To consolidate or not

Moneymash

I am another one for who consolidation didn't work, as I kept the cards and ran them up again! This is how I got myself into the situation below in my signature.

The loan repayments would allow you more money each month 'to play with' however even if you save this surplus the interest on a savings account is still going to be lower than the loan interest.

Five years is a long time, what are your long term plans, are your jobs safe, are you in good health, do you have any plans to buy a house, car etc, as others have said consolidating requires discipline, get struck with one of life's curve balls and you're scuppered!

FireWyrm

On the other hand...if done right, consolidation loans CAN work. Unfortunately, it takes iron will and a few little tricks like those suggested by HappyCamel.

I've done something very similar.

I have a bills account into which wages go, and bills come out. The debit card for that is not carried routinely and is locked in a box along with the credit card which used to have the debts on it.

I have a nationwide account which houses a consolidation loan and into that, the monthly payment of £200 is sent from the bills account via DD on the first of the month. It's a current account for a reason. The reason is, that whilst I cant overpay the loan, I can overpay the account and when the two balance in approximately a year, I can then close both the account and the loan.

I then have a Natwest current account which holds food and fuel spending. It takes a DD from the Bills Account on the first of the month. Anything left on the last day of the month gets shunted into a savings pot attached and the new tranche of £400 pops in on the 1st. It has a debit card but no overdraft facility.

I have two more savings accounts for different purposes. One takes a DD each month for Christmas next year and another takes a DD for 'incidentals' such as birthday presents, kids shoes etc.

The credit cards that were incorporated into the consolidation loan were cut up. I have one credit card which is still 'live' for emergency purposes but I dont know the pin since I didnt bother to open it. This means that if I really need the credit card, i can ask for a pin to be issued, but that means I have to phone up and ask for one. It will take 5 days to arrive and therefore, there is no chance of cheating. The credit card was removed completely from Paypal, Ebay, Amazon and Itunes.

By strict budgetting, creative use of what I have and determination to be out of this once and for all, it is possible.

Shelldean

we started many yrs ago with a consolidation loan for £1500, our last one was for £15,000 :eek::eek::eek:

However our last loan payment is going out next January, and whilst we still ahve credit card debt, we're currently managing the card debt plus the loan debt.
Once loan repaid ( and we get a reward at end for not repaying early) the money we normally pay to the loan will be put towards the highest % debt, to reduce it faster, I mean after all for the last almost 3 yrs (LBM) we've survived without that money so we can go it bit longer.

If i recall correctly we'll be debt free in appox 18mths.
(maybe sooner as OH has got some redundancy money coming plus we'll be over paying)

Been a long hard slog, and we certainly didn't help ourselves by consolidating so many times and then respending on the cards.

Consolidation can work but you have to be SO very strict about not respending!!

Shelldean

Should add the main reason we've not consolidated again is due to the fact we get 25% of the interst paid returned to us if we dont clear the loan eary which is what consolidation would do.

Yes we've used credit cards again, but as we've been much more sensible since LBM, we've been able to get 0% deals and juggle, so this is actually being chipped away at too.

Takeaway_Addict

I have consolidated twice

Once I whacked it back onto the card, this time I am paying it of very quickly and closed all other accounts.

You can consolidate but you need to have your wits about you

DD265

Another person here who consolidated and ran up the same amount of debt again in a very short period of time.

This time, I am chipping away at the loan and the overdraft, and the credit card balance is on a 0% card.

neuromancer

Shelldean wrote: »

Should add the main reason we've not consolidated again is due to the fact we get 25% of the interst paid returned to us if we dont clear the loan eary which is what consolidation would do.

I've seen mention of this in a few places. It's not something I was informed of in my case, but it would be pretty neat - where's the best place to find out if that's something I'm entitled to?