consolidation of relatively small debts

EssexHebridean

First things first you need a spending diary. You're meant to have £300 odd left every month - if this isn't currently happening, then writing down every last little thing you spend on will help track down your missing £££'s.

Second. Cut up the credit card. If you feel you have to have it "just in case" then there is an alternative. Take the credit card out of your purse. Pop it into a large bowl, and half fill with water. Pop in freezer. The next morning, fill the bowl to the top, and replace. That's the temptation of using the credit card dealt with. Oh - don't try microwaving the large glacier you've created to get at it either - you'll wreck the card. Having to wait several days for the card to defrost should give you a chance to consider whether it's really enough of an emergency to use it for, though.

Third. Scrap the clothes budget. An extra load of washing once a week isn't going to cost you £50 per month. I'm afraid to say it, but the fact that you immediately defended the clothes budget indicates clearly that you know yourself it ought to get cut back, hard, for now. As for the toiletries - clear out the bathroom cabinet as a first port of call - once you've discovered how much you have, come over and join the "No Buying Unnecessary Toiletries" challenge over on the Health & Beauty board. New [STRIKE]victims[/STRIKE] members always welcome!

Start working in cash - for absolutely everything you can. Taking £10 out of your purse feels a lot more "real" than whipping out the debit card.

Start making your lunch 4 days a week at least. you're right about living your life - you DO have to, but equally in due course you're probably going to want to get a mortgage etc - a dodgy credit rating won't help you there. Cut back hard now, kill off the problem, and then rebuild gradually.

I assume you have two months without council tax and water rates coming up (this month, and next, if you're the same as us) if so that is best part of £300 you can throw straight at one of the debts. Don't let it sit in the bank to get frittered - just make the payment as soon as you can. Alternatively, throw that, plus £200 from this month's surplus (which you'll have, this month, because of watching what you're spending!) into an ISA as your emergency fund then start throwing everything else at the debt.

Good luck, and keep posting!

mayforher_2

glasgowsaver2011 wrote: »

You are on the right track, just need a few months of head down hard work

Home made lunches.

Cancel sky/broadband and home phone.

Pay off as much as you can each month.

cut down the entertainemts fund

go to a museum or a park or awrap up and have a country walk.

- I suspect you are 24 - prob a bit young for those things, but if you really wanna be debt free its very do able in a year

Thanks for the positivity!

Will really concentrate on all of the above. I can't really cancel the broadband and home phone because I am on an Ilex and this is paid for by work but it's distance learning so I need to be online all the time.

I am 24 yes, I actually love going for long walks and this weekend actually we went to Rivington pike and had a lovely few hours walking around there. I really like things that are free surprisingly! I dont actually seem to spend any of my money on doing many fun things at all! The question is, why am I always skint if i have £400 odd pounds free!

Shelski_2

Hi

I think we all feel like this and it's so common. On paper it seems to give you a huge (ish) surplus. That's why the idea of a spending diary is so valuable.

The thing that has helped me the most is drawing out cash weekly and only using this for groceries, top ups etc. I've been so good with it, I've even been able to pay for 2 children's school trips!
If there's any left at the end of the week either pay it straight towards the debt or save it towards the cinema or a drink at the pub. My extra is going towards paint and a new bedcover for DD's bedroom. Before I wouldn't have thought twice about putting it all on the debit card with not a thought for how much was actually in the bank.

I think it's great that you want to tackle this now. I wish we had, we would be able to afford to do so much more now and we earn good money, yet I dread to think what I've paid in charges and interest over the years by taking out another consolidation loan. Think positive. You can do this

mayforher_2

Shelski, thanks so much for your positive post!

I have decided I am going to do that, get little pots for all our money, only spend what’s in the pots. Going to leave my debit card at home because I think it’s far too easy to spend a few quid here and there on it. I’m just a little bit worried about paying off my credit card – I don’t want this hanging over my head and I definitely don’t want to be paying mostly interest and only being able to make tiny repayments a month! I really need to focus on what I want, which is definitely being debt free! I am going to talk to my partner about this tonight and try and make him see that a loan is not the way forward, that will be attaching another 5 years onto our heads.

Can anyone tell me if I paid £1,500.00 off my credit card, which will leave £2,300, what the interest will be per month if I didn’t spend on it? I am trying to work out my budget for each month to be able to show my partner so he can see that we can do this without a loan but I don’t know how much I will be paying back into my card a month!

Interest Rates
Annual Purchase Rate 16.90%
Cash Interest Rate 27.90%


I got a big Vaseline tin from my friend at Christmas and am going to start putting a tenner in every two weeks so that I can build up a nice little treat fund, alongside everything else and paying off debts etc, so that in a couple of months or a year or whatever I can say to my partner that ive saved us a little extra to treat ourselves with for being so good!

Is there anyone who would take out a loan to try and get rid of everything into one monthly payment? We have worked out that the cheapest we can find that we can apply for in May is £170 a month for 5 years. This would mean that we are paying less than we currently pay for overdraft interest/fees and credit card per month. It would also mean that we have some spare cash in the bank (about £1,000.00) for emergencies and to build a really good savings fund out of. My car is an old old car so I feel as though in the next year we will need to use that money to get a new car. But the downside is that we have to make payments for the next 5 years! And that seems like such a long time!!

I will start making a spending diary, I tried to call Sky on my lunch but they are down for maintenance until Saturday so I will call them then and try and sort that out.

thanks everyone for your help so far, I have been reading through this board and you're such a strong pillar for everyone out there who is struggling. It makes me laugh, our parents say they feel sorry for us having to go through all this and I start feeling sorry for myself when they say that and then I come on here and look at everyone else who are in the same position, or worse, or better and I look at all the no-longer-wannabes and just feel so happy for them all and think you all do a great job of supporting each other and helping each other out!

:T ( I feel like writing to the government and pointing them this way to show them how its really done!!!)

glasgowsaver2011

mayforher wrote: »

Thanks for the positivity!

Will really concentrate on all of the above. I can't really cancel the broadband and home phone because I am on an Ilex and this is paid for by work but it's distance learning so I need to be online all the time.

I am 24 yes, I actually love going for long walks and this weekend actually we went to Rivington pike and had a lovely few hours walking around there. I really like things that are free surprisingly! I dont actually seem to spend any of my money on doing many fun things at all! The question is, why am I always skint if i have £400 odd pounds free!

Because you buy subway's

2 hot chocolates from star bucks

A few magazines

Sunday brunch at a cafe

Bottle of water in the gym

All ads up

I have been there

glasgowsaver2011

mayforher wrote: »

Shelski, thanks so much for your positive post!


Is there anyone who would take out a loan to try and get rid of everything into one monthly payment? We have worked out that the cheapest we can find that we can apply for in May is £170 a month for 5 years. This would mean that we are paying less than we currently pay for overdraft interest/fees and credit card per month. It would also mean that we have some spare cash in the bank (about £1,000.00) for emergencies and to build a really good savings fund out of. My car is an old old car so I feel as though in the next year we will need to use that money to get a new car. But the downside is that we have to make payments for the next 5 years! And that seems like such a long time!!

I

:T ( I feel like writing to the government and pointing them this way to show them how its really done!!!)

get the loan you need not an extra grand

it will disapear and you will wish you never took it

EssexHebridean

Honestly? I doubt you're going to find anyone on here who will tell you that consolidation is a good idea. Why? Because it's not.

Look at it this way - your combined debt currently stands at...what, about £6,800, yes? You are showing around £300 surplus on paper at least - plus there are savings to be made on your SOA - so let's call that a total of at least £350 per month you can pay to your debts. Very loosely, and without calculating for interest etc, that means that theoretically 20 payments of that £350 would see that debt cleared. Naturally interest will increase that a little, but not massively. Compare that with the 60 MONTHS you will be paying off that loan for. You'll also be paying something over £10k in payments... :eek:

How about this:
Five months before the interest free period ends on the cc - so time for 5 hefty OP's to be made to it.
5 x £350 (which is the amount we've ascertained you could manage) PLUS the £83 p/m you're already paying = £433 per month.
£433 per month x 5 = a whopping £2165 off that CC before the interest starts kicking in!
IIRC from your OP that means a balance of around £1635 still outstanding? Even allowing for interest, you could have that cleared in about 5 months from the date of the interest kicking in, then you'll be able to turn that entire £433 per month to your overdrafts.

Does that sound better than a 60 month loan? I reckon you could be debt free in under 18 months.....and if you want a further incentive - the remaining 42 months that you WOULD have been paying the loan for - multiplied by the £500-ish you'll have spare for not paying CC's and overdrafts means you could have enough to buy a BRAND NEW car EACH by the time you'd have finished paying off the loan, otherwise. (Or, alternatively, you could buy one second hand one, once you've saved for it, and have a nice healthy savings pot! :rotfl:)

anh1904

Taking out the loan implies you are more inclined to use debt to fund a lifestyle?

There are life choices to be made - live now, pay later is the one many choose, and then with the benefit of hidsight, wish they never had, as the "paying later" bit, well, that's why there are so many of us on here, and it certainly impacts the "living later" bit too.

Only you can decide at the end of the day what is really important, but if being debt free and in control of your life is a priority, then there are compromises, at this stage, luckily for you, none of them appear particularly onerous.

Good luck, whichever path you choose!

mayforher_2

EssexHebridean wrote: »

Honestly? I double you're going to find anyone on here who will tell you that consolidation is a good idea. Why? Because it's not.

Look at it this way - your combined debt currently stands at...what, about £6,800, yes? You are showing around £300 surplus on paper at least - plus there are savings to be made on your SOA - so let's call that a total of at least £350 per month you can pay to your debts. Very loosely, and without calculating for interest etc, that means that theoretically 20 payments of that £350 would see that debt cleared. Naturally interest will increase that a little, but not massively. Compare that with the 60 MONTHS you will be paying off that loan for. You'll also be paying something over £10k in payments... :eek:

How about this:
Five months before the interest free period ends on the cc - so time for 5 hefty OP's to be made to it.
5 x £350 (which is the amount we've ascertained you could manage) PLUS the £83 p/m you're already paying = £433 per month.
£433 per month x 5 = a whopping £2165 off that CC before the interest starts kicking in!
IIRC from your OP that means a balance of around £1635 still outstanding? Even allowing for interest, you could have that cleared in about 5 months from the date of the interest kicking in, then you'll be able to turn that entire £433 per month to your overdrafts.

Does that sound better than a 60 month loan? I reckon you could be debt free in under 18 months.....and if you want a further incentive - the remaining 42 months that you WOULD have been paying the loan for - multiplied by the £500-ish you'll have spare for not paying CC's and overdrafts means you could have enough to buy a BRAND NEW car EACH by the time you'd have finished paying off the loan, otherwise. (Or, alternatively, you could buy one second hand one, once you've saved for it, and have a nice healthy savings pot! :rotfl:)

Thank you so much for this post! puts it all into perspective for me - I find it really difficult to see the bigger picture and you setting it out like that has made me realise that i definitely don’t want to get a loan! I am just going to plough all my money into the credit card and do exactly what you’ve said. The thought of having a loan hanging over my head for 5 years doesn’t really appeal to me to be honest, it will be £200 ish repayments each month and that’s money that we could be spending for 5 years on ourselves/possible family etc. To be honest our main goals are to start a family and get married – I would rather do this myself and debt free than do it on someone elses money and pay them over a grand for the privilege. And the incentive is certainly a good one! What a brilliant plan, thank you so much!!!

mayforher_2

anh1904 wrote: »

Taking out the loan implies you are more inclined to use debt to fund a lifestyle?

There are life choices to be made - live now, pay later is the one many choose, and then with the benefit of hidsight, wish they never had, as the "paying later" bit, well, that's why there are so many of us on here, and it certainly impacts the "living later" bit too.

Only you can decide at the end of the day what is really important, but if being debt free and in control of your life is a priority, then there are compromises, at this stage, luckily for you, none of them appear particularly onerous.

Good luck, whichever path you choose!

You're exactly right. One thing my partner said was "if we get the loan we might be able to treat ourselves to a little holiday" which made me really excited but then I realised that i wouldnt be saving/paying for this myself and that's part of the joy of going on holiday - youve worked really hard for it!!! Thank you