Loose the credit card debt!

VX_Foxy

Hello all!

After many years of irrisponsible spending I think the time has come to get a grip! This is mostly because my partner and I are expecting our first child in August

Although I have always managed to service my debt I would really like to gain more control of it.

I owe about £19k on credit cards which I try to juggle and stay on low rates - but sometimes its not possible and I end up getting stiffed (technical term ). I also usually have about £1k overdraft. So the plan is to transfer to a personal loan, but the best rate I've got so far for a £20k (5yr) loan is 7.5% with Moneyback/A&L.

Do you think I'm doing the right thing and have I got the best deal?


I'm setting myself a debt free target of May 2011 - is that a cop out? :?

Cheers!

skintchick

Hi there! What you're planning is consolidation, which people on here don;t usually recommend because

you pay it off over a longer period therefore paying more interest

you are likely to run up more debt because your monthly payment is lower and you feel you have spare 'cash' on all those credit cards

you don;t learn your lesson and therefore don;t stay out of debt (see above)

So.......if you feel up to it post you financial details, money in, money out, in detail, and we'll see if there is a better way.

themaccas

I agreee with skintchick, please look at other options other than going for consolidation they just don't work and because it's easy money, the debts are soon back to where they were only there is now a consolidatin loan to pay for too. It will be much better to try and pay off the debts by snowballing look at https://www.whatsthecost.com this is an amazing website and will show how you can pay off the debts much quicker and save a load on interest charges.

moozie_2

Yep the chick is right

Try and look at other alternatives before you go for the loan. It may seem an all encompassing easy way of sorting everything out with one payment/one debtor but unles your mindset towards money and credit changes, you will find yourself in the deep end again.

Speaking from experience, sadly

Best of luck and welcome - you are at the right place for good advice and support :T

VX_Foxy

Hello Chick!

I hear what you're saying - I tell myself the same things but never do any thing about it! I'm soooo crap!

I'll go through the ins/outs and post up later, but it's a little embarrasing...

Here are some rough figures:

Monthly income: £2400 approx (bonus varies)
Mortgage bills etc: £810 (paid into joint account)
Credit Card min payments £450
Car ins £40
Mobile, iternet etc £50
Endowment £65
Hobby (car racing) - £LOTS
O/D is £1500 at the mo'

BTW, I'm not claiming poverty - I just think I could do much better with my money.

bitza81

Hiya
My partner and I did this about 2 years ago (consolidated to a 15k loan). BIG MISTAKE we made the mistake of keeping our credit cards and have run up a further 7k on these so we are much worse off. We only have ourselves to blame but unless you have real self control (both you and your partner) then don't do it.
I only recently joined this site and we are making a real effort to pay off our debts. I would suggest concentrating on clearing the debts with the highest interest rate first. Also keep an eye on minimum payments as sometimes these only just cover the actually interest you are being charged so you aren't really reducing the debt itself.
Hope that makes sense... good luck!
Helen x

Bestthingsinlifearefree

HI VX Foxy,

Welcome to MSE you will find lots of excellent advice and support here (and its free).

Could you post a statement of affairs (SOA) ie all incomings and outgoings, debts etc with as much detail as possible.

Generally a consolidation loan ie borrowing more money / or putting the debt over a longer repaymnet term is not the solution.

It will make you think you have "solved" your problem, when it has not.

The problem is you have been spending more than you earn proably for quite a few years.

The solution is to make your outgoings LESS than your income and start paying back your debt.

Post the SOA and memebers can then see your overall situation and give you positive suggestions.

I wish you well.

VX_Foxy

Thanks for all the replies guys! It's kinda comforting to know that there are people who were (;)) as bad with money as I have been! 'whatsthecost.com' looks good!

D&DD

Hi Foxy congratulations on your news Having your first is definately an eyeopener it makes you reevaluate everything.I'm another one who fell into the consolidation nightmare and in most circumstances I would advise against it,as Moozie and chick and other posters have recommended the snowball route is by far the cheaper.

VX_Foxy

Bestthingsinlifearefree wrote:

The problem is you have been spending more than you earn proably for quite a few years.

That is one BIG DING!!!

I think this must be my lightbulb moment! :T


I'll post full SOA later...

VX_Foxy

Just did a couple of quick calcs - consolidation -v- snowball

Current CC debt -£19000

If I consolidated with a 7.5% loan over 5yrs the TAR would be £23905, and would also allow me to clear my O/D.

Cost £3905
Monthly £398

If I snowballed it would cost £3124 over 51 months (£450/month) but I could still have and O/D od £1000, and it would cost me more each month.

Cost £3124
Monthly £450

I can see that the SB route would be massively better than a long term consolidation loan but given the marginal difference between SB and the 5yr loan I'm thinking that the loan could be a better option as it would require less discipline on my part!

Does that make sense or am I still kidding myself?