Savings to pay off debt?

Hi, I've just returned from Afghanistan and have been putting all of my wages into an account for my newborn daughter. I now have 3 grand left over including my tour bonus which I'm happy to use to get other things nipped, and my plan was to put this into my own savings account which is bare after recently buying a car. I have around 3 thousand in outstanding debt which I have defaulted on over a year ago, and have had a lot of problems contacting/keeping track of the various agencies who have taken over the debt,t hey dont seem in a hurry for me to pay it off, and although I'm aware I have massively screwed up my finances when it comes to credit for the next decade, I would still like to pay off all this debt now that I have the funds available. I am keen to change my appaling financial habits and give my daughter the best chances. Is it advisable to use this tour money to do so? Or is it a better plan to kick start my savings with it, and instead to use my monthly wages to pay off the debt which I could manage to clear in around 4 months? Also, I get no communication with these debt collectors whatsoever, and when I do it's always a new company. Where should I go for advice over this mess?
Clear your debts, it costs more to borrow than it does to lend (save).

For advice go to Citizens Advice, do not go to one of these debt management companies.
No brainer, pay off all your debts now, immediately. Contact all of the companies to whom you owe money and ask them what the settlement figure is and the current rate of interest rate they are charging you in writing. List all of the debts with the highest interest rate at the top and pay them off in that order, write the cheques, send them off.

You will be doing three things:
Starting to rebuild your credit history - that could take as long as 7 years if you have had any County Court Judgements.

You won't have that nagging feeling in the back of your mind.

You'll have more excess income to save.

Saving now and paying the debt later will cost you money (you will be paying out more in interest or administration charges than you can earn in interest on the savings) and if you're honest will you really pay it all off in a few months from your wages?
Cheers for the above replies I'll get down the CAB this week and track which company I'm supposed to be paying and hopefully return to work with a weight off my back. Yeah Chief you make a good point that right now I have the intention of doing so with my wages but will it happen after a few Thursday nights out? The idea of losing that fridge on my back is now the motivation to get it sorted :D Cheers fellas
These people are definitely worth contacting:

A friend of mine has been left in rather a large financial pickle following a divorce and CCCS have been spot on; they're a charity as opposed to one of those money grabbing debt management companies so don't want a slice of your cash in return for 'helping' you.
Although you are in a pretty stable job, it is always worth hanging onto a level of savings for the emergency problems that appear....between 1 and 3 months out-goings is a guide I've heard before.

You might want to keep that in mind if you were about to put every spare bit of cash into paying off the debts...only to find that the car breaks down and you need to get back into debt...with a bad credit record this pay for the car.

Apart from that off the debt....currently best thing you can do.

If you 'owe' Debt Collection Agencies remember that:

1) It is doubtful whether they have the paperwork to legally enforce the debt.

2) They probably paid about 10p in the pound for the debt.

Your call - but as you have 'cash on the hip' it would probably be worth making a Full and Final offer of about 25% of the debt.

A good site for advice and background information is

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