Which Debts to pay

New_Guy_2016 · 7 January 2017 at 2:45PM

Right so I have done a recheck on what is better to pay off after getting all the Interest rates for each card but can anyone tell me if I am correct in my calculations.

Basically to give me a max minimum monthly payment workout I have done FULL BALANCE * MONTHLY PURCHASE INTEREST RATE + £5 to get minimum payment. I have guessed at the £5 add on as not sure how credit cards work out what extra you pay on top of interest.

So as an example my highest interest card is my Vanquis at 3.43% and the balance is 2k. So I worked out my interest a month if at maximum spend would be roughly £67 and then added £5 so a monthly payment of £72

abby1234519 · 7 January 2017 at 5:21PM

New_Guy_2016 wrote: »

Right so I have done a recheck on what is better to pay off after getting all the Interest rates for each card but can anyone tell me if I am correct in my calculations.

Basically to give me a max minimum monthly payment workout I have done FULL BALANCE * MONTHLY PURCHASE INTEREST RATE + £5 to get minimum payment. I have guessed at the £5 add on as not sure how credit cards work out what extra you pay on top of interest.

So as an example my highest interest card is my Vanquis at 3.43% and the balance is 2k. So I worked out my interest a month if at maximum spend would be roughly £67 and then added £5 so a monthly payment of £72

If you plugged all the balances and interest rates and min payments into whatsthecost.com (find the snowball calculator) it would work it out for you and you wouldn't need to worry about the mathematics.

I know you keep saying that the dfs loan is a fixed term blah blah. but if the snowball calculator says you will save money by clearing that first then just follow it's instructions.

I live by the snowball calculator. It's easy enough to get all your interest rates and min payments.

New_Guy_2016 · 7 January 2017 at 5:28PM

Okay thanks, will try that.

I get what you are saying and agree I may consider if it says paying off the DFS is better in the long run.

My thought at the moment though is things like the DFS are essentially out of my hands and taken care of in terms of when it ends and I just have to keep paying as I have done. But the credit cards will stay as they are unless I make a conscious decision to pay off and not use again. In theory it is easy but in practice a lot harder so trying to remove as much risk as possible

abby1234519 · 7 January 2017 at 5:35PM

New_Guy_2016 wrote: »

Okay thanks, will try that.

I get what you are saying and agree I may consider if it says paying off the DFS is better in the long run.

My thought at the moment though is things like the DFS are essentially out of my hands and taken care of in terms of when it ends and I just have to keep paying as I have done. But the credit cards will stay as they are unless I make a conscious decision to pay off and not use again. In theory it is easy but in practice a lot harder so trying to remove as much risk as possible

I get what you mean about DFS don't worry.

What is most important to you. Saving interest so you pay less overall towards your debt? Or having less debts (as in 4 debts v 10 debts). If you pay off your credit cards, you would need to cut the vanquis ones up (bad bad vanquis) and close them so you don't fall into the trap again

New_Guy_2016 · 7 January 2017 at 5:51PM

I think in order of priority for me taking into account the amount to pay off is already set at around 13k has to be

1. Pay off as many Credit Cards as possible
2. Start with the smaller amounts and work up to maximize the quantity
3. Save as much monthly as possible

But looking at my Debts and the amount of Credit Cards it is pretty simple to meet all that criteria

New_Guy_2016 · 14 January 2017 at 2:34PM

Sorry for all the questions but just want to make sure this money is working for me as much as possible.

An alternative to paying off the Credit Cards is today I have got a statement from my 2nd Mortgage which states to settle the amount now I would need to pay £16,000. Now i have looked at the possibility of being able to add to my lump sum payment I am getting which would allow me to pay this off. Initially it would be less savings a month and quantity wise would be less debts paid off by a long shot.

However as well as short terms fixes I am trying to make sure this works out in the long run. So I know extra borrowing is not recommended but if we say paid off the 2nd Mortgage which is a high Interest rate could we have options of:

- Better chance at getting a re-mortgage to a lower rate not we have a good bit of equity in the house
- Qualifying for a Loan on a much lower interest rate than the Credit Cards and using this money to pay off the credit cards

Alternatively if we paid off the Credit Cards with the lump sum would we be in a better situation maybe to qualify for a low interest loan to pay off the 2nd Mortgage.

As said I know borrowing more does not help as you are in essence getting debt to pay off debt but we are at the point now where we want to make sure this money works for short term and long term

theoretica · 14 January 2017 at 3:31PM

We don't have all your interest rates to look at, but I think it unlikely that paying off the mortgage first would be the best choice for you. Pay the high interest cards and catalogues first, then use the extra freed up to pay other debts.

Do check the terms on your Very account - they can be eyewateringly high interest rates.

New_Guy_2016 · 14 January 2017 at 5:04PM

Cheers,

Yeah I have done all the Interest rates and most of the Credit Cards are the high Interest ones. but yes as I am initially thinking of paying the small debts off I will have a look at the Very Account.

The only other high Interest thing I have is the 2nd Mortgage but would take my whole lump sum to pay this off so only 1 debt paid as opposed to several Credit Cards.

I know you cannot predict but wanting to make sure the money goes exactly to the right things so it benefits me in a much ways as possible in the future

New_Guy_2016 · 20 January 2017 at 8:43PM

Okay so I have on the off chance emailed all my Credit Cards advising them I may be coming into a lump some of money and wondered if they would accept a partial settlement of the amount I owe them.

I have received an email back about both Vanquis card which are 2k limit each. They advised they would take a partial settlement on each of just over 1,700 but would have to mark the Credit files as partial settlement which is understandable.

In terms of savings this is nearly £600 which I could put to another debt, however I am not sure what the downside of having a partial settlement on my Credit File. I mean at the moment with all the debt we have and issues in the past our Credit files are bad anyway but not sure what this will do to our credit file in the short time and long time.

fatbelly · 21 January 2017 at 9:33AM

I'm surprised that V are offering F&F without a default.

As they are high interest anyway, take the offer.

Which Debts to pay

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