Consolidating debts with a long term loan?

DJChris

Thanks for all your replies, everything is valuable advice!

What I have done is got a quote to add the amount I need to pay of my debts and move it onto the remaining term of my mortgage - £11K over 19 years is £87 per month. I have then redone my MSE budget sheet in this scenario, cut back on a few areas, and it looks like this;

Home was £844 now £887 (includes extra 'consolidated loan' payment)
Insurance was £11 now £11
Eats Drinks Smokes was £150 now £112
Transport & Travel was £137 now £78.50
Debt Repayments was £310 now £0 (-moved onto mortgage)
Savings & Investments was £35 now £35
Family was £0 now £0
Fun was £141 now £86
Big One Offs was £54 now £52
Clothes was £20 now £15
Education was £0 now £0
Odds & Sods was £6.50 now £6

TOT was £1710 now £1298
Monthly income job 1 = £1270 NET
Monthly income job 2 = £50 (min), £100-150 (average), £250 (max)
Monthly income average = £1400

In my budgetting as stated above I have allowed for the following (i live alone in my own house and my son stays with me 3 nights a week) which I am sure I can live within;

Monthly;

Food shopping £80 (£960 pa)
One meal out £10 (£120 pa)
Pub once a week £12 (£144 pa)
Lunches @ work £10 (£120 pa)
Car repairs/tyres £15 (£180 pa)
Dentist check ups £2.50 (£30 pa)
Petrol £60 (£720 pa)
New glasses every 2 years £4 (£48 pa)
Personal Shopping treats £10 (£120 pa)
Clothes £15 (£180 pa)
Days out £20 (£240 pa)
Cinema once a month £10 (£120 pa)
One DVD/game each 1/2 months £10 (£120 pa)
Saving for Christmas £20 (£240)
Saving for birthdays £12 (£144)
Saving for main holiday £20 (£240)

TOT £310.50 per month


In a funny way I am looking forward to budgetting because it will give me a real sense of achievement, especially if i underspend in one area I can overspend in another!

Obviously it all comes down to me being strict in following the budget and not using ANY credit at all.....and borrowing on my mortgage. I am confident that if I try and sort out my problem my own way, I will fully appreciate the risks and this will be the incentive and motivation I need to not use credit and stick to my budget. With a DMP, its as if I'm admitting defeat and then would be constantly struggling out of debt until its paid off. I don't want to live feeling like that, even though maybe I deserve it!

*Sparkle*_3

If you do have some spare cash then it would be benifical for you to make overpayments on your mortgage, to help cut down on the interest and get rid of the mortgage sooner, it could help you save thousands in the long term.

skintchick

May I comment on your new budget?

Eats Drinks Smokes was £150 now £112 - can you give up smoking? IT seems a lot of money to spend a month

Fun was £141 now £86 - you're in debt, therefore are not allowed any fun!!

Clothes was £20 now £15 - same wiht clothes. Make do with what you've got.
Odds & Sods was £6.50 now £6

One meal out £10 (£120 pa) - nope, you can't afford this either

Pub once a week £12 (£144 pa) - nor this

Lunches @ work £10 (£120 pa) - make your own and save a fortune. I make my own lunches, and my food bill for those AND dinners etc is £60 a month - only £20 more than you're spending on just your lunches

Personal Shopping treats £10 (£120 pa) - tut, tut, you can't afford treats

Days out £20 (£240 pa) - same again

Cinema once a month £10 (£120 pa) - and again

One DVD/game each 1/2 months £10 (£120 pa) - and once more

Saving for main holiday £20 (£240) - you can;t afford a holiday either. I haven;t had one for years.

Basically, all that was to make one point - that you have to cut back seriously so you can pay your debt off. Hope it didn;t feel harsh - wasn;t meant to, but I think you need to get your head round the fact that you don;t have spare money for treats and days/nights out at the moment.

ms_london

You are consolidating so that you can "ignore" the debt, or so it seems, and keep living the lifestyle you have become accustomed too.

Why cant you just pay the debt off without having to add it to your mortgage? Do you really want a higher mortgage? You're still going to have to pay it back eventually? Is there a risk that you might keep spending and run up debt again?

I think that most of the time, consolidation is bad news. There are a lot of stories where people have consoliated and then ran up on their existing cards/overdraft etc etc when they meant to cut them up. I did it too, hence how I ended up with a debt of £19,000 (paid off last Thursday - whoo!!).

Your budget is very generous, even with it being a revised copy, I suggest you have a rethink!!