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  • FIRST POST
    • Geworgie
    • By Geworgie 16th Apr 18, 4:45 PM
    • 7Posts
    • 5Thanks
    Geworgie
    What order would you pay this debt off?
    • #1
    • 16th Apr 18, 4:45 PM
    What order would you pay this debt off? 16th Apr 18 at 4:45 PM
    Hello all,
    I'm looking for some fresh eyes on our debt. I've got a couple of spreadsheets that I've been keeping and forecasting with and I think I'm going round in circles at this point.

    For background we have significant debt (although it's not unmanageable due to reasonably high income) because life got complicated for awhile. We are no longer adding to the debt but we are now down to one income whilst I am on maternity leave until October.

    We have:
    CC1: 5500 - 1.6% interest
    CC2: 8500 - 1.5% interest
    CC3: 7500 - 0% until Dec 18 - 8100 limit
    CC4: 3400 - 0% until April 20 - 3400 limit
    CC5: 2400 - 0% until Dec 20 - 3800 limit
    Car loan: 10k

    We are currently paying the minimum balances on all the ccs (we were paying at least £30 over the minimum but reduced the payments to give us some breathing room whilst on mat leave.)

    We currently have around £1000 set aside so have been toying with paying down CC5 to 1400 and then transfering 2400 from CC2.

    Is this the best option?

    There should also be a bonus of around 10k later in the year if that makes a difference, although this isn't guanteed.

    Since I'm not currently working my eligibility for any credit is practically zero so should we try to pay off the debt that is in my husband's name first to improve his credit rating and therefore give us the freedom to perhaps apply for a 0% card later in the year to do a balance transfer

    I'm trying myself in knots!!!

    Any help much appreciated!
Page 1
    • theoretica
    • By theoretica 16th Apr 18, 5:04 PM
    • 5,115 Posts
    • 6,376 Thanks
    theoretica
    • #2
    • 16th Apr 18, 5:04 PM
    • #2
    • 16th Apr 18, 5:04 PM
    When you transfer to a cc don't you pay a fee? So what is the advantage to pay off the cc at 0% and then transfer to it, rather than paying the money off the interest paying card directly?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • Geworgie
    • By Geworgie 16th Apr 18, 5:36 PM
    • 7 Posts
    • 5 Thanks
    Geworgie
    • #3
    • 16th Apr 18, 5:36 PM
    • #3
    • 16th Apr 18, 5:36 PM
    Thanks for your reply.

    Yes, I would pay a fee but it would be a maximum of £190 which I would easily rack up in interest. Cc1 currently costs me £100p/m in interest so I figured its a coat worth paying.

    Happy to be corrected though!
    • Fireflyaway
    • By Fireflyaway 16th Apr 18, 6:03 PM
    • 1,677 Posts
    • 1,798 Thanks
    Fireflyaway
    • #4
    • 16th Apr 18, 6:03 PM
    • #4
    • 16th Apr 18, 6:03 PM
    If I were in your situation, I do the snowball method. Pay minimum on everything but the smallest and pay that off. Then move to the next one and so on. It's more motivational and you feel like you are making progress quicker.
    Have you done a written budget to see where you can make savings? You might be able to decrease your outgoings and pay it even quicker.
    I'd probably focus on the ccs and leave the car till last, seeing that more as a bill. I'd also close the cards so as not to be tempted and find the hard work was for nothing.
    Last edited by Fireflyaway; 16-04-2018 at 6:05 PM. Reason: T
    • theoretica
    • By theoretica 16th Apr 18, 6:20 PM
    • 5,115 Posts
    • 6,376 Thanks
    theoretica
    • #5
    • 16th Apr 18, 6:20 PM
    • #5
    • 16th Apr 18, 6:20 PM
    Thanks for your reply.

    Yes, I would pay a fee but it would be a maximum of £190 which I would easily rack up in interest. Cc1 currently costs me £100p/m in interest so I figured its a coat worth paying.

    Happy to be corrected though!
    Originally posted by Geworgie
    Uhuh, but rather than pay £1000 off the interest free card and then a fee to transfer £2400, would you have a smaller fee if you paid the £1000 direct off the interest charging card and only transferred £1400?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • LMG1305
    • By LMG1305 17th Apr 18, 2:29 PM
    • 149 Posts
    • 1,018 Thanks
    LMG1305
    • #6
    • 17th Apr 18, 2:29 PM
    • #6
    • 17th Apr 18, 2:29 PM
    It would make more sense to use the £1000 to reduce the balance on CC1 & then just transfer over what you can to one of the 0% balance transfer deals.
    • indesisiv
    • By indesisiv 19th Apr 18, 12:16 PM
    • 5,474 Posts
    • 18,090 Thanks
    indesisiv
    • #7
    • 19th Apr 18, 12:16 PM
    • #7
    • 19th Apr 18, 12:16 PM
    Pay minimums on all apart from CC1.
    The 10k that you will *hopefully* get later in the year you will then need to clear CC3 (Before the 0% runs out) and use the rest of it for CC1.

    Yes, I would pay a fee but it would be a maximum of £190 which I would easily rack up in interest. Cc1 currently costs me £100p/m in interest so I figured its a coat worth paying.

    Happy to be corrected though!
    Originally posted by Geworgie
    You are missing the point here you are paying 0% debt off to replace it with 0% debt but with an additional fee. If you use that £1k to pay directly CC1 you have done exactly the same as you were thinking expect you don't have to pay the £190 fee. i.e net result is CC1 is reduced by 1k.
    “Time is intended to be spent, not saved” - Alfred Wainwright
    • Dobbibill
    • By Dobbibill 19th Apr 18, 10:04 PM
    • 2,922 Posts
    • 3,906 Thanks
    Dobbibill
    • #8
    • 19th Apr 18, 10:04 PM
    • #8
    • 19th Apr 18, 10:04 PM
    In your shoes I would pay £1000 of CC1 - then also transfer £1000 from CC1 to CC5.

    This will leave £3500 on CC1 - the interest will reduce as will the monthly payments but keep paying the same as you were, so you are paying over the minimum. Throw every penny at this first.
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
    Local Money Saving - Wales boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.


    It's not about being the best -
    It's about being better than you were yesterday.
    • redpete
    • By redpete 19th Apr 18, 10:10 PM
    • 4,229 Posts
    • 3,766 Thanks
    redpete
    • #9
    • 19th Apr 18, 10:10 PM
    • #9
    • 19th Apr 18, 10:10 PM
    If I were in your situation, I do the snowball method. Pay minimum on everything but the smallest and pay that off.
    Originally posted by Fireflyaway
    Or pay minimum on everything but the one with highest interest rate and pay that off, then you are saving yourself the most amount of money.
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • enthusiasticsaver
    • By enthusiasticsaver 19th Apr 18, 11:19 PM
    • 6,265 Posts
    • 12,422 Thanks
    enthusiasticsaver
    Tackle the most expensive first so CC1. I agree it is better to use the £1000 to pay it down then transfer to 0% card if possible.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enjoyyourshoes
    • By enjoyyourshoes 20th Apr 18, 8:03 AM
    • 1,047 Posts
    • 1,281 Thanks
    enjoyyourshoes
    What is the interest on the car loan?

    Are CC1 & 2 interest rates monthly? or are they an annual promotional rate? If latter when does that expire?

    What are the rates post promotional rate for the CC3,4,5 & if promo for CC1&2?

    How much can you afford to pay off your debts on a monthly basis, have you changed your monthly spending and reduced all monthly costs.?

    Have yo solved the real problem, which is why did yo get int tis position in the first place?
    Debt is a symptom, solve the problem.
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