New job, new leaf, newbie in need of advice

Debtgoing

I have just got a new job in London and have moved from the southwest. My earnings have gone up from 18k to 30k and the new job also covers my travel cost so I only need to worry about getting out of debt and spending on shopping and going out.


I owe 15047 which is split between 2 low interest loans, 2 no interest credit cards and 1 high interest credit card. I really just want to get out of debt as quickly and as simply as possible so was thinking of consolidating using a loan where I can pay off say 500 a month (I could afford to pay off nearly 800 most months.) then what ever I don’t spend each month I will put into a high interest savings account. When the amount I have saved equals the settlement figure on the loan I will pay it off. I have heard of a loan on this site that cuts out the banks and doesn't charge you for paying the loan off early. So does anyone think this is a good idea? The other credit cards I have will be coming to the end of the interest free period soon so it’s all going to get complicated and more expensive which I just don’t want to happen. I know this is going against the rule of paying off debt with savings but I am willing to pay slightly more interest for having the luxury of cash should I need it.

I also like the idea of having only 1 payment to make and to have that bit I am saving to dip into if I need to for a rainy day. Obviously it would be up to me how quickly I save up then!

Your advice is would be much appreciated

Thanks!

Horace

Hi and welcome

Firstly don't get a loan to consolidate as you will only end up paying more interest and get yourself into a pickle. Why not post your SOA and we can see where you can make savings to chuck at your debts - I would pay the card with the highest interest off first or if possible move it to a 0% card.

https://www.makesenseofcards.com/soacalc.html - follow the instructions to format it for MSE and copy and paste it here.

bargainbetty

Welcome to the boards!

I've got to agree with Horace - most loans are front-loaded with interest, so you end up paying way more than you owe. If you have a good credit rating, why not throw all your money at the high interest card to clear it, and have a credit card tart shuffle - clear one, ask the lender for a 0% deal, and then switch it around.

You are also more likely to run up more debt if you don't learn to deal with it now.... believe me, I've been there. Two consolidation loans and not-so-proud-of-it over here!

Good luck x

Debtgoing

Thanks for the advice, I was thinking you would say that. I suppose I should just concentrate my efforts on getting rid of the high interest card then maybe getting another 0% interest deal to put the other 2 onto and then concentrat on getting rid of them.

I have asked for a repayment holiday on one of my loans and will put that monthly payment towards the high interest card.

I notice that some loans can be deffered for the first 3 months. If I were to borrow enough to cover my 2 loans for over a period that would finish beofre my current 2 loans and deffered it for the first 3 months that would be good wouldn't it? The I could put 3 months worth of payments towards my cards and probably get a lot payed off! Basically what I am trying to do is get a few months where I can put all my efforts into getting rid of the cards becasue they are the ones that will cost me money!!

Debtgoing

Oh, and I have gone to that link and when I have time I will go through it all and definately post it up here so thanks for that

Duncan_H

Not sure there is much to add to this advice but I would say that if you do find you get into a pickle, ring up whichever c/c company it is an be honest with them. from my experience they are much more likely to help if you are open and frank rather than trying to play them covertly

DawnW

I would avoid payment holidays, as you don't get a holiday on the interest accruing! I would (if I were you, and I have been there and come out the other side) continue to make minimum payments on all but the highest interest card or loan, and throw all available 'spare' money at that. If you put up a SOA, helpful folks on here will suggest how you can free up some / more 'spare money' in order to do this.

In any case, it is good discipline to be able to accurately list (and keep / update for future reference) all your incomings and outgoings. Once you are debt free, you are less likely to get into debt again if you keep it up.

Good luck!

Fire_Fox

First thing to do is to cut up any credit card you will never need to use again: second thing is the SoA. Payment holidays just mean the interest is added onto the debt, so you own more after three months than you borrowed. Then the interest is usually front-loaded, so the next few months of payments are all interest. It will be months before you start paying any capital off and make progress.

Set up all debt repayments by standing order or direct debit, then it matters not if you have one or five amounts going out. It's seconds of effort to change the amount or date with a standing order or to check your online banking.