How can i consolidate mine and my partners debt to pay less interest?

blisteringblue

sophpac wrote: »

Why is consolidation a bad idea? I feel like it would help to have 1 debt rather than 4?

I've not just 1 T-shirt from this but a wardrobe full. It seriously does not work.

Consolidation does not solve the root of your problem which is overspending. You have to cure that before you can get out of debt.

Use the snowball link, a little overpayment on the highest APR and you are off and running. It will clear sooner than you think with no more borrowing.

DVardysShadow

In_The_Red_2009 wrote: »

However, it CAN work if you're in the right frame of mind to do it and are 100% sure you will not start spending on the credit you have freed up by consolidating. On my second time around consolidation has worked very well for me and I am saving £200 pcm in interest charges.

This is of course valid. But the other issue with consolidation is even if you do have a handle on your spending, replacing cards with loans puts you on a treadmill of having to meet a payment schedule which includes substantial repayments. So the £200 in interest you save can easily go on higher monthly payments. If you end up with the boiler and the car breaking within a few weeks of each other, your certainty on not spending on freed up credit begins to look quite shaky.

his_missus

mildredalien wrote: »

Consolidation often leaves people with 'empty' credit cards or overdrafts but still no real handle on how much they are spending each month or where the problems in building debt are - which mean that over time the temptation to spend more on those cards or reach back into your overdraft can lead to even more debt.

It CAN work - if you get rid of all other avenues of credit and are very sure about how you can live within your means until the consolidated debt is paid off.

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This is so true. First time I consolidated my CC debts I had great intentions but ended up spending on them again, then extending my loan to clear the CCs and then again. It's been a vicious circle but on July 1st I finish paying the loan but still have £3000 on my CC to clear. It's taken me 7 years to pay off the loan that was originally for £2000 but ended up at over £8000!

It is all about learning to live within your means, consolidation doesn't help with this, it's just a quick fix.

If you can move the CC debt to a 0% card that could help. Try to reduce your OD monthly. Look for ways to reduce your spending or up your income (loads of ideas on this site especially in the forums)

Good luck xxx

System

DVardysShadow wrote: »

This is of course valid. But the other issue with consolidation is even if you do have a handle on your spending, replacing cards with loans puts you on a treadmill of having to meet a payment schedule which includes substantial repayments. So the £200 in interest you save can easily go on higher monthly payments. If you end up with the boiler and the car breaking within a few weeks of each other, your certainty on not spending on freed up credit begins to look quite shaky.

Good point. If you consolidate onto a loan with fixed repayments each month it does not give you much flexibility if, as DVardysShadow says, something unexpected crops up. On my second time around I consolidated all of my credit cards onto one interest-free card and closed all the other cards down. As it's a credit card I can be flexible with how much I repay each month.

The general consensus though is that if you don't know what you're doing (and I'm sure most of us didn't when we first started out on our debt-free journeys) then consolidation is probably not the best idea. For every one person on this forum that it has worked for, there are probably ninety-nine that could tell you a horror story (me included).