Clear debt or save

OK so may sound obvious, but bear with me!

I'm on my own, own a small place on minimum wage with a smallish mortgage but I stretch everything to keep things going.  

I have a few thousand in debt on a credit card, I also have about £1k more than this in premium bonds which are my safety net / get out of dodge to that island if life really goes [email protected] up.

My question is: do I basically wipe myself out to clear debt and live so very strictly to try to build up savings again (previous was an inheritance) at maybe £25 a month or just keep chipping away at it????


Any advice please gurus!!!


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  • Well, you have to do what makes you the most comfortable. If it were me, I'd pay off the debts. BUT! This is only if you have a plan to never go back into debt unless it's an emergency and even then as a last resort. When you have credit card debt, every purchase you make is financed and you're paying extra for it. So, I'd pay of the debts and then immediately start rebuilding your safety net. Embrace YNAB and start saving for other future needs as well. Good luck!

  • How safe is your job? And if the answer is uncertain in these crazy times, what are the prospects for finding another where you live?

    And what's the interest rate on those credit cards?

    Just a few things to add into the mix. We're at the start of a really uncertain financial period in the UK what with COVID-19 and Brexit. Cashflow could be really important and if the proverbial really hits the fan mortgage debt is a much higher priority than credit card debt.

    That said, if you have enough in your premium bonds to pay off the debt in full and leave yourself with a £1k emergency fund alongside a budget that works on your salary, then you're in a great position to become non-mortgage debt free. That can really change your relationship with money.

  • If:

    You feel your income for the next few months is solid,

    Your interest rate on that credit card debt is higher than average,

    You feel confident your finances will be positive enough not to put yourself back into debt after this,

    And the debt is hanging over your head mentally...

    Then I would say yes, pay it off!


    Your cash flow for the next few months is uncertain,

    Your interest rate on the card is not that high or at 0% (in the U.S. you can negotiate this),

    You know you have a big purchase or payment coming up that will put you back in debt again,

    You feel comfortable holding this debt for a while and paying it off slowly...

    Then just pay the minimum (or minimum+) on your debt and continue to save a little.


    A third option falls somewhere in the middle: you can take out a chunk of your savings to pay off most of your debt, and then continue to make small payments from there until it's gone. It'll shorten your debt paydown schedule while hopefully retaining a good amount of savings. I did something like this earlier this year.

    Just remember not to use that credit card again in the foreseeable future until it's paid off!

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  • Thanks for the replies, so I've cashed in enough bonds to leave me with £1200 debt which I can chip away at and fingers crossed not make any more!!! :)

    Thanks again all x

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