Where to get best financial advice?

Moneybus

I'm married with a 3 year old. I work part time and my husband is self employed. We have two loans (one finishing next month), 3 credit cards with quite large amount on two of them and a mortgage (fixed rate). Also, I want to look at savings options for putting money aside each month for my husbands' tax. I want someone to look at our current financial situation and give us some advice on the next course of action eg. If we should get a loan for credit cards and if so when's e best time to do this eg. after both loads are paid off, whether we should add CC to mortgage, the best options for saving husband's tax. Would a independent financial advisor cover all areas or would we need to see several IFAs who specialise in different areas. I want someone to take a look and give us the different options we could choose.

Do you have to pay for an IFA? If so, how much would I expect to pay?

I want someone who will give us some good advice and not be judgemental.

HappyMJ

Moneybus wrote: »

I'm married with a 3 year old. I work part time and my husband is self employed. We have two loans (one finishing next month), 3 credit cards with quite large amount on two of them and a mortgage (fixed rate). Also, I want to look at savings options for putting money aside each month for my husbands' tax. I want someone to look at our current financial situation and give us some advice on the next course of action eg. If we should get a loan for credit cards and if so when's e best time to do this eg. after both loads are paid off, whether we should add CC to mortgage, the best options for saving husband's tax. Would a independent financial advisor cover all areas or would we need to see several IFAs who specialise in different areas. I want someone to take a look and give us the different options we could choose.

Do you have to pay for an IFA? If so, how much would I expect to pay?

I want someone who will give us some good advice and not be judgemental.

You shouldn't save and have credit cards with outstanding amounts. You should pay off the credit cards using the savings for the tax and then save towards the tax bill. If when the tax bill is due you don't quite have enough you can then use the credit card to pay the tax bill.

A IFA will advise you that as you need access to the money on a certain date that fixed interest fixed term deposits would be the best choice however they don't pay much more interest than easy/instant access accounts at about 2% interest per year. You cannot have any risk with that money so your returns will always be low.

Do not take out loans to pay off credit cards and do not add it to the mortgage. It will take much longer and cost more to clear the debt.

Moneybus

We currently don't have any savings towards our tax and our credit cards are maxed out. We can only afford to pay the minimum amount towards the credit cards each month and then will start saving an extra £400 a month aside for tax. If we get a loan to pay credit cards for the same month cost of the combined minimum payments the credit cards and interest will definitely be paid off in 5 years time. If I'm paying £400 towards the credit cards each month and still just paying minimum we still won't have extra money aside to pay tax bill so in six months time we'll have to pay the tax bill on the credit card effectively wiping off the £400 each month we'd been paying and leaving us in the same situation we are now.

TotallyBroke

How much interest a month is being added to the credit card debts? You would be better paying minimum on the one with the least interest and putting the £400 to clear the other one.
You maybe in a better position in 6 months to time to have cleared one of them and reduced the other considerably to do as was suggested above.
If you get a loan the payment will be more than the minimum payment and you still wont be able to save the £400 for the tax and so you will still need another form of payment meaning another debt for the tax.

There is a calculator here somewhere that shows you a end date for paying debts off at minmum and then with over payments but I cant remember what it is called at the minute I'll see if I can find it

TotallyBroke

Here is the link for the tool I was talking about

https://www.whatsthecost.com/snowball.aspx fill that in and it will show when each debt will be paid

If you do a SOA as well you may be able to see where you can make other savings

Grumpelstiltskin

OP Do not even think about approaching an IFA until your debts are cleared.

Do not pay anyone to give you advice about clearing your debts or saving.

It's simple, pay debts off ASAP, stop using credit cards and most importantly save for tax. IR are the most important people you must pay.

Moneybus

On CC1 we have approx £9500 - pay £200 minimum and interest is around £165. On CC2 we have approx £7500 - pay £160 minimum and interest is around £140 per month. CC3 is £900 with minimum of £30 and interest of about £11. So we pay £390 per month minimum repayments but only realistically pay off £65 per month of the total debt which is obviously not a lot!

Even paying an extra £400 a month off the total debt is going to take a long time to clear even one CC. Also the £400 a month is technically "tax" money so in six months time we won't have any savings for tax (as we're paying it off the credit card) and therefore in six months time will have to pay for tax on the CC bringing us back to square one.

It seemed a "simpler" idea to get a loan for 20k with a payment of £360 per month over 5 years and know we will be debt free in 5 years time as not a massive amount of interest will be added on. Then we set up a separate account to put £400 in per month to save for the tax and then we're not putting tax on CC.

It seems that paying off £400 on CC each month but then in six months putting tax back on CC we won't be making any dent in our debt.

Our financial situation will not change dramatically until
Sept next year when I can go back full time and then 2nd loan will be paid off meaning we will probably be better off by £400 per month.

My two options seems 1) loan for CC and then £400 into savings or 2) pay £400 per month off CC extra on top of minimum payments but then in Jan 2013 have to put tax amount back on CC as we have no savings and then maybe reassess situation next Sept. With option 2 I just feel like I'm throwing money away each month with interest going back on the cards - with the loans I can at least see my final debt reduce.

Thanks for advice

whizzing

Who does your husbands tax return.? Do you do it yourself or do you have an accountant who does it?

Moneybus

We used to have an accountant who literally just completed the tax return and charged £400 for it so my husband does it himself online. To be honest they didn't give us any advice on how to save tax and we'd give them a full breakdown of earnings and expenditure so it seemed very expensive to enter a few figures online on my husband's behalf so he decided to do it himself. We'd be happy to meet with an accountant who'd be able to give us some advice on saving tax and financial advice rather than having them do the admin side of simply inputting the tax return and charging a fortune for it.

theoretica

You are right that it seems a good idea- mathematically- to take out a loan to pay off the credit cards. There are however some problems.

1) Finding a loan. The banks look and see you have about £18000 on credit cards and are asking for £18000 loan. They have no way of making you pay off the credit cards and shut them down so will be asking if they think you can handle £36000 debt. The answer may well be no, and if they do offer you a loan it will probably be at high interest.

2) Are you absolutely certain you would chop up the credit cards and never go that way again? Human nature being what it is far too many people take out a loan to pay their cards off, then run the cards up again. If you got into debt through generally spending too much rather than anything you are sure won't happen ever again you need to be sure you can, and have, changed your lifestyle before thinking about this course of action.

TotallyBroke

How much is the limit on CC3? You could pay £400 on that for the next 2 months and it would be nearly cleared. That would free some credit in readiness for the tax bill.
Do you know roughly how much the tax bill will be?

I can only suggest you do a SOA and work out if you can find some extra spare cash each month to try and clear the debts. Loans are very bad ideas