SOA - got the hard hat on - straight talking required!

foxgloves

We only became debt-free this year (apart from mortgage). We were always able to pay our debts, but one of the reasons they went on sooooooo long was that before we combined our finances, my partner 'consolidated' 3 times. Like most people, he had several smaller loans/cards which he was paying each month & he worked out that if he took out a 5 year loan, the monthly payments would reduce significantly. That much was true, but like most people who consolidate, he borrowed a little more than he needed just to make sure, & then his (& my) spending habits & lack of budget planning continued exactly the same as before. Suffice it to say that when we got within a sniff of getting rid of the loan, the credit cards/overdraft were up again, & he borrowed it again (with that little bit of extra of course to upgrade something he didn't really need to buy!). And then.......yes you've guessed it, this happened a third time, so the '5 years of lower repayments & we'll be debt-free' was a complete fiction!! After we'd had LBMs & were working hard to pay off all debt, he did wonder if the consolidation route might be worth doing, but I absolutely wouldn't go that way again & he agreed it had hindered rather than helped us. Maybe it works for people who can be absolutely iron-willed about budgeting, but I strongly suspect that the only real winners are banks & companies' profits.

EKAndrew

JimmyTheWig wrote: »

Great news that the debts haven't been increasing over the last 6 months. This suggests that you are now living within your means, something you probably haven't for a few years before this.

Good that you've got Christmas sorted, but you've sort of missed my point. I was using Christmas as an example where you might just "need" that extra bit of cash. If it's not Christmas for you then it may well be something else.
The point is that if you had available credit, would you use it? If you got a consolidation loan then you would have more available credit (on your credit cards). Would you use it?
Is the reality of the situation that your debts haven't increased in the last 6 months because you haven't had any credit available?

Can you understand, at least, why most people find themselves owing more not long after going down the consolidation route? Have you got the willpower to do better than most?

Hi Jimmy - you are going to keep me on my toes!! :rotfl:
Its all IFs and BUTs just now, but if I were to get the consolidation loan - I would be happy to cut up all my cards (I would probably keep one for emergencies. Although I would reduce the limit on it) I have read that people put this in the freezer, so there is no temptation to spend. I would be happy with moving debt around if I were to get 0% cards - but im scared that I will get rejected if I apply.

I believe I have the will power - without sorting all this debt out, we cant move from our flat to a house. Ultimately, thats the goal we need to aim for

bargainbetty

Before you apply for a loan, why not apply for a small credit card on a low-life-of-balance deal. Transfer everything you can onto it from the remaining opening account, and throw the extra interest money at the open one until it is clear. Then, empty the card with the highest interest rate onto the now-clear card, after agreeing to a 0% deal or a low-life- of balance with a provider. You might not get a 0% card, as they know people want to tart like this, but a LLoB card could save you hundreds in interest, as long as you don't spend on it.

Whether or not you get the card, try living without your cards for three months. Cut them up now - you shouldn't need them, and you say you won't use them again? If you really can go 90 days without spending a bean on any credit card, and live entirely within your salary, then maybe you do have the willpower for a consolidation loan.

Personally, I ended up consolidating twice. Just because you think you can, doesn't mean you will. Have a practice for a while and reduce your outgoings at the same time. Ebay/boot fair everything you can get rid of (old kids clothes, toys, books etc all go) and throw the money at the debts. Do a store cupboard inventory and see if you can live off what you have for a while, rather than shopping for already-purchased items. I realised I had enough toiletries and household cleaners to last six months - money not spent can be applied to debts - a few pounds a week overpayment is manageable when you do it in small chunks. You might realise you don't need the loan - if you have real willpower and a bit of cheek about asking for reduced rates, you might do it another, more flexible way.

Good luck!

rising_from_the_ashes

EKAndrew wrote: »

I would be happy with moving debt around if I were to get 0% cards - but im scared that I will get rejected if I apply.

Sorry to put a dampner on things but what makes you think you'd be successful in applying for a loan if you think you won't be accepted for a credit card?

Bargainbetty has made a very good suggestion - when did you last use the cards? Put them all away and see if you can manage for a couple of months without using them.....

kazwookie

£80 for xmas x 12 months = £960.00 is this right?

If so do you really spend that much on Christmas, the money for now might be etter placed against the cc insterst and for example on £30 sent to xmas savings x 12 months = £360.00

JimmyTheWig

rising_from_the_ashes wrote: »

Sorry to put a dampner on things but what makes you think you'd be successful in applying for a loan if you think you won't be accepted for a credit card?

Because, presumably, he'd need a top of the market credit cards but only an average consolidation loan.

JimmyTheWig

EKAndrew wrote: »

Hi RAS -
Limits are :
credit card......5096.98...was 6k, but now closed
credit card......4274......5.5k
credit card......3824.94...this was Cahoot, who dont exist, so now closed
credit card......6098.86...6.5k

So moving debt around isnt really an option

Not totally out of the question.
Phone up the second card company (£4274 current debt) and ask what rate they'd give you for a balance transfer (i.e. transfering debt to them) of, say, £1000. And ask if they'd charge a transfer fee.
Chances are you won't get a market leading rate, but they may offer you, say, 17.9%.
If the numbers work (check back here if not 100% sure) then ask them to transfer £1000 from your 4th card company (£6098 current debt).
Even if they can only offer you the 23.9% that you're currently paying them this would save you £10 a year if they don't charge a fee for doing it.

Once that's gone through you could then phone the fourth card company (current balance £6098, but by now reduced by balance transfer) and asking what rate they'd do a balance transfer. If they give you a decent rate you could then transfer from your third card to them.

This will only work if the cards are run by different companies.


The advantage of this is that it doesn't involve applying for more credit.
The important thing to do is to keep up with the existing total payments even though the minimum repayments will probably drop.
As per now, you should be paying the minimum on all cards other than the highest interest rate one, where you should be throwing the rest of your money.


I appreciate that this might not be too easy to understand. If so, start by doing the following...
Phone your second card company (£4274 current debt) and say "Hello, I've got an outstanding balance on another credit card. What interest rate and what fees would you charge me if I transfered £1000 of that balance to my card with you?"
then come back here and tell us what they say.

rising_from_the_ashes

JimmyTheWig wrote: »

Because, presumably, he'd need a top of the market credit cards but only an average consolidation loan.

Yup, but they do take into account the amount of current debt / available credit and when you add on another £20k+ for the new loan .... this will be more than 100% of his current income - and not that attractive a proposition to a lender.

EKAndrew

Hi Betty - thanks for your advice. We've got boxes looked out, and are going to sell every single CD/DVD we have. We have already traded in Xbox games so we could get the new FIFA12 as no cost to us. We have a couple of old phones that we are looking into selling.

I like the idea of going through the cupboards.........I think we have alot of sauces for pasta/curries/stir frys

Rising from the Ashes - please dont apologise for your thoughts or advice - Im here because I need help. Its not that I think I'll get a loan over a credit card - I fear that both may reject me. My credit history/score/rating is good. I have never missed a payment, although I do have 2 late payments showing, which were about 1 yr-18months ago. Maybe cards is the way to go - I dont really know, again, I'm here for people to give me advice and point me in the right direction, and listen(well read!) to how others who have been in my position have managed to get out of it.

Kaz - its 80*10months, you dont pay Nov and Dec and they are cashed in 1st Nov. I dont deal with xmas, the OH does. They are universal vouchers. If they are not spent on Xmas, we use them to buy groceries or go to Boots to buy milk/nappies/clothes for the baby

Thanks again everyone - please keep the advice coming

EKAndrew

rising_from_the_ashes wrote: »

Yup, but they do take into account the amount of current debt / available credit and when you add on another £20k+ for the new loan .... this will be more than 100% of his current income - and not that attractive a proposition to a lender.

ok, hypothetically, if I were to call all my CC lenders and close the accounts - but continue to pay them monthly - would that make a difference as there would be "no available credit" ???

Or would they look at the info, and say "this guys closed all his accounts with alot of outstanding debt? he might be trouble?!?! Or would they think its a sensible choice?