Ex-Graduate account overdraft, im having trouble clearing
- Thread starter DJMK4
- Start date
Erm if thats what you think, however a £500 will also end up costing you a hell of a lot more than £500
Its a £500 car for a reason, and no, I wasnt looking to buy a 1-2 year old car, I was looking to buy in the same sort of age as I bought my golf 3 years ago, 7 years old with 102k on the clock.
Nope, IMO clear the debt in around 3 months and then you'll have £650 available to save every month from then on.
You'll make up the deficit in the second month of the recomencement of the savings.
gt
EDIT: Look at it this way - with your plan you might have £2450 in 7 months whereas if you concentrate on paying it off ASAP and save £650 for the remaining four months you'd have £2600.
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No. It should be:
£650p/m debt repayment
£0p/m savings
You are being charged more to have the debt than you are gaining if you have the savings. That is the "end of".
Consider this:
Scenario 1
You have an overdraft of £2000, and £2000 is used
You have savings of £4000
What is your net worth? It's £2000.
What are your available funds? You have £4000 available.
How much interest are you charged per month? £29.
How much interest do you gain per month @ 5% pa? £16.
Net change = -£13 per month
Scenario 2
You have an overdraft of £2000, and £0 is used
You have savings of £2000, as you paid off your overdraft
What is your net worth? It's £2000.
What are your available funds? You have £4000 available.
How much interest are you charged per month? £0.
How much interest do you gain per month @ 5% pa? £8.
Net change = +£8 per month
The difference is, you are not charged interest if you do not have an overdraft.
There is no logical reason to be in your overdraft if interest on savings < interest on overdraft. The overdraft is always there - you can spend it whenever you like, just like your savings.
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Soldato
You are beyond help
Read my post and explain why it makes sense to save £100 per month. There is no possible explanation at all ever
Soldato
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- 10 Apr 2004
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NO! Get rid of the debt!
Why can't you do what everyone is telling you to do.
You are *loosing* more money by taking the longer option to pay it off!
A £1000 car WILL suffice as long as you choose correctly?
Listen to them. Pay it off.
I don't think this even matters! He has an overdraft rather than a loan, so he can spend his overdraft remaining + savings value any time he likes. If he pays off the overdraft with his savings, the overdraft remaining goes up
The only possible reason for not paying the overdraft off, is if they are going to take the overdraft facility away from you once you have. That will reduce your available cash (borrowed or not).
I am not using my £1k that I have already saved to clear it off. Im sorry, I need that just incase my car goes. As otherwise ill be taking out another loan to buy a car.
What I am willing to do is to reduce my savings down now to say £50 per month to add to my £1k, and then pay £500 on debt, which will take me 4 months to clear.
I am in no position to get rid of that 1k I have saved, as it could be 2 months before my car gives up on me, then what do I have?
What I am willing to do is to reduce my savings down now to say £50 per month to add to my £1k, and then pay £500 on debt, which will take me 4 months to clear.
I am in no position to get rid of that 1k I have saved, as it could be 2 months before my car gives up on me, then what do I have?
Soldato
- Joined
- 10 Apr 2004
- Posts
- 13,496
I don't think this even matters! He has an overdraft rather than a loan, so he can spend his overdraft remaining + savings value any time he likes. If he pays off the overdraft with his savings, the overdraft remaining goes up
The only possible reason for not paying the overdraft off, is if they are going to take the overdraft facility away from you once you have.
Actually, putting more thought into it. I agree.
Absolutely no reason what so ever to not get rid of the overdraft.
You keep banging on about the saving and ignoring all the advice that you are actually losing money by not paying back the overdraft ASAP.
I can only assume you plan to buy a different car to replace your Golf, in the next 3 months as that can be the only reason you desperately want to cling onto making those savings payments.
I can only assume you plan to buy a different car to replace your Golf, in the next 3 months as that can be the only reason you desperately want to cling onto making those savings payments.
Soldato
Must I remind you that while that 1k you have saved up is yours, The 2k you owe in overdraft isn't.
Car in the equation or not I know what I would do.
OK I am going to explain this very simply. Let's take your situation:
You have £1000 savings. You have £1750 overdraft used, £250 available. Your total cash available is: £1250. At any time you like, you can spend, at most, £1250. If you want to buy a car, you have £1250 to spend.
Let's say you pay off your overdraft off with your savings. DO NOT REDUCE YOUR OVERDRAFT AMOUNT. You have £0 savings. You have £750 overdraft used, £1250 available... recognise that number? Yes, you still have £1250 to spend. If you want to buy a car, you have £1250 to spend. The difference is, each month that you don't spend that £1250, instead of being charged interest on £1750, you are being charged interest on £750. The interest you are charged on that extra £1000 is MORE than the interest you are gaining from having it in savings.
So, please, pay your overdraft off, and do not reduce your overdraft limit. You will have the same amount of cash available, but will be losing less money each month on interest charges. The purchase of a car is a completely separate issue to where you should be saving/borrowing money.
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Soldato
I believe we are wasting our time, He does not seem to grasp the concept of money or common sense.
He is just another poster who wanted advise yet didnt want to agree with the sensible options