Time for action!

I think I need to get my money problems sorted out this year (well at least make a start!). I see from other posts that there are others in much worse situations than I am, but my position is still a big concern for me. Here is a brief overview of where I am at...

Credit Cards
£5578 HSBC 0% until sept 05
£3421 Cahoot 10% APR (with about £80/month direct debit on this card)

Other debt repayments
£114/month Student loan (supposedly inflation intrest rate) until may 06
£316/month personal loan until sept 06 (yeah maybe I went a bit mad there, but I wanted the car!)

Savings
£1000 Halifax ISA saver
£4266 Halifax PEP


I struggle to pay off much more than the minimum repayments on the CCs at the moment. I think I have a pretty good credit history and havent had problems getting cards in the past (thats half the problem!), so I dont mind shuffling between 0% cards if they are available (HSBC werent offering me a high enough limit to take in the cahoot card as a balance transfer). I have been considering cashing in those savings to pay off some of the debt (starting with the cahoot card). Is this a good idea? or should I keep that stash of cash for a rainy day or as a start to a mortgage deposit should I decide to buy a house (which I want to do as soon as I can afford it). Come september next year when both loans are paid off I will effectively have another 400 quid a month to play with, so should I hold out until then?

Any ideas on how I could rearrange things would be very welcome :o)


cheers.
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Comments

  • Xbigman
    Xbigman Posts: 3,884
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    Before any direct advice can be given we probably need to ask how much is your personal loan for? And are there repayment penalties on any of the loans?

    Otherwise its almost straightforward.

    Use your savings and free income to pay off the highest interest chargers first (subject to penalties / charges).

    By the looks of it you are at the crucial point where you are still in control of the situation and with a sustained 'pay off' push you can be debt free in the not too distant future.
    Regards



    X
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  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276
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    It's very difficult to give precise suggestions, without knowing the full picture e.g. what is your income? Your bills? And the minimum payments on the cards. If you can post more information you may get more suggestions.

    If you cashed in the savings, you could clear the Cahoot card and part of the HSBC Card. You need to start paying off that card as the 0% runs out in 7 months - so it would take nearly £800 a month to clear it.

    Clearing the Cahoot card would then give you an extra £80 a month to pay off the HSBC card, in addition to whatever you're paying at the moment.

    That car was a big expensive mistake! You should consider selling it and paying off the loan - but be careful, as you may not get enough for the car to do that. Have a look at that as an option.

    Your only other options are to get your regular bills - utilities, food, insurance etc - down to the minimum. Get the best deals by shopping around. And start to be thrifty with food. In addition, could you take a second job and chuck all that you earn from it at the debt?

    Play with some "what if" scenarios in a spreadsheet to see how quickly you could be debt free. In particular, look at all the surplus cash you would have if you were debt-free.

    Or post back with more information.
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • dave76
    dave76 Posts: 252 Forumite
    I cant put my hands on the original personal loan agreement at the minute, but if I remember correctly it was for 13k at about 7% apr over 48 months (with direct line). Anyway, I just got an early settlement figure which is £5471 (the remaining payments would be 18x£316 = £5688).

    Minimum payments this month...
    Cahoot £62
    HSBC £172

    As it happens I am working away from the office at moment so can rake in an extra couple of hundred quid a month (after taking into account extra fuel costs) so that will help in the short term. I know you have to be cruel, but selling the car, come on ;)
  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276
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    I know you have to be cruel, but selling the car, come on

    Depends on how important being debt-free and then accumulating some serious savings e.g. for a house, is to you. Compared with impressing your mates and the chicks with your nice car (or, so you think)

    ;)
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • dougk_2
    dougk_2 Posts: 1,403 Forumite
    I think that people forget the purpose of cars..... its to allow you to travel from one place to another! If a car costing £500 does that and it is safe and relaible, why spend £10k doing the same! You wouldn't pay £5 for a loaf of bread because it comes with pretty packaging!

    Sell the car and do yourself a favour and pay off the loan and buy a cheaper car! :)

    With regards to the debts - I would use the savings to pay as much off the cahoot card. Don't pay the 0% one off until a couple of weeks before the intrest free period ends as there is little point as you are saving money by gaining intrest on the money invested.
  • Jumanji_2
    Jumanji_2 Posts: 108 Forumite
    I would take my savings, and this months loan payment, and pay off that loan completely!. Then you've got an extra £316 to throw at your Cahoot card a month, and if you sell your car and get a cheaper one you would probably have enough to pay off both the credit cards.

    Then you'll have £664 a month to pay off your student loan which you could probably do pretty quickly.
  • JasonW_2
    JasonW_2 Posts: 705 Forumite
    I would agree this is not time to hang onto savings. This is the rainy day you have been waiting for. It propbably sticks in your throat to be using this money for something as dull as paying off debt. Right? Well what if you look at the money in your savings account was paid for by the credit cards and loans and never was your money?

    Sell the car and get a cheaper one. Use the hundreds of pounds a month extra you have to clear off the other debts one by one, and once they are clear, then built up savings. You will feel a lot better once you have gotten rid of the debts for sure.

    JW
  • fazer6
    fazer6 Posts: 185 Forumite
    Or alternatively sell the car and buy a bike. Better mpg, lower tax, cheaper to buy than a car and you save time on the commute to work, basically you get more smiles per mile than in a car.

    Don't bother keeping the savings if you already have debt you earn hardly any interest anyway. Once you're debt free you can start to think about saving for a deposit, the sooner you pay off the debts the less money you spend on interest so the more money you have.

    Search the forum for the snowball calculator and try a few alternatives of what to pay off first with your savings and see which option works out best.
  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276
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    Snowball calculators here

    https://www.whatsthecost.com
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • dave76
    dave76 Posts: 252 Forumite
    cheers for the advice people - you all seem far too sensible ;)

    I'll try not to put any more on the CC when I go to milan next week :D
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