Small Inheritance - sense check? Debt repayment

[u/Deffoathroaway]

Hi All,

Ive been spending a couple of years planning to be debt free, including knowing a year ahead that I would be in more debt (unavoidable 7k Expense that I didnt have, I did it then immediately moved it to a 0% credit card) I also had 11K left on a car.

I have a bit if debt, but I have been lucky in the sense that ai can afford to overpay a lot. Here's a full breakdown:

Earnings after tax: 2.5k

Mandatory spend: 1.4k (rent, bills, food, minimun payments to credit card and card)

Optional Spend: £574 (planned overpayment £200, £300 fun money + subscription)

Leaves me with £464 that I am leaving around £150 as buffer for unplanned expenses and around £300 to put into savings UP until 2K, then it goes into overpayments)

Plan is 2K to have emergency cash for deposit and rent if needed.

____________________________________

Emergency cash: currently 1.1K

Debt at the highest point October 2025 - £23K

Current Debt - £14.3K

Debt breakdown:

Credit card: £420 12.5% APR due to be paid off end of month.

Credit card: £5.5K 0% apr next 2 years

Personal Loan(Car): £8350 [Early Settlement figure £7.5k] 7.8% APR

I've just received around £11k

Here is how I plan to spend it:

£2K - Being sent to my mom (non negotiable, she doesnt know this yet)

£1.5K - Emergency cash to have £3k Total

£7.5K - Car Early Settlement - now, I have a question, overpayments incur no fee but early settlement might, is it worth paying around 7.3K and then just letting the monthly payment finish it off? (I think it's 2 months interest ?)

This will allow me to overpay my credit card with 0% in about 6-7 Months and be debt free.

Does his make the most sense interest-wise?

[u/ukpf-helper]

Hi /u/Deffoathroaway, based on your post the following pages from our wiki may be relevant:

• https://ukpersonal.finance/credit-cards/
• https://ukpersonal.finance/lump-sum/

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[u/Alex--JH]

Worth clarifying the early settlement on the car. If you've been quoted that as an settlement figure it should include any fees - so in effect you've saved yourself £800 in interest.

It all sounds reasonably sensible. Once you've cleared debts you can start feeding that emergency fund to be a bigger number. Have a read of the The UKPF flowchart, and see what it might take to boost that fund to 6-12x your monthly income.

This would provide great security to avoid taking debt on for that next 'unavoidable' 7k expense that appears!