Newbie ina mess- where to start?

fbrander

Hello all,
I am trying to sort out our finances at long last but dont know what to do first. We have an Egg card with £2400 on it , a personal loan for £10000 and a car loan for about £3500. Do i try and pay them off one at a time, which will take forever? Or can I lump them together? Was wondering(dont scream) about re-mortgaging and adding it all on. The loan is a good rate though as is the car loan. I dont have a lot of spare cash every month to put in so there is no way I can pay off a credit card in 9 months! Help

Bargain_Rzl

Read the "Where to start with Problem Debts" article (follow the red link towards the top of this page).

Work out all your incomings and outgoings, and the exact balances of each of your debts along with the interest rates. Then post all that info on here. (This is your Statement of Affairs or SOA).

Then everybody will be able to see which areas you can cut back and hopefully avoid having to consolidate (which means you'll pay more interest in the long term) and, especially, having to remortgage because secured loans put your house at risk.

You'll get loads of advice if you give us that detailed SOA.

Kevicho

The problem with consolidation loans is that they may cut down on monthly payments and indeed short term interest, it is very easy to think of as a "solution to all my problems" and then you start spending on cards again

I did this myself a year ago, and got into the mess i am today

My solution has been to get a loan to cover most of my debts, however i left myself 4k on other accounts to pay off, that way i get the benefits of a cheap loan, but at the same time, leave myself in the position i am now, forcing myself to pay off my debts, by whatever means necessary, which i think will do me good in the long run, which means i know how bad it is and my mind is focused on clearing the debt

Hope this is of use

Conor_3

If you try to pay them off one at a time, they'll be knocking on your door offering you a day trip to the County Court.

A consolidation loan dramatically incrfeases the amount you'll repay whilst at the same time lulling you into a false sense of having spare money so you rack up more debts.

Bargain_Rzl

Further to what Conor has said, I hope the OP's not that daft (!) I trust that the strategy of paying them off one at a time would involve keeping up with the minimum payments on all of them - but directing any other spare cash towards overpaying one of the others until it's cleared, then moving onto the others in sequence.

Fbrander, this is a very sensible and productive strategy known as snowballing (paying off debts in sequence in descending order of interest rate) and you can find further information about it HERE.

fbrander

thanks to you all. The loan is the cheapest rate I could find (i found the info here actually!) The credit card is a nightmare but am now thinking of switching to rbs platinum interest free for 9 months. Then switch again- does that make me a tart?! The car loan Im not sure of- cant get through to them on th phone- think it is 5.5%. Dont misunderstand me- I can afford the loan payments, just wondered if there was a quicker and cheaper way.

fbrander

Bargain_Rzl wrote:

Further to what Conor has said, I hope the OP's not that daft (!) I trust that the strategy of paying them off one at a time would involve keeping up with the minimum payments on all of them - but directing any other spare cash towards overpaying one of the others until it's cleared, then moving onto the others in sequence.

Fbrander, this is a very sensible and productive strategy known as snowballing (paying off debts in sequence in descending order of interest rate) and you can find further information about it HERE.

Just been on the site you recommended- excellent! Got a full printout to help me thanks again :T