Sick, Sick, Sick of being debt - and looking for advice to get out of it.......

Crap_with_money.com

Ok so here goes, I'm a 25 year old single girl, who stupidly got into a mountain of debt (well - it seemed like a mountain to me - at the max it was approaching £20k not including student loans).

I've been plugging away at it for the last 2 years or so, and although it's now very manageable - I'm at a stage where at some point in the next year or so I'd like to buy a house with my boyfriend (when I said single, I mean no hubby or kids) - so really - the rest of the debt has to go - and ASAP!!

I'm now permanently overdrawn by £500 (but with the last of my c/cards going this month, it should be gone in the next 2/3 months).

But the biggie is a £6k bankloan, which still has another 3.5 years to go on it! Last year I consolidated quite a bit of my debt into the loan (which if only I'd known about this site then I would never have done!)

Really I'm looking for advice on what's best to do from here?

My bankloan is £166 per month, I've already dropped all my outgoings to the bare minimum, which leaves me with £280 a month from my basic salary which can go towards debt. With my new(ish) job, i'm starting to earn between £200-800 per month in commission on top of my salary. I figure I have a few options but am not sure which is best, which is hopefully where you all come in, do I:

A> Leave the bankloan as it is, continue making the payments, and just try to save as much as I can meantime to hopefully pay it off much sooner.

B> With the £1.5k I intend to have saved by Xmas, take out a new bank loan, which combines the savings and the remainder of the balance of the loan, and also increase the monthly payments to again get it paid off more quickly.

C> Try to transfer the balance onto an interest free credit card, which would allow me to pay the £460 a month I can already afford, but to also put any added commission I get towards it as well! (Or is it even possible for me to do that?)

In the mean time, I also need to save £5k towards a deposit for the mortgage we're eventually hoping to get, plus an extra £1.5k towards my brothers wedding in Mexico next year!

Any help or suggestions would be greatly appreciated!

xx

rustybucket

Hello, I would advise that you don't take out another loan.

If you have a good credit rating you could try and transfer the balance to the credit card, but chances are you may well spend on the card.

I'd try and pay off the loan as quickly as you can.

House prices are falling and will for the next couple of years so I'd be inclined to rent for now.

Use the commission to pay for your holiday, you still need to have something to look forward to.

**Amy**

Hi

Please do not take out another loan. That is the first thing.

Second thing, well done on paying so much off so far.

What is your APR on your bank loan? Can you make extra payments?

You say you need £6.5K in savings, when is that by? Have you looked at the "up your income" board for ideas on how to make extra money. There are also monthly challenges "Make £10 a day in August" etc. These are full of ideas.

It might be worth looking into putting some money into a high interest savings account or an ISA?

x

Bargainfinder_3

Hiya, it is a very tricky scenario.
At the moment we are in £12k debt, plus £7000 loan which we have a monthly payment for. We are aiming to pay off all the other debt on cards and overdraft etc; and then apply for a mortgage when we are debt free (not including the loan).

As far as I am aware, the loan shouldn't hinder our chances to get a mortgage??

My personal feeling is that for the next 2 years, we will see the loan as a monthly outgoing, and it will be great when it is gone.. our loan company wont let us overpay on it monthly, its all or nothing... and we cant afford to pay it all off!!

Hopefully someone else can give some more useful advice?!

BF x

LilacPixie

Having outstanding credit commitments at the time of applying for a mortgage may reduce the amount a lender is willing to lend you.

OP do not go with option B. Consolodation will only mean you pay more in the long run.

How about opening a seperate savings account for your commision and extra earnings and the amount you can overpay to the loan and save like made to settle the loan early if you cannot over pay.

THe 0% c c idea sounds a good one but i think you would need to clear the existing loan with a cc and then do a balance transfer to another

milliemonster

lilac Pixie is spot on here, you probably won't be able to overpay on the loan (unless its a flexible loan) and taking out a new one will only add on more interest, plus if you circumstances change at some point and you're monthyl payments have increased you may be in more difficulty.

Put the extra money in a high interest savings account for now and then get a settlement figure for your loan in a few months, you should then be able to just pay it off and be done with it

Crap_with_money.com

Thanks guys! I think I'll go with your advice and just get myself a decent savings account!

I called my bank and checked, the loan I have now is 11.9% APR, which is apparently just their standard rate, I've no idea whether that's good or bad! And I definitely can't make additional ad-hoc payments - the only option would be to take out another loan with higher payments! So I'll stick with my lot for now!

Thanks for the suggestions on making extra money Amy - I'll have a look through now!

Bargainfinder, I don't think the loan will hinder your chances of getting a mortgage, but like lilacpixie said it might affect how mch you can borrow.

In my case, it's not so much the actually getting the mortgage that's concerning me, it's more the paying it when I have it! I'm back living at home with my mum for now, and I'm a bit wary of over stretching myself, as I don't want my debt to start racking up again! So although I'd love to move out now, the house'll just have to wait until the bank loan's gone!

xx