At what point ...

StStevo

Hello forum users

As i read through the various articles about personal loans, the vibe I pick up is dont do it unless you really need to. But at what point would we say enough is enough, its the only way?

Ok so about me, im in £4000 roughly of debt between two cards (£3000 limit, £750 limit) and a NEXT Account of around £350ish. Whilst incomparison i dont have much to cry about juding by those in huge amounts of debt, but its becomming a struggle for me.

I got this way by being silly at uni, not being content with a student loan and a loan for my fees i abused my cards for various things.

I have now graduated, currently unsucessfully job seeking, and I am working around 15hours per week in a part time job (with no overtime available) this roughly gets me about £350 per month which i spend over half on paying (usually) the minimum payments thinking I can take care of it when I have a full time job, as well as taking care of other bills ie phone, internet etc

I am currently living at home, but usually pay my way for everything and its just not stretching anymore and im not "getting anywhere" in terms of reducing my debt.

Is it now time? Do i go for a personal loan of about £4000 over 3-4 years? I think its about £120 a month, but is it not better to be paying off debt than just post poning it? I eventually want to move away in life with my partner, but this just feels like an anchor around my neck.

Thank you for your interest and any comments to follow

JasX

you are hitting the nail squarely on the head by seeing the £4k loan as postponing the debt rather than wearing it down.... and as your debt accrues interest over time you'll likely be adding to the total cost of the debt by going down that route as lowering the APR a little but adding years to the duration will both work against you with the total cost of the loan AND leave you open to increasing the level of debt you're in by freeing up your cards and catalogue for fresh spending.

Perhaps post an SOA to see if others can spot ways to save but living at home is really your best chance to get on top of this as hopefully you're not paying an unreasonable rent and food costs etc will be kept down.

best focus your efforts on the job hunt for the moment.

redpete

I suspect you will struggle to find anyone prepared to loan you money at reasonable rates of interest given you don't have a FT job and with that debt already.

StuTheDon

Stevo - firstly, you might get better help on the DFW board, but what I will say is that there have been many stories on here of people taking consolidation loans, and then continuing the spend on cards, and being worse off in the long run. I you feel that you can trust yourself 100% not to rack up further debts, then a loan may be a better option, however it rarely fixes it in my opinion.

Have you looked at moving your balances to a 0% creditcard for 12 mnoths? I dont want to sound harsh but you may struggle to get a unsecured loan on your PT wages anyway, even for £4k.

My advice would be to get the amounts onto a 0% card and throw everything you have at it.

StStevo

Thank you for the replies so far, I am sorry I didnt realise I was posting this in the wrong section, Ill do a copy over to the recommended forum.

JasX, my intention for the loan was to bulk the debt together and make fixed payments per month to eventually pay off the loan? I am not sure what you mean by post poning it instead.

redpete, I have shopped around and seen some potential options - you probably are right that most will not support the loan but at this stage im willing to try anything.

StuTheDon - my intentions would be to cut all cards, do my best to stay away from it for life. I know people who have amassed triple or more than my debt and how it affected thier lives. Now that my girlfriend knows the debt I am in, she would be positive reinforcement and a stern reminder not to be as silly with my money. I have looked at 0% cards before, but I was only being given limits ranging from £500 - £700 pounds, not nearly enough to take the sting out of my card with the £3000 debt.

Hax

Can bank of Mum & Dad help you out with a loan?

I am sure that if they can, they would rather be helping you out now than having to possibly come to your aid in a year or two if the situation should deteriorate.

With regard to the 0% APR cards, even if they are low limits, you need to remember that £800 @ 0% is better than £800 @ 20%.

Also, have a look at the snowball calculator (Google it ) - it basically involves focussing on paying off your highest APR debt first (which I would guess is the catalogue) and just paying the minimum on the other debts. Then, when the first is cleared, move on to the second one.

Also, do you have anything you could sell? Or could you maybe take on a second PT job?

Good luck with the job hunting - hope you have some luck soon!

StStevo

Sorry guys for neglecting this post!

Hax thank you for your post, consulting the bank of Mum & Dad is not an option lol they would go bucko, and its not worth it living at home with them!

I understand the point of the 0% card now, perhaps its something I might look into now.

Ive heard of snow balling, I think its gonna be my course of action. As regards to things to sell, not overly :-\ have loads of dvds but the value of them sucks now tbh and with Ebay and Paypal taking stupid cuts from your sales value it doenst seem worth it. Other than that I dont really have much.

I have been going around a few more job agencies since i posted this, so hopefully have a better job soon!

I am still none the wiser as to why taking a loan is a poor idea. The sound of rolling all the debt together and paying £150 a month off the debt, rather than minimum payments sounds good right? I understand that with the wrong APR that the value of the loan can go from £4k to £5k instead ... the recommended loans on this site however seemed quite reasonable?

iolanthe07

I am still none the wiser as to why taking a loan is a poor idea. The sound of rolling all the debt together and paying £150 a month off the debt, rather than minimum payments sounds good right?

This is called 'consolidation' and the experience of many here is that it only works if you have self-control and discipline. There are lots of posts from people who have 'consolidated' over and over again until their debt is huge. Consolidation gives the illusion of clearing debt, but in reality it only lengthens it and often at a higher interest rate.

paddyrg

Consolidation is a great idea - in certain circumstances only.

Firstly you have to cut up all your cards, change your lifestyle etc to make sure you don't just go building up fresh debt. And secondly you need to be creditworthy enough to double your current debt (for a few days) as there is no condition that you would use the cash to pay off the first debts!

So, in short, it doesn't sound like it would suit you right now.

StStevo

As for self control - the cards are already cut up, minus one!

I thought the idea of actually paying £150 off a debt, then £150 on minimum payments/bills sounded good, whilst I totally understand that it lengthens the debt - I dont know how sucessfully I can control myself NOT to pay a minimum on a debt keeping my circumstances as it was, say I got a job with a decent salary.

I have this illlusion that if I did get a good job soon (a few of which im waiting to hear back from after interview) that I would still live at home and pay £500 a month off in bulk to the worst debt - but realistically ill probably think happy days and go on a spending spree! lol

I want to move away, so ideally I dont want debt hanging over my head - so I wanted to make ammends on that by starting a consolidation and paying it off.

As for being credit worthy, my credit score has vastly improved. I would need to see if I could get the loan before weighing up the pro's and cons any further.

I just want to get the ball rolling on freeing myself again and to plan my future with my partner ...