plea for help: sorting debt out

zenith1820

HI Guys

I'm in trouble and have been worrying about it and decided to do somehting about it. I had some major renovation work done to my house and had have managed to occur the following debts:

* £9000 borrowed from my mother

* £5000 on my old natwest credit card (pay around £110 per month min payment)

* £7000 on my alliance and leicester card (with 9 months 0% apr), i pay the minimum every month but once the 9 months are over ill have probs paying the min as it will be quite high for this amount.

* £ 6000 personal loan (with interest its around £8000) for 5 years

total debt is £29,000

I am currently working and earning around £18500 pa, reason why i took the loans etc is that we were having a baby and i wanted to get the house finished in time for the baby. I dont have a mortgage and want to be able to pay this debt off asap. Any ideas?
thanks

frugglewump

The helpful people on this board are going to ask you to give the apr and min payments for each of the debts plus all your other monthly outgoings to see if money can be saved elsewhere.

rprinter

no mortgage so you own the house outright?

Xbigman

If you have no mortgage your best bet (on your income) is to get one. A 29,000 mortgage is pretty low these days and you could get a long term fix for security. Whatever you do only borrow enough to pay off your other debts. Don't fall into the trap of borrowing a bit extra. Then cut up your cards and don't run them up again.
Regards




X

zenith1820

yes own the house outright (had some money saved up and bought a cheap "in need of much repair" house)

Income:
Employemnt: £1156 per month
Child Benefit £60 per month
Tax Credit: £80 per month

Outgoings:
£110 per month min payment for natwest c/c
£79 per month min payment for alliance leicester card (9 months 0% apr)
£180 per month bank loan
£165 per month council tax
£50 approx per month gas bill
£30 approx per month electric bill
£310 per year water bill
£41 per month car insurance
£175 car road tax per year
£20 per week petrol
£20 per week on sandwich/food at work
£50 per week aprrox on shopping for whole family (includes food/nappies etc for 2 year old child)
£41 per month home insurance

dont go out much because of baby and "financial problems"

zenith1820

dont want to take a mortgage out for personal reasons (may sound strange) but im thinking about taking a loan out to cover all these debts and paying it off over say 5/6 years since ive got these payments to make, i may as well bundle them into one debt and pay it off without having to worry about the 16.9 apr the c/cards are charging.

whats the best loan rate available or any other good ideas on getting the loan out of the way
thanks

black-saturn

Doing that will only get you into more debt over a longer period of time. Sit tight, there will be someone on here in a minuite to help you out.

Bestthingsinlifearefree

Hi Zenith,

With 29,000 debt but no mortgage you have a good chance of turning things around on your 18K salary.

You are doing the right thing to budget exactly all your out goings.

The money you have left you need to throw at your debts, targetting the debts with the highest interest rates first.

What are the rates of interest / term on each debt.

You could apply for another 0% credit card and when / if you get it transfer the balance of the alliance and leicester card on to it when the promotion period runs out (AND THEN CUT UP THE ALLIANCE AND LEICESTER CARD)

You could get a mortgage on your house e.g for 30K it would cost you say £200 pounds a month for 25 years and pay off your debts.

The only think with this is you need to be careful not to run up new debts,plus you are convereting unsecured debts ie credit cards to secured debts and could lose your house if you don't keep up with the mortgage, plus over 25 years you will probably pay more interest and their are fees you need to pay to get a mortgage e.g lawyers,survey.

My gut feeling is I would keep the house mortgage free (which is a fantastic position to be in) congratulations!!

and use spare cash to tackle your debts.

You have done the right thing coming here. Good Luck.

Bestthingsinlifearefree

zenith1820 wrote:

dont want to take a mortgage out for personal reasons (may sound strange) but im thinking about taking a loan out to cover all these debts and paying it off over say 5/6 years since ive got these payments to make, i may as well bundle them into one debt and pay it off without having to worry about the 16.9 apr the c/cards are charging.

whats the best loan rate available or any other good ideas on getting the loan out of the way
thanks

I understand your thoughts on not wanting a mortgage.

e.g A 5 year low interest loan could be the way forward but make sure they don't secure it on your house.

Any personal loan more than 8 % is a rip off and DON'T run up more debt once / if you have got a loan.

Maybe if your mum will allow it set up a direct debit paying her back £80 per month or something direct into her account (and then you won't need to get that 9k on a interest loan) and both of you will feel better knowing that you are paying her back something each month automatically from your account.

What about low interest credit cards / balance transfers ?

The solution is to live with in your means and throw whats left at your debts.

Louiseuk25

Hi there,

I would advise taking your own packed lunch to work-I am sure this would give you at least £60 a month extra towards paying off your debts (and make sure it goes that way!).

Take a look around the forums for ideas for packed lunches-it's worked for me :-)

Louise

jen_jen_2

being mortgage free is great but you have run up debts doing up house and 29k is quite a small amount to owe on a house if you see what i mean.

you dont have to get a 25 yr mortgage, you could get a short one that allows overpayments then you can clear it more quickly the advantage being you will get a lower apr over the term than an unsecured loan.

about securing the debt, it is generally not sensible to secure unsecured debt however in your case i think its different, you are not increasing your borrowing and if you defaulted on a loan for 30K at say 7% apr they will go for a charging order effectively securing it on your house so why not choose to secure it now and take advantage of a good rate. you could fix the rate if you are worried about interest rates rising.

unfortunately lenders are getting better at getting their cake and eating it, they lend unsecured loans and on default secure them overall receiving a better interest than if money was borrowed on a secure basis.

the only thing you have to do, is not borrow more on the cards if you consolidate either secured or unsecured.