Is a loan right for me? Please help

be27

Hello everyone,

I wonder if anyone can help me. I have a £2000 overdraft on a student account, £900 on a credit card and £500 overdraft on a current account. I want to just get my debt in one place so I can start doing something about it as I graduated 3 years ago. I went to see my bank, Natwest, and the best they could do was £3500 over 4 years at 23.7%!! I don't have a bad credit rating as far as I know. Does anyone have any suggestions? Is a loan the best way to go?

Would really appreciate some help,

Thanks!

slig

No, I'd say it probably isn't.

Why don't you pop onto the debt free wannabe forum and post an soa using this calculator http://www.makesenseofcards.com/soacalc.html.

I fel quite certain that you can get rid of your debt in much less than 4 years.

be27

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 1455
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1455
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 525
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 25
Gas..................................... 0
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 100
Clothing................................ 100
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 110
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1195

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................900.......50........14.9
student OD.....................2000......0.........23
overdraft......................500.......0.........20
Total unsecured debts..........3400......50........-

Monthly Budget Summary
Total monthly income.................... 1,455
Expenses (including HP & secured debts). 1,195
Available for debt repayments........... 260
Monthly UNsecured debt repayments....... 50
Amount left after debt repayments....... 210
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -3,400
Net Assets.............................. -3,400
Created using the SOA calculator at makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

IWantToBeFree_2

be27 wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 1455
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1455
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 525
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 25
Gas..................................... 0
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 100
Clothing................................ 100 - If you are serious about getting out of debt, cut this back
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 110
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 150 - As with the clothes, you could cut this back
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1195

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................900.......50........14.9
student OD.....................2000......0.........23
overdraft......................500.......0.........20
Total unsecured debts..........3400......50........-

Monthly Budget Summary
Total monthly income.................... 1,455
Expenses (including HP & secured debts). 1,195
Available for debt repayments........... 260
Monthly UNsecured debt repayments....... 50
Amount left after debt repayments....... 210
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -3,400
Net Assets.............................. -3,400
Created using the SOA calculator at makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

There is only your overdraft there which is at a higher APR than the loan, therefore you would be daft to take out the loan you have been offered, you would be increasing your debt rather than decreasing it.

Loans also can be restrictive, some won't allow you to make lump sum payments and you may be penalised if you wish to pay it off early.

Best thing to do if you want to get the APR down would be to apply for a credit card which allows you to do a super balance transfer, i.e. transfer the money to your bank account as a balance transfer. MBNA do this, as do the post office and Egg.

If you were to get a virgin card, you would get 0% balance transfers for 16 months and for a 4% fee you can transfer this to your bank account, and then pay off over drafts and credit card.

Your SOA shows you have a £200 surplus every month, are you using this to reduce your overdraft or make overpayments on the credit card?

I don't understand why you need a loan to sort these debts out, it can be done just by using the surplus you say you have and cutting back a bit on clothes and entertainment.

slig

If you stopped buying clothes for a while, and reduced entertainment to £50, you could have a £400 surplus each month. That would make a huge dent in the debt. In fact, you could be debt free in 8.5 months, possibly even less if you can cut back elsewhere/bring in some extra cash.

A loan might seem like the easy option, but they're so unflexible, and as Iwanttobefree says, 2 of your 3 debts are at a lower apr anyway.

CLAPTON

-unless you actually have that £210 spare each month I would suggest you start to keep a spending diary.. i.e. write down everything you spend and see where the money really goes

-clothes spending is just huge.... try six months with no clothes spending..that will be 1,200 towards debts

-with any spare money you have try to pay as much as possible towards the debt with the highest APR.

luke05

slig wrote: »

If you stopped buying clothes for a while, and reduced entertainment to £50, you could have a £400 surplus each month. That would make a huge dent in the debt. In fact, you could be debt free in 8.5 months, possibly even less if you can cut back elsewhere/bring in some extra cash.

A loan might seem like the easy option, but they're so unflexible, and as Iwanttobefree says, 2 of your 3 debts are at a lower apr anyway.

Good points.. That will be the starting guide to become a debt free for life.. thanks..:T

david_hellier

CLAPTON wrote: »

-unless you actually have that £210 spare each month I would suggest you start to keep a spending diary.. i.e. write down everything you spend and see where the money really goes

-clothes spending is just huge.... try six months with no clothes spending..that will be 1,200 towards debts

-with any spare money you have try to pay as much as possible towards the debt with the highest APR.

Another way of using a spending diary is to allocate a weekly amount to yourself per week, from your budget after all essentials have been deducted. Using receipts, deduct as you spend through the week. Try to get to the end of the week leaving some over to carry forward to the next week. This has the effect of keeping your overdraft down and avoids overspend.

dfh

Also,start to use cash instead of cards.

be27

Thank you for you advice everyone! It's all been a great help that I will follow