consolidation of relatively small debts

camuk81

Mayforher, let me give a prime example of why consolidation is a bad idea.

I spent, then got one loan, then kept spending. My credit then go shot. I ended up taking out a loan with a subprime leander with a starting balance of £5,813 at 60 payments of £233.14.

Total amount to repay is £13,988.40!

Meaning just on interest alone I will overpay the loan by £8175.40.

I'm now 28 payments in and its one of the worse things I have every done but its what I needed to make me have my LBM.

Just as reference the apr is around the 29.9% marker.

mayforher_2

camuk81 wrote: »

Mayforher, let me give a prime example of why consolidation is a bad idea.

I spent, then got one loan, then kept spending. My credit then go shot. I ended up taking out a loan with a subprime leander with a starting balance of £5,813 at 60 payments of £233.14.

Total amount to repay is £13,988.40!

Meaning just on interest alone I will overpay the loan by £8175.40.

I'm now 28 payments in and its one of the worse things I have every done but its what I needed to make me have my LBM.

Just as reference the apr is around the 29.9% marker.

Thanks camuk, I appreciate you using your example to highlight to me why this is not the right path for me.

I had and still have deep down, the wrong attitude to money. I think that if i have savings thats mine. but I realise now that if i have debts i dont have savings! those savings are the banks money, not mine. I just wish I had realised a bit sooner as I might not be in this position now but on the plus side i am glad I came here before I applied for the loan. They sound so shiny and lovely until you realise that its not your money and youre unlikely to come out the other side with anything worth showing for it.

psychopathbabble

mayforher wrote: »

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!!

If you have the potential to be debt free within a year, with some sacrifices, why would you take out a loan? I'd have been dead chuffed to have the possiblity of being debt free within a year.... the sacrifices you would make are only short term and then you can have the lifestyle you want provided it's within your budget.

As for your car, keep it until you get your debt paid off then save up for a new car... I'm sure you can maintain it until then, depending on what goes wrong with it.

I don't understand your obsession with an emergency fund, and if you have been paying £100 per month into it, why isn't the total included in your assets?

ETA: You said previously that you still have the wrong attitude to money. Budgeting properly for a year and making those sacrifices to become debt free will go a long way to helping you change your attitude to money... don't get me wrong, I still spend unnecessarily sometimes but nowhere near as much as I was before! I always thought I had no chance of paying my debt off, I've got no money... but I've found the money from somewhere! x

camuk81

[QUOTE=mayforher;51065185
I had and still have deep down, the wrong attitude to money. I think that if i have savings thats mine. but I realise now that if i have debts i dont have savings! those savings are the banks money, not mine. I just wish I had realised a bit sooner as I might not be in this position now but on the plus side i am glad I came here before I applied for the loan. They sound so shiny and lovely until you realise that its not your money and youre unlikely to come out the other side with anything worth showing for it.[/QUOTE]

This may be the analogue I have ever heard about this