Should I consolidate my debts?

ElleWoods

I've got approx. £13,600 of debt spread over 2 credit cards and my student loan in the following way:

HSBC card (0% until April 08) - £2,900
Virgin Card (15.9%) - £4700
Student Loan (approx 6%) - £6000

My question is, should I consolidate all these onto one loan to pay it off over five years? The reason I'm considering this is because I tend to pay only the minimum payment, or just a bit more, every month on the cards so don't seem to be denting the amount I owe. I haven't even started paying my student off yet as I never seem to catch up with the minimum amount you need to earn to have to start paying if off, so keep deferring it. I think that having a set amount to pay every month will make me pay it. And it goes without saying that I wouldn't get any more credit cards of any description!

Is this a good idea?

Thanks,
CC
x

Little_Miss_Winner

Hiya CC, :hello:

The general consensus re consolidating, is usually a no-no reason being is that one for you have consolidated, and are apying back a monthly figure, you tend to go back to the train of thought that had you using your credit cards in the first place. And more than one of us on these boards have been there done that, got the tshirt!:rolleyes:

It's an easy option to consolidate.

So, you never really learn from the experience of trying to become debt- free, in effect all you are doing is shifting debt from one place to another.

That said though, I am sure consolidation works out for some people, but you have to be 100% sure that you never ever take a card or loan on ever again.

What payments do you make at the moment?

ElleWoods

Thanks for your reply, I currently pay approx. £60-£70 to the Virgin card which is just over the minimum payment and around £50 to the HSBC one, which is about £15 over the minimum payment.

I know what you're saying with regard to getting stuck back in the CC trap again even with a loan to pay off. I just don't know how to deal with my debt and whether I'll ever pay it off and be debt free - it all seems so slow to pay off.

Would I be better looking into one of those debt management plans, or would that be even worse, as it would take even longer to pay off?

How do I work out my debt free day based on my current debts?

Sorry there's so many questions, I'm relatively new to this.

CC x

danielleindebt

i hate consolodation - mainly because i never did and ended up with more loans.

not sure what you could do tho but im sure someone will point you in the right direction

Little_Miss_Winner

Hiya CC,

I'm afriad i dont really know too much about the debt management plans, just snippets what i have read on here.

theres a great snowball calculator that you need to use here;-
https://www.whatsthecost.com/snowball.aspx

Have a play about with it, the method behind it is that you use your payments to pay off the debt with the higestest apr. Then when thats paid off, you concentrate on the next etc......

It's pretty easy to go through and enter your figures.

Give it a go, it's an eyeopener, if you need any help or want me to do it for you, 'gis a shout.

hugs for now
x

Little_Miss_Winner

I currently pay approx. £60-£70 to the Virgin card which is just over the minimum payment and around £50 to the HSBC one, which is about £15 over the minimum payment

Do you pay anthing each month to the student loan?

Dan29

The interest rate on student loans is only 2.4% if that helps with your decision; no point consolidating that into a higher rate loan IMHO.

ElleWoods

No, I don't pay anything towards the student loan - I graduated 10 years ago and still have it hanging over my head. Trouble with it is they want all or nothing, so I either have to pay it off at over £100 pm for 5 years I think it is, or pay off the full amount. Due to this I defer every year.

I'm sure my SL is a higher rate than 2.4%, although I can't seem to locate the paperwork at the mo to double check it.

CC
x

Little_Miss_Winner

Have you ever posted an soa CC, that way you may be able to see areas when you can find extra dosh without too much effort to throw at your debts.

ElleWoods

Yes, I posted SOA at the start of April as I worked out that I had £147 more going out every month than coming in. I've since managed to cut that amount down a bit but still don't have any spare cash whatsoever to pay off any more of the debts. Wish I did!

CC
x

Little_Miss_Winner

Did you look at the snowball calculator?