New Debt Free wannabe

deeveedee

Hi everyone, I've just joined the forum after seeing what great advice others have received!

My situation is that I have a mortgage and accept that, £303 per month, in a decent position there.

My wife and I bring in £2200 per month after tax between us and have about £1500 going out per month. We have £1100 owing on credit cards and £6000 on student loans with student fees of £2500 per year. We have no other unsecured debt and are planning on taking a £10,000 bolt on loan for wiping out all debt (other than mortgage) at a 2.4% rate which will mean we have no debt other than £360 per month going out to our mortgage on a fixed term.

I have detailed our income and expenditure below.

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1750
Partners monthly income after tax....... 570
Benefits................................ 180
Other income............................ 0
Total monthly income.................... 2500

Monthly Expense Details
Mortgage................................ 303
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 70
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 30
Mobile phone............................ 50
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 350
Clothing................................ 20
Petrol/diesel........................... 90
Road tax................................ 35
Car Insurance........................... 55
Car maintenance (including MOT)...... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 16
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment......................... 30
Holiday................................. 0
Emergency fund....................... 0
Laundry............................... . 0
Union fees.............................. 0
Total monthly expenses............ 1302

My question is whether there's another suggested way to consolidate our loans etc so we have just one payment. I like the idea of the bolt on loan despite the fact it lowers our equity, it does leave us with a fixed manageable figure which we can keep focused on and are confident we are not spending beyond our means.

Suggestions and advice welcome!!
Thanks

Tixy

How long do you have remaining on your mortgage term? How much interest will you pay on the £10,000 secured loan over the term of the mortgage?
Will taking on additional secured debt push you in to a higher ltv bracket and make it harder to switch to a new mortgage deal in the future or get a the most competitive deals?

Are the student loans income contingent loans? or the old mortgage style loans that you make the repayments on yourself?

What do you intend to do with your your surplus cash each month? (£2500-1302-57 additional mortgage -208 student fees).
If you save the £933 a month what interest rate will you earn on your savings)?

From what you have said about your circumstances it doesn't really sound like you need a consolidation loan or need to be spreading your debts over such a long period of time.

If you pay off the card debt within a couple of months then you will only have the student loans to repay anyway, and the student fees as they become due. I don't really see the benefit of having 1 payment.

ifstar

You could do with posting the full SOA which has all the debts and their percentages etc.

Just looking quickly at your SOA though, gas/electricity are high. Telephone (land line) is high and mobile seems a bit high too.

You will end up paying more if you stick your debt onto your mortgage so you need to weigh up that too. Also you need to recognise how you spent £6000 on credit cards so that you don't clear them off then start spending on them again and get into the same situation down the line.

ShootForTheMoon

Hi, and welcome!!
You're certainly in the right place for some great advice!!

Have to agree with Ifstar on the SOA re: bills - have you tried to negotiate these down a bit or switch providers recently??

Other than that your SOA seems reasonable, so I'd think carefully about the strategy of a bolt-on consolidation loan... For the reasons already set out above.

Could you not challenge yourselves to cut back slightly and pay off your debts in this way?? I have recently payed off my student loan as my last debt, and the feeling of achievement is amazing!!
This way you would create good financial habits for future saving so you will not need to accrue more debt?

Yes, it may not be a quick fix, and you will have to be more aware/active in managing your savings & payments - but ultimately would it be a better option??
Just throwing it out there?!

Whatever you decide, best of luck with it!! x

AlexLK

Wow, you seem to have your finances in order.

Just a few points:
-Do you need to spend £50 per month on mobiles?
-Your groceries and petrol seem quite low for a family of 5, are you sure these are accurate?

By student debt do you mean from the SLC? If so, I wouldn't worry about that at all.

Edited to Add: Your wife's income seems rather low, can she perhaps look towards another job or taking on a further p/t income?