To Loan or not to Loan...that is my question

hannibanani

Hello!!

I have been in debt since I was 18 and i'm approaching 25! I, more than anything, want to be debt free so I can go travelling next year (October is the plan!) I want to be debt free a few months before so that I can save, save, save!

Here is my situation - I have 3 credit cards.

£ 750.00 Virgin (MBNA) 24.9%ARR (limit £1800) £5,172.00 Halifax 29.9%APR (limit £5,300) £1,192.00 Barclay Card 0%APR (limit £1500)
Total £7,114.00

Each month I pay:

£ 150.00 Virgin £ 150.00 Halifax £ 200.00 Barclay Card

Total
£500

Now... I want to pay off my debt ASAP... Is a loan the best option? I cannot find any other 0% cards that will accept me...

Helpful advice most wanted!!

Thanks

Hannah x

hannibanani

Oh - one other thing... I have a car which is valued at £2000 and furniture/freezer etc to sell before i leave to help with the debt too (So I hope this challenge is acheivable!)

Wee_Pilsbury

Hi there

Firstly, well done for posting - you really will get lots of good advice here.

I don't want to sound like I'm preaching but getting another loan isn't really paying off debt although I know what you mean when you say this. Many people (me included) have consolidated credit cards into an "easy to manage" loan and then gone on to rack up more debt on the cards :eek:.

The best advice I could give is to put up a full Statement of Affairs (SOA) and the good folks on here may well be able to advise on how to pay your debts off quicker without having to try for a loan. The link to the SOA is here -

http://www.makesenseofcards.com/soacalc.html

Best of luck, whatever you decide to do!:)

hannibanani

Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1500
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 345
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 30
Gas..................................... 0
Oil..................................... 0
Water rates............................. 10
Telephone (land line)................... 0
Mobile phone............................ 48
TV Licence.............................. 6
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 70
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 65
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)...... 0
Haircuts................................ 0
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 999

Assets
Cash.................................... 750
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 2750

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card (Virgin)...........750.......150.......24.9
Credit Card (Halifax)..........5200......150.......24.9
Credit Card (Barclays..........1200......200.......0
Over draft.....................750.......20........0
Total unsecured debts..........7900......520.......-

Monthly Budget Summary
Total monthly income.................... 1,500
Expenses (including HP & secured debts). 999
Available for debt repayments........... 501
Monthly UNsecured debt repayments....... 520
Amount short for making debt repayments. -19
Personal Balance Sheet Summary
Total assets (things you own)........... 2,750
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,900
Net Assets.............................. -5,150

RAS

hannibanani wrote: »

Now... I want to pay off my debt ASAP... Is a loan the best option? I cannot find any other 0% cards that will accept me...

hannah

Taking out a loan does not pay off your debt; it just transferrs it from flexible debt you can over to inflexible debt.

You need to be paying off over £1000 per month. Can you do that?

Clear the virgin card and ring up to cancel it. You might get a low rate balance transfer?

hannibanani

It's been my mission to pay off the Virgin one first, along with the Barclays then hit the Halifax one with £500 a month...

I understand that getting a loan will not make me debt free - but surely it will be lower apr??

Wee_Pilsbury

hannibanani wrote: »

Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1500
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 345
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 30
Gas..................................... 0
Oil..................................... 0
Water rates............................. 10
Telephone (land line)................... 0
Mobile phone............................ 48 - Go PAYG?
TV Licence.............................. 6
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 70
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 65 - What's this?
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)...... 0
Haircuts................................ 0
Entertainment........................... 150 - Could easily reduce by £100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 999

Assets
Cash.................................... 750
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 2750

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card (Virgin)...........750.......150.......24.9 Is this the cash you have?
Credit Card (Halifax)..........5200......150.......24.9
Credit Card (Barclays..........1200......200.......0
Over draft.....................750.......20........0
Total unsecured debts..........7900......520.......-

Monthly Budget Summary
Total monthly income.................... 1,500
Expenses (including HP & secured debts). 999
Available for debt repayments........... 501
Monthly UNsecured debt repayments....... 520
Amount short for making debt repayments. -19
Personal Balance Sheet Summary
Total assets (things you own)........... 2,750
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,900
Net Assets.............................. -5,150

I'm not an expert but this doesn't look too bad. If you actually have £750 saved in cash you could pay off the Virgin Credit Card now. This frees up £150 each month. If you only reduced your entertainment budget by £100 a month then by my calculations you would have £620 every month for debts.

I've loosely put your figures into the snowball calculator (you can access it from the same link from which you got the SOA). It shows how to pay off each debt (presuming you have £620.00 available for debts) and shows you could have it cleared in 14 months! That would be in time for October 2012 :rotfl:

RAS

Pay off the OD first, as this is costing you something like 30 percent APR.

hannibanani

The 750 is in a deposit scheme that i've just paid for (rented property) so if i look after the flat, I will eventually get this back!

Entertainment = festivals this year.... (going to 3 - so saving and paying for those)

The 65 quid is for my bus pass...

Now I'm thinking...sell the car now... that way I will have 2k plus £170 (petrol and insurance)

Thanks for the advice!!! xxxx

Wee_Pilsbury

I was just about to ask why you have a bus pass but also a car and then I read further.

Selling the car would be an idea and the money you would save each month could be snowballed into the debts.

Good luck!

katsu

£150 is a big amount of money - could you do two festivals not 3, or cut down a bit on your festival spending?

You can also look at better mobile deals, there are great ones out there.