Should I take a loan?

Storm

Hi peeps!

Well, I've accepted that I've got to clear my debts off and that at the moment it's just far too high!

Debts at the moment are about £4500 on CC @ (I think) 14.9%, about £50 Next Directory and £1250 overdraft with HSBC. Partly what's spurred me on was reading an article online saying that HSBC are going to start getting tough with people who are permanently overdrawn and drastically reduce overdraft limits! :eek:

I could get a loan for £5000 which would cover most of it at 5.7% for 2 years, and I know I could afford the monthly repayments as it's only about £60 more a month than I've been paying on a Graduate loan that's just finished.

I am finding quite difficult to work out exactly what I can afford per month because I'm going to be moving fairly soon (but still rented accomodation), have just passed my driving test so no more expensive lessons, but cost of running a car instead, and I often have extra hours at work, but this varies from month to month!

Part of me doesn't want to get another loan as I've just finished paying off one - but the interest on the credit card is coming in at around £40-50 per month, which is crippling!

Any advice or suggestions very welcome - I'm going to have a clear out & see if I can raise any extra money through Ebay/Amazon, but I think it will probably only be a couple of hundred max.

Thanks for reading, sorry it's so long a rambling!:D

Storm

Molanole

Hi there! Welcome to the DFW board.

Generally the rule of thumb is not to take on extra debt to clear existing ones but why don't you pop up a statement of affairs (take a look at southern scouser's sticky for first time posters at the top of this board). We can then look at your incomings and outgoings and be in a better position to advise on ways to reduce your debt without taking on other debt commitments.

Also, have a look at the snowball calculator (http://www.whatsthecost.co.uk/snowball.aspx) which should give you a better idea on how to prioritise your current repayments. Remember to include your overdraft though as so often it's forgotten.

Well done on posting and good luck. Look forward to seeing the SOA!

Molanole

Here's the link to Southern Scouser's sticky in case you need it...

http://forums.moneysavingexpert.com/showthread.html?t=107280

Storm

OK, here's my SoA as far as I'm able at the moment:

Money Owing

Credit Card - £4446.51 at 14.9% apr
Next a/c - £182.67 - don't know apr
Overdraft - £1350 - which I end up at each month
Mum - £130 (she paid for me to do Pass Plus as I couldn't afford it this month, paying her back on 1st October)

TOTAL: £6109.18 :eek:

Income

Basic Income £1300
Most months I have a bit extra as I do overtime, normally around £100 each month but I try not to rely on it!

Expenditure

Rent £300 (inc most bills)
Phone/Sky £30
DD to savings a/c £100 (for car tax, repairs, mot etc)
Mobile £10
Warranty on laptop £12.69
Specsavers £15 (currently on payment break as I managed to over pay!)
Cigs £100ish (eek, I know I should quit, or at least go on to roll ups!)
Food £100 (estimate)
Petrol £50? (I've only just passed my test & started driving, so don't really know!)
CC Minimum payment £200

TOTAL: £916.79

With the remaining near £400, I don't really know - though until recently I was paying £30 a week for a driving lesson, plus taking quite a few taxis! The rest goes on the usual I guess - lunch at work, clothes, beer...:beer:

I've also this month finished paying off my graduate loan, which was £153.20 per month.

I'm not sure whether to stop my saving £100 each month for the moment - I've got £350 in the account, which is really for car things - I've just paid the insurance (on the CC, but to pay monthly the apr was 20%), tax is due in Feb & MOT not until next August.

Because I've not been used to the £150 for the graduate loan, I was wondering about taking a £5K loan for about £200 a month as it's a much lower apr than the cc (5.7%). I've also wondered about 0% balance transfers or a low apr CC, but last time I applied I was turned down!

Any advice would be wonderful - I've been reading some of the other DFW threads and I'm always amazed by how people see right through the normal **** and come out with practical suggestions. Thank you to anyone who replies in advance

Storm

angchris

hiya storm welcome to mse:T lets have a quick lookie over and see what we can do...
right obviousely your biggest worry is your credit card, your mission from tomorrow/today is to get this apr down from apr of 14.9% to as little as poss as i suspect a good chunk of your payment each month is interest only! hunt around on the internet for either a 0% balance transfer to give you a bit of breathing space to try and knock down that balance .with your extra £400 a month 11 months of paying £400 and it would be gone! if you dont think you would be able to cope with such high payments or cant get another card then i think that although i would normally not encourage people to take out more debt if works out cheaper for you because of the high apr then get the loan for 5.7%. i have just checked out the loans and maybe your best bet is to get one for 4k which is nearly enough to pay off your card this works out at £176.48 a month for 2 years dont take out the ppi!!!(only and i mean only take the loan route if you can cut up the cards and never use one ever again alot of people fall into the trap of taking out loans and everything is hunkydory for a while then they find their spending habits havent changed and they are far worse off than before after hocking their cards back up again to the max and also having a loan!)
this leaves you:-
Credit Card - £446.51 at 14.9% apr
Next a/c - £182.67
Overdraft - £1350
Mum - £130
which adds up to nearly £2160 + interest
im sure the rest of these debts if you stick your mind to it can be obliterated one by one with the remainder of your £400 (£223)plus the 200 you are already paying out now on cc which would be roughly be £423 a month left over £523 if you do overtime and id start with the next a/c first as these are normally 20 odd something % if my memory serves me correctly
at least doing it this way you know where you stand you can be debt free in 24 months, you could pay off next a/c in 1 hit :j the remainder of the credit card in 2 hits :j both of these could be gone in 2 months! and the overdraught and mum can be done at your leisure but asap if that makes sense
if you knuckle down, you CAN do this! make a few sacrifices now and reap the benefits later as circumstances can and often do change.what would happen if you lost your job/got ill? whatever you decide to do please please please learn from your mistakes and never ever use a credit card again! remember how you felt when you wrote your post and never put yourself in that position again! with regards to saving £100 a month i would keep putting that away each month but make sure it goes into a high interest account that you can get at easily, i read somewhere about paying yourself first this is now essential as you need to budget, cars are expensive hobbies/neccesities (sp:o ) and they do break down at the most inoportune times having a bit of emergency money for your car is the most sensible thing to do so you are not just tempted to stick it on the card again! cars are expensive things to run so plan for next year if you fail to plan you plan to fail! things like tax/mot/insurance arent unexpected things make sure you have enough put by to manage these expenses save up for next years car tax and buy it outright but before you do check out online for prices first and this goes for anything you buy in the future,first ask yourself do you need it second get the best price and if you can go through quidco and earn a few pennies on the top even better!
is it just you that you are buying food for? if so im sure you could knock a few quid off your monthly food bill, cut out the lunches at work and take your own and try and limit the excursions out for beer;) best of luck, its a long hard slog most of us on this site have been there/going through it at mo, you CAN do it and im sure you will because take it from me when you come out of it on the otherside the feeling is fab:D it is worth every single penny pinching exercise to get to your goal of being debt free, above all you now need to be savvy with your money no more credit cards no more ohh i like that top i`ll pay next month, start to live within your means and pay back the money you have already spent and be much more carefull of what you spend your cash on in the future, its now your call do something about it now or live with debt for the next 10/20/30 years...... make the right choices

Raquela

If I were in your shoes I would do a spending diary which will tell you exactly where that 400 quid goes a month; and more than likely, will leave you with a lot left, because you'll be more stringent about not spending what you don't have to.

You basically have that 400 (assuming you haven't missed any outgoings), and what you were paying for the graduate loan a month. Plus, if you have money in the savings account for car things at the moment, you could indeed stop that for a while.

when you next get paid, pay your mum, and pay next off before you do anything else. Then you can't spend that 600 or so on random things. And you'll feel better, not least because you will have paid off the loan that is costing you the most APR wise (Store cards are almost always a higher APR than Credit cards). I wouldn't worry too much about the overdraft at the moment, I would concentrate on whacking as much money at the card each month as you can; look into getting a 0% card, or at least lower interest, if you aren't eligible for a 0% card. I don't know much about those, but I'm sure there are links on this site, or others will post details (I'm not eligible for new credit cards right now.. *ahem*!)

Once you've done your spending diary for a while (I'd say a month at least), have a go at working out a proper budget based on those amounts. Switching to rollies or cutting down is probably a good option on the ciggies too; rollies are so much cheaper! You could probably do cheaper on the food too, but your petrol might be higher, but doing a spending diary will show you clearly how much your petrol is likely to average out per month.

Please don't get a loan.. it's so easy to get into more debt because your credit cards are free... I've done it twice, even though I promised myself I wouldn't.. and you can see what that did to my debt in my sig!

Good luck!

R

Storm

Thanks Angchris & Raquela,

I'm going to start a spending diary today, which is no doubt going to be scary, esp as I'm going out tonight. My cunning plan is to try and spend 'normally' for a week so I can really see what I'm spending out on what, then next weekend I can have a bit of a review and tell myself off!

If I knew I could transfer a lump of the cc balance onto a lower apr card then I would do that rather than a loan, simply because then I could pay off more/less each month as my income varies - I'm more worried that as I was turned down last time I applied it'll just end up looking bad on my credit report (though thinking about it, I don't know why it was turned down, perhaps I should have a look...)

Still not sure about the loan - I want to be trying to buy a flat in the next couple of years, which is partially what's got me facing up to my finances, if I get the overtime from work that I have been getting I 'should' be able to clear everything within a year if I live as frugally as possible, but as it's not guaranteed...

Storm

p.s. my figures didn't include my student loan of around £15K, but as this goes straight from my salary & at such a low interest rate I'm not really that bothered by it, apart from it eating in to any pay rise I get!

Storm

I've just had a go on the Snowball Calculator - the scariest thing was when I realised that the interest I'm charged on my O/D is at a higher apr than my credit card:eek: I guess because it does get paid off either completely or nearly each month I hadn't noticed the interest, but the Snowball doesn't appear to take that into consideration.

The figures it's coming up with are 20 months to completely clear everything, which makes me think that I don't want a loan as it would take an additional 4 months to clear everything...

Anyway, my plan is as follows:

Clear off Next card as soon as I get paid in October
Sell as much stuff as I can on Ebay/Amazon - sort this out over the weekend
Get my credit report & see if I can figure out why I was turned down before for 0% CC
POSSIBLY - apply for 0% or low apr LOB CC

I've signed up for quidco & pigsback, though I don't think I really understand that well yet. I've been reading threads on matched betting, but just can't get my head around it at the moment!

I also have an Egg CC that I don't use, so whenever I buy stuff for work I'm going to do it on there & get the money transferred straight onto it (I'd like to get one that gives cashback for this if poss but don't know that they'll give me one!) One of the reasons I've ended up in the mess I am now is that I'd buy maybe £100 worth of stuff for work, get the cheque but then forget to transfer it over to the CC! I've also got £25 of overdue library fines to pay for books I got out for work and then forgot about! :mad:

I know it's my own stupid fault, and that's £25 I'll never see again for wanting of going online and renewing the books!!!

Spending diary starts today - so far, nothing (but it's only 11.30!)

lynzpower

hi there storm

Maybe the reason you got turned down for the other thing was because of this spare egg card??

Storm

Oh, I didn't think about dormant cards affecting my credit rating - I've got several store cards that I opened to get the discount and never used again - I bet some of these are still active!

Does anyone know how I could trace all these to make sure they're closed off?

CLAPTON

get a copy of your credit records...they will show your credit and store cards