Is it better to consolidate?

Pop_Sox

Hi all, I'm new to posting on here although have been lurking reading posts for a while.

I have a good income, but never seem to have any money due to my past irresponsible spending on credit, i.e. holidays, using credit for groceries, buying things I really didn't need - I don't seem to have anything to show for it, but up until now have been doing the ostrich bit.

I am not in arrears with any of my credit, which I suppose is the good news - but it doesn't seem to go down (obviously, as I pay the minimum payment). I am wondering whether it would be best to go for the consolidation option - and then I can cut the cards up and start again living within my means?

What I earn / owe:

Income: £2240 take home pay monthly
Mortgage: £68,000 on property worth £175,000 (paying £450/month)
Savings: £800

I run a car which is paid for, running costs are about £80 a month inc. insurance, breakdown cover, servicing, tax and petrol.

I owe £15,000 on five credit cards and two overdrafts. The amount I pay monthly on these (currently paying the minimum is £335 a month).

There is one adult and one dependent child in the house.

I am very grateful for any advice on the best option for me.

Bestthingsinlifearefree

Hi PS,

welcome to MSE :beer:

In answer to your qu. No it is better not to consolidate. It is better to pay debt back.

Consolidation is just moving debt around and NOT paying it back.

Best,

Bestthingsinlifearefree

with your income you should easily be able to pay down your debts.

You need to begin a spending diary. what is the interest rate of all those credit cards? Can you post the individual cards / rate / amount etc.

You should be able to live on about £1200 per month and pay £1000 per month of the cards and clear them in just over a year.

You need to budget. No meals out, holidays, treats, new clothes etc etc for 12 months and you could be debt free.

Your income is not the problem it is your spending that needs to drastically be cut back on and that comes down to motivation and discipline.

CLAPTON

you need to post a full SOA i.e.

a. list of income and a total
b. a detailed list of spending (include mortgage and secured debt but exclude unsecured debt)
c. a total of spending as above
d. now you can see how much you have to pay debt monthly by forming income minus spending
e. a list of unsecured debts
i.e. debt amount, minimum monthly debt repayment, APR for CCs
and amount outstanding, monthly payment and number left to pay for loans
f. a total of unsecured debt and of monthly unsecured debt repayment


do you have PPI on any of the debts.. in general PPI is poor value and expensive.

Pop_Sox

Hi, the cards are: (figures rounded to nearest £100)

Egg Card: £4200 - 16.9% APR - credit limit: £7000
Capital One: £1800 - 15.9% APR - credit limit: £2000
Virgin Visa: £1900 - 15.9% APR - credit limit: £2000
Smile Visa Gold: £2900 9.9% APR - credit limit: £3000
Marbles: £2300- 15.9% APR - credit limit: £5000


Smile overdraft: £600
Abbey overdraft: £1400

am currently paying back about £400 a month on the above debts.

Bestthingsinlifearefree

Pop_Sox wrote: »

Hi, the cards are: (figures rounded to nearest £100)

Egg Card: £4200 - 16.9% APR - credit limit: £7000
Capital One: £1800 - 15.9% APR - credit limit: £2000
Virgin Visa: £1900 - 15.9% APR - credit limit: £2000
Smile Visa Gold: £2900 9.9% APR - credit limit: £3000
Marbles: £2300- 15.9% APR - credit limit: £5000


Smile overdraft: £600
Abbey overdraft: £1400

am currently paying back about £400 a month on the above debts.

ouch.....they are horrendous interest rates.

Could you get a low interest rate CC and balance transfer the debt onto that?

But as I say the main strategy must not be moving the debt around / consolidating it, but reducing your spending and paying off the debt.

As Clapton says post an full SOA.

Let me guess do you have the sky full package £42 ?

The key is cutting your spending and to identify where we can save we need a full SOA.

Keep posting.

bandraoi

Consolidation only works if you don't build up the debt again.

Tackle your spending first - do up an SOA, cut back where you can and budget as much as possible.
Follow your budget for AT LEAST three months, make sure the change is genuine and you're motivated to stick to it.

Then if it's working and you trust yourself enough consolidate the loan into a loan that
a) is at the best possible interest rate and
b) you can make overpayments on without penalty

Pop_Sox

Hi, no I don't have the full sky package LOL whatever that means.... although I have almost the full package. I don't go out very much, so like the movies and kids channels, and consider what I pay good value for the entertainment. Also I don't go on holiday much, as we live in a tourist area of the west country so usually in school holidays just go to the beach locally.

My main problem is that I have money coming in from lots of sources, and it comes in dribs and drabs, and I am absolutely crap at managing money, I really need some advice as according to my SOA I should have almost £1000 a month to spare, and sometimes I end up scratching around for change for petrol to get to work!!

Also as I am already overdrawn it seems as soon as my money arrives into my bank account it gets eaten up straight away and I am back overdrawn.

I am a mature student, I also work part time 18 hours a week so I get working tax credit. I get childcare help from the university as they pay a higher percentage than the tax credit childcare help.

I have tried to put in as much as I can, I realise I am in a lot better position than a lot of people to pay back my debts, I just don't know where to start.


All figures are monthly

Income:
Bursary (tax free) £800
Bursary childcare contribution) £228
Part time earnings £600
Working and child tax credits £390
Child Maintenance £240
Child benefit £78

TOTAL INCOME: £2336 per month


Outgoings:
Mortgage: £422
Contents/building insurance £28
Life insurance: £15
Child care: £285
Council tax: Exempt as full time student
Electricity: £60
Gas: £5
Water: £25
Telephone & internet: £35
Mobile: £15
Car Insurance: £28
Car Tax: £15
Car expenses (servicing, breakdown cover etc.) £15
Petrol: £80
TV Licence: £10
Sky: £28
Pet insurance: £8
Child’s activities: £20
Groceries: £150
Socialising: £60
Family outings/holidays: £80

TOTAL OUTGOINGS: £1384 per month




UNSECURED DEBT
Egg Card: £4200 - 16.9% APR - credit limit: £7000
Capital One: £1800 - 15.9% APR - credit limit: £2000
Virgin Visa: £1900 - 15.9% APR - credit limit: £2000
Smile Visa Gold: £2900 9.9% APR - credit limit: £3000
Marbles: £2300- 15.9% APR - credit limit: £5000
Smile overdraft: £600
Abbey overdraft: £1400

am currently paying back about £400 a month on the above debts.


SECURED DEBT
£68000 (property worth £175000) Nationwide 2 yr tracker 5.62% - £422/month

Pop_Sox

Bestthingsinlifearefree wrote: »

ouch.....they are horrendous interest rates.

Could you get a low interest rate CC and balance transfer the debt onto that?

I think I would have a problem borrowing money/getting a credit card because of my current commitments. I could probably remortgage with a status mortgage as I have a fair bit of equity in my property, is it worth looking into this?

Bestthingsinlifearefree

Remortgage to get a lower interest rate on your mortgage. Good idea.

Remortgage to stick your 15K CC debt onto the mortgage, very, very bad idea. You are then converting unsecured debt into secured debt, plus you are not dealing with your budgeting / spending issue, PLUS you are not paying the debt back just moving it, plus over 25 years you would pay back more interest..................so bad idea;)

So according to your SOA you have about £500 (after paying your debt repayments ) going missing every month.

Quite easy to find where you are overspending, from today keep a spending diary and record every £ and penny you spend in it.

I saw nothing for birthday presents,clothes, hair cuts, christmas presents in your SOA ?

Did you have no haircuts, christmas presents, birthday presents,new clothes in the last 12 months ?;)

Pop_Sox

Bestthingsinlifearefree wrote: »

I saw nothing for birthday presents,clothes, hair cuts, christmas presents in your SOA ?

Did you have no haircuts, christmas presents, birthday presents,new clothes in the last 12 months ?;)

I have my haircut about once a year, have long hair so just have it trimmed. My son has about four haircuts a year at a fiver a time. Birthday presents I counted in with the groceries - I usually buy stuff like that from Asda with the weekly shop. Clothes I suppose you could add in £20 a month, I normally get them from George too, mostly for my son - I don't buy myself much these days - I have a wardrobe full of clothes from my credit card spending!