Need Advice...

BelfastClare

Hi,

I need some help in a situation I am in... I have £5000 on a credit card and £600 on another one after travelling, buying a car etc and am in the last year of a £5000 loan payment which I needed to pay of my student debts (not the student loan which I also pay)...

I am wanting to buy a house in the next 5 years and have very little in the way of savings.

I am wanting to know if it would be worth taking a loan out to cover my credit card debts over 4 years even with the interest so I can save a majority of my money towards a deposit for my house or should I just pay all of what I would save too and clear the debt but have fewer savings?

I understand that I'll be paying more interest on a loan, but at least I know it'll be paid and when it is, i'll also have savings!

Help, cos I'm useless at all this stuff.

Thanks!

TonyMMM

Taking out another loan isn't going to help, unless:

1) the interest rate you can get is much lower than the CC and;
2) You cut up the CC and don't use it again.

Many people find step 2 just too hard and end up with the loan and a whole lot more CC debt.

To buy a property, you are going to need a deposit (at least 10%), plus an extra amount to cover the costs of buying (solicitor etc.). Take a look at current property prices and work out what that figure is going to be.

Sit down now and work out a proper budget ...use a spreadsheet or similar and work out what your target date is and how you are going to get there ... allocate your income to cover your outgoings and then throw all your spare cash at getting rid of the CC debt, and when that's gone, start building your savings.

The rest just comes down to willpower (and a bit of luck).

12bdebt3

TonyMMM wrote: »

Taking out another loan isn't going to help, unless:

1) the interest rate you can get is much lower than the CC and;
2) You cut up the CC and don't use it again.

Many people find step 2 just too hard and end up with the loan and a whole lot more CC debt.

To buy a property, you are going to need a deposit (at least 10%), plus an extra amount to cover the costs of buying (solicitor etc.). Take a look at current property prices and work out what that figure is going to be.

Sit down now and work out a proper budget ...use a spreadsheet or similar and work out what your target date is and how you are going to get there ... allocate your income to cover your outgoings and then throw all your spare cash at getting rid of the CC debt, and when that's gone, start building your savings.

The rest just comes down to willpower (and a bit of luck).

Very true, do a quick calculation on a spreadsheet of how much you would currently pay on your credit cards and how much it would cost to consolidate them into one loan. You could put them on a different credit card with 0% on balance transfers for 12 months. Make sure that after the 12 months the APR isn't as high as you're paying now. This way you have 12 months to take as much as you can off before the interest. Then try and settle the remaining debt while you save up. When you finish paying the loan you have at the moment use the money that you use to pay for that to save up for a deposit with. Don't spend any on yourself otherwise you will never end up saving it.

CHR15

If you do decide to get a loan, get it for the shortest time possible, this will mean repaying less overall.

There is little point in taking out a 4yr loan and squirriling money into savings. That money could have gone toward the loan paying it off quicker, and for less.

The additional money you would pay on a longer loan period, would eat up the money you would be putting into savings.

Clear the debt as soon as possible paying as little as possible, then put ALL your spare cash into savings. The savings pot will grow MUCH quicker.

Have a good look at the APR's you are currently paying and compare that to the Loan APR (assuming you receive the advertised rate)

You need to cut up those cards though.

chalkie99

Do you currently have a job and, if so, how much are you earning?

This is going to be important to find out if you can even get more credit, let alone whether or not it's a good idea.

Jeff_Bridges_hair

What Ch5is said really. Though i notice your in the last year of another loan repayment so you may not get one depending on your income generated now.

BelfastClare

I'm actually on very good money, which is why I worry that I don't have the willpower thing going on, I spend too much ...

... I know you are all right tho - throw myself into paying for the credit card debt then start saving.

Thanks for your help.