Bringing down debt, where to place the focus?

Budgetmealplanner

Hi everyone,

long time lurker but now signing up for some tips and advice to reduce this debt hanging over us as it's really starting to irritate!

Quick overview - £34k debt on a self managed DMP, around 3.5 years old now - F&F offers starting to come in with around 50-60% discounts so hoping to clear this for around £15/20k, was across 7 cards and loans and built up with 2 SMP only maternity leaves, Covid and job losses and also typically living above our means when we shouldn't have been.

Income - now £75k joint (this has increased by about 10lk each in the last couple of years which has been great and really helped with building emergency funds and not having to rely on credit anymore with our spending)

New loan - sadly, recently our house (which is forever - we have a £180k mortgage on a 4 bed house worth 250k and have absolutely 0 intentions of ever needing to move) needed some immediate work doing which we had to take out a £16k loan to cover, due to the 4 year old defaults we weren't in a position to add this to the mortgage so a 5 year loan has been taken out but it's at a horrible 17.5% rate it is this part that I'm after some of your well versed advice with please, as everything is steady away at the minute would you focus on building up the funds to make the F&F offers, or would it be better to overpay the loan and have it cleared sooner/pay less interest over the time just keeping the DMP plodding along? it is the level of the DMP that's really getting to me now I just want it gone.

RAS

Have you checked the loan details to make sure you are allowed to pay it off early without any penalties?

Budgetmealplanner

Hi @RAS the loan terms state early repayment would be liable to a charge of 28 days interest and £150 'admin', but overpaying regularly in small amounts doesn't incur any fees or charges. We have rounded the payment already (so it is supposed to be repayment of £387 a month and we pay it at £400)

Budgetmealplanner

to update - the admin fee isn't applicable if we make small additional payments which reduce the term of the loan, only in the even we may a lump sum payment to clear the loan! 
I think I've answered my own question here and the best thing will be to clear this in maybe 4 years rather than the 5 using smaller overpayments, saving a couple of k interest in the process.

My total outlook on debt has been completely changed and I can only thank the member of this page - as though I've not posted before, reading everyone's journeys has been mind-blowing. here's hoping in just a few years this will all be a distant memory.