credit card if I can get a limit high enough and then chip away at it that way.

Any guidance or advice would be appreciated. 

stu12345_2

are all or any of the debts you are paying off with the £38000 have interest 

Cryptoguy

Yes all the debts getting paid off have interest. Some ridiculously high. 

stu12345_2

will you get a 0% interest credit card  big enough to cover very and creation 

Cryptoguy

I'm hoping so, income is £40,000 per year and have never missed a payment. Once I use the £38000 to pay off the majority of my debt, I'll have no credit card debt so it may take a few months to feed into my credit score but then hopefully options will become available.

Exodi

While it is great you are able to settle the majority of your debts from inheritance, it unfortunately only addresses the symptoms rather than the cause (which would be an imbalance between your income and outgoings). You don't fix a leak with a bigger bucket.

While coming up with a plan to settle your remaining debts is important, it is also important to be aware of the reasons for getting into debt in the first place and have a plan for it not to happen again (I hope your username isn't a nod to the true source!).

What are the interest rates and dates for Very and Creation to come off their promotional term?

I believe Very is ~45% APR. While refinancing on 0% before this happens makes financial sense (and I'd generally support this), it is often viewed quite cynically on this forum as it often leads to people becoming a bit too comfortable and starting to re-spend (especially in circumstances like this where it's not clear that the root issue has been resolved).

With a surplus of £1.1k p/m you could be debt free by the end of next year if you remain steadfast in your resolve.

TheAble

My thoughts exactly Exodi. These behaviours don't change overnight; fortunate, op, to be able to clear a large portion with the inheritance but be aware that the chance of you accumulating them again is probably quite high unless you start to live within your means.

Cryptoguy

Thanks for the comments guys, I certainly won't be getting myself in this position ever again. I have been drowning and it's a massive wake up call.

MFWannabe

Will you be keeping some of the inheritance as an emergency fund? 

If not you could find yourself heavily in debt again if something goes wrong and you have no funds to pay 

Cryptoguy

No ill be utilising the full inheritance to pay down debt. As I'm going to be immediately better off by £1100, this will allow me to build savings whilst paying down my remaining debt. 

Once I then get my payrise in April (typically £100 per month more) I can then also add this to savings.

Feeling very very blessed with this way out of the way things have been for the last 2 years.