Looking for advice - Loan or just snow ball
Options
james194zt
Posts: 6 Forumite
Hi,
After being blessed with a new job in December I have now finally been doing the snowball debt clear down and have hit a good chunk of debt (about £3500 in 5 months). The problem is my credit cards and old bank account overdraft all have really bad APR 21% - 26%
I have not used credit now for at least 12 months so am comfortable living on my wage and hitting my debt hard now, it took me a couple of months to get everything straightened out when I got my new job and I paid off all my smaller debts straight away and am now hitting the rest. I have closed all of my credit cards to avoid any chance of temptation.
I have £9100 left and have managed to be approved for a personal loan with First Direct for 8.9% for the £9000, seeing as overpayments are acceptable my plan at the moment is to take it out over 36 months just in case I have an emergency, but the reality is I will paying at least £800+ a month to it.
I calculated out the interest on the loan to be about £400 a year my aim being to clear it in at most 1 year, the total of the interest of all my cards and overdrafts is currently £180 a month, even hitting them as hard as I am currently I will get charged far more than £400 in a year.
Is this the best way to do this, it looks to me to be the most cost effective. I can get rid of the overdraft on our old joing account and then close the account (with Santander who I have had enough of). I am extremely strict on this plan, I hate being in debt and 95% of this was not run up by me it was thanks to my ex wife who ran up a load of debt in my name by taking cards out without my permission (then Santander allowing her to pull herself off the current account without requesting my permission). I just want it all gone as soon as possible so I can live a debt free life as I already removed the rest of the rubbish from my live!
Just an additional note, 0% balance transfers etc... don't look viable as I can't get a card with a high enough value to transfer as my credit raing is not amazing, and even if I can get a 0% APR I am not able to get it at a decent amount of months (think the best was 6 with a £1500 balance).
Any feedback would be greatly appreciated.
After being blessed with a new job in December I have now finally been doing the snowball debt clear down and have hit a good chunk of debt (about £3500 in 5 months). The problem is my credit cards and old bank account overdraft all have really bad APR 21% - 26%
I have not used credit now for at least 12 months so am comfortable living on my wage and hitting my debt hard now, it took me a couple of months to get everything straightened out when I got my new job and I paid off all my smaller debts straight away and am now hitting the rest. I have closed all of my credit cards to avoid any chance of temptation.
I have £9100 left and have managed to be approved for a personal loan with First Direct for 8.9% for the £9000, seeing as overpayments are acceptable my plan at the moment is to take it out over 36 months just in case I have an emergency, but the reality is I will paying at least £800+ a month to it.
I calculated out the interest on the loan to be about £400 a year my aim being to clear it in at most 1 year, the total of the interest of all my cards and overdrafts is currently £180 a month, even hitting them as hard as I am currently I will get charged far more than £400 in a year.
Is this the best way to do this, it looks to me to be the most cost effective. I can get rid of the overdraft on our old joing account and then close the account (with Santander who I have had enough of). I am extremely strict on this plan, I hate being in debt and 95% of this was not run up by me it was thanks to my ex wife who ran up a load of debt in my name by taking cards out without my permission (then Santander allowing her to pull herself off the current account without requesting my permission). I just want it all gone as soon as possible so I can live a debt free life as I already removed the rest of the rubbish from my live!
Just an additional note, 0% balance transfers etc... don't look viable as I can't get a card with a high enough value to transfer as my credit raing is not amazing, and even if I can get a 0% APR I am not able to get it at a decent amount of months (think the best was 6 with a £1500 balance).
Any feedback would be greatly appreciated.
Halifax CC - [STRIKE]£3716[/STRIKE] £2738, Cahoot - [STRIKE]£2450[/STRIKE] £2142, Tesco [STRIKE]£1900[/STRIKE] £1675! just started to smash them all down. Mortgage next to get rid of Santander, the worst Bank on the planet!! hope to never deal with them again.
0
Comments
-
It sounds like a sensible plan to me- but only if you are 100% confident that your budgeting/spending is definitely under control, and that you would remove the overdraft facility and close the credit card accounts once they were paid off by the loan.
From what you have written it sounds as though you very much have things under control, but you will read many a sorry tale on here where consolidation loans have proved disastrous for others- because of the open lines of credit available after consolidation.Total Starting Debt August 2014- £38,061
Current Debt- £3600
Mortgage Offset Savings- £600
90.5% paid off so far...0 -
Agree with PP mostly! However most people on here advise against consolidating as there are a far number on here who have been in your mindset but have still added up racking up debts on credit cards again!PinkPoppies wrote: »It sounds like a sensible plan to me- but only if you are 100% confident that your budgeting/spending is definitely under control, and that you would remove the overdraft facility and close the credit card accounts once they were paid off by the loan.
I would suggest phoning your CC company and asking if they will reduce the interest. I had approx. £6,500 on a Barclaycard at 19.9% - called them and literally just like that they agreed to reduce the interest on the current balance (i.e. not any further purchases) to 6.9% for two years! Might be worth trying as a first step as I found them really helpful, so fingers crossed yours will be too. I'm no good at the maths but would it be worth shifting what you can onto the best interest free deal that you can get?
And well done on your debt busting efforts so far!Starting again..0 -
Nearly always recommend against loans but you seem so committed to your plan that i think its a yes. As long as you recognise the dangers of this strategy (which you clearly do) and avoid them.
Close or reduce any lines of credit in order to avoid temptation. Do try what Twiggy suggested, I've seen a few people on here who have had success with that and been given a similar rate.
Good luck mate.£1000 Emergency fund No90 £1000/1000
LBM 28/1/15 total debt - [STRIKE]£23,410[/STRIKE] 24/3/16 total debt - £7,298
!0 -
I know consolidation loans are usually a no-no on here and I usually agree - but in your case I do think it would be sensible. My husband and I consolidated a few silly-APR cards into a very low APR loan, later on in our DFW journey, like you, and it did work for us. But we were already so committed to getting out of debt - as it seems you are!
Just really keep an eye on your habits and you should be fine. Good luck.0
This discussion has been closed.
Categories
- All Categories
- 343.3K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 248K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards