How do I get out of £10K of debt?

Chupps

Hi, I have a loan with the Alliance & Leicester and still have £8,484 to pay off at £371.61 a month (with 2 years to go at 7.4%apr). Because I'm self employed I sometimes have money 'left over' but the A&L are not flexible.

I also have £1,162 outstanding on an Abbey credit card and the interest free period has just come to an end. This debt has been going on for some time and I have been a credit card tart - swapping when I need to!

I got myself into this debt and now I'm fed up of paying so do you have any advice. I'd prefer to roll the two debts into one and up what I'm paying with the option of paying more if I can. I'm not too worried about not having enough money to pay - I'd prefer to stop (or reduce) eating for a time to get rid of this debt.

Any input would be gratfully received.

DiggingOut

Well, you probably have prepayment penalties on the loan, if it isn't flexible. Is it exactly 24 payments you have left, and is £8484 the full payoff figure?

It seems clear to me that the best thing you can do is dedicate any extra money you have to paying off the credit card debt, rather than the loan. First things first, and with your 0% period ending the interest on the credit card is intolerable.

System

I don't have a loan with them, but Egg are flexible with repayments and don't charge for early repayment. I once applied for £10,000 over 7 years to cover other loans and credit card debt, but didn't sign the agreement in the end because of the good old 'rule of 78' that made it pointless. With that also goes the fact I'd have seven years of monthly payments too, which I didn't like the prospect of.

Additionally, I only earn £13,500 a year, and they were prepared to give me £10,000.

As has been said, I will never sign an agreement where you can't pay off early. Egg are very good on that - but in your case it may not be any help as you'll be charged big style by your current loan companies.

DiggingOut

Cahoot also has flexible loans.

Nickynoo1

Whu not use the extra money to pay off the credit card. When thats paid put the extra money into high interest savings until there is enough to cover the remainder of the loan. you may be able to knock a few months off the loan.

Keep a running account/chart of your total debt, and credit when you get there, and when your fed up with feeling like a skinflint reflect on your success so far. It hopefully will keep you focused and motivated in your hours of weakness.

nickynoo1

Pal

As D_O suggests, find out whether there are penalties for early payment and what they are.

Apply for a new 0% credit card deal with egg or another SBT card and then balance transfer the credit card over to it.

Then work out the early payment penalties for the loan. It may be worthwhile doing an STB from the credit card on 0% in order to pay the loan off early. Then just card tarting whenever the 0% deals expire while you pay the balance down.

Alternatively, if you cannot pay off the loan early, it is always worth doing a balance transfer up to your 0% limit to a savings account and at least earning some interest to offset the interest you are paying on the loan.

Of course this method requires some financial discipline.