Financial Guidance

[prettypleasewithsugarontop]

Probably been asked a ton of times but:

Is it better to have some money (albeit not a lot) in the bank or pay that money to a debt?

In the grand scheme of things I don't have loads of debt but its enough that it makes me worried, and feel like I am working for nothing because I am paying it off each month. I don't have a credit card, just a couple of hire purchases and a council tax debt - neither of which are growing any larger, as there is no more interest being added on.

I also want to take any payments which end (one will be due to end soon!!!) and add that onto one of the others - would the loan be the option do you think?!

Hire Purchase - £1280 (currently paid at a combined 168 pcm)
Council Tax - £650 (currently paid at 65 pcm)
Loan - £2300 (DD of £152.99pm - ends july 2014)

Any help is very much appreciated - thank you :)

[LovingWINE]

I think it depends on the interest you are paying on your dept, and interest you are receiving on your savings. You still need some cash put aside for emergencies, but overall, clearing dept saves you money in the long run.

[BabyFaker]

Depends.

I have a credit card and savings. I choose to keep the credit card because it's zero interest at the moment whereas my savings are earning me interest.

[prettypleasewithsugarontop]

I don't have a credit card, and don't particularly want one. It's just another enabler for my shopping habbit :( The HP are Littlewoods and Next - Littlewoods there is no more interest being added on. Next I think about £4 a month went on last month but there is only £200 left to pay them. The council tax debt the interest was added at the start, so no more there either. So I assume the only one with interest will be the loan - I know I can make lump sum payments on it if I wish and it gets readjusted, it would be nice to know what I am paying loan/interest - can the bank tell me that?

[Charlesroi]

Although you are not paying interest I think I'd get rid of the council tax debt first, as they can get really unpleasant/legal if you don't pay (what if you couldn't for some reason e.g. losing income?).
Then I'd pay off the Next debt as that seems to be expensive, then the loan.
Once you've got rid of the council tax maybe you could put half of the £65 pcm in to savings and use the rest to get rid of Next a bit quicker?
I'd ask your bank about how lump sum payments affect your loan, usually the interest is put on at the start but you get some back if you repay early.

[prettypleasewithsugarontop]

Thank you for that Charlesroi :)

The CT has already gone to all that, and this is us paying it back. It will be clear in 9mths at current rate, but aiming to pay a bit more - i get annoyed because unless you pay by standing order, they charge you! £2.50 per payment at post office and £1.50 over the phone or online :\ bonkers!

Next is the small one at £200 remaining, hopefully have it clear in about 3mths :)

Littlewoods is the big one, but I paid double this morning and am finally under 1k :) it will be clear in 9mths too

The loan ends July next year - I will contact the bank and ask about lump sum payments - aiming to combine everything when finished and pay extra on the loan each month.

PS to anyone who used Experian, I went on and noticed a small missed payment mistake, contacted company and my score's shot up :D woohoo :)