A question about consolidation

paybacktime2008

I have read more than once that consolidation is a bad idea. I understand why consolidating to a mortgage isn't great but don't understand why consolidating to a cheaper rate credit card or loan is? Am I missing something?

skintandscared_2

83% of people who consolidate go on to run up their cards again. Yes, initially you have cheaper monthly payments and EVERYONE thinks they will then be able to manage perfectly well without credit cards. But the simple facts are that most of us don't. I have consolidated three times now ... and I'm more in debt than ever. Consolidating doesn't teach you the reasons why you got into debt in the first place. It's learning to budget properly that stops you running up debts again. Maybe you would be one of the 17% who don't get further into debt.

poorandindenial

Ditto what s&s said

I first consolidated at £8k, it was the start of the slippery slope to £36k

Ames

I did it too.

paybacktime2008

Cheers. I suppose I have to weigh up if i can resist temptation. As someone (Oscar Wilde??) said 'I can resist everything except temptation'

poorandindenial

lol - you are generally better overpaying where possible (unless you have a truly hideous interest rate and will of iron)

There is a tool that helps you to see the impact of overpaying at www.whatsthecost.com/snowball.aspx

It is very addictive

skintandscared_2

Quite! We all think we will do it and manage just fine. But the stats say it all. I think the only consolidation which would be remotely acceptable is if you got a 0% credit card and could transfer the balances from several other cards onto it. But then DESTROYED the other cards!!! I transferred my Barclaycard onto a 0% card then went and ran the thing straight back up again....

The loan companies don't help either. I got my consolidation loan with Lombard Direct and it clearly states on the paperwork what the loan is for. I had already cut up all my cards when the loan was signed and guess what ... they transferred the money into my account and SENT ME THEIR CREDIT CARD AS WELL!!! I kept it for "emergencies". It's amazing what "emergencies" suddenly arise that you can justify getting that card out!!!

I am now (finally) learning to budget properly and it's sooooo much harder handing over cash than that little bit of plastic. My grocery bills are one-third of what they were just a few weeks ago.

rubydoiwannabee

Just wanted to pop in and say thanks to the op for this thread. The same question kept me awake only the other night!!!