To borrow or not to borrow?

ben-dover

redpete wrote: »

No it didn't, you just kinda decided to apply and got the loan. (which noone thought was a good idea when you asked for advice about it.)

I willing applied for the loan, but couldn't believe it was so easy to get it, it took less than 5 mins and that's probably a push if I'm honest..

Anyway, I have the loan I'm relatively happy, apart from I can now see my massive debt all in one place, before it was lots of small debts so didn't seem as bad!

macman

What is the point of consolidating if you are paying more interest per month? What is the possible benefit, apart from the dubious psychological benefit of having one creditor rather than ten?

Mara_uk7

Close them, but keep one back for an emergency. Ask them to reduce the limit to around £1000 which will cover you for any GENUINE emergency.

chesky

macman wrote: »

What is the point of consolidating if you are paying more interest per month? What is the possible benefit, apart from the dubious psychological benefit of having one creditor rather than ten?

The benefit was -and is - that the OP is lazy. So he really couldn't be bothered to sit down and work out a strategy for paying off his credit cards. So he'd rather pay more just to avoid doing a couple of hour's work.

dealer_wins

Lets hope the OP can be the rarest of the rare people and make it through 5 years without racking up further debts!

ermine

ben-dover wrote: »

Well a quick update, I didn't want to go down the new loan route but it kinda just happened!

I was sat in a cafe and applied via my mobile banking app, no less than 5 mins later I had 22.5k sitting in my bank account! less than 24 hours after that I had spent 22K 'paying off' credit cards, loans and overdrafts!

I see yet another debt-slave dig himself deeper into debt-slavery. Just kinda happened eh, the road to hell and all that.

So you've just idly chosen, of your own free will, to pay a higher interest rate for your past consumer spending? Because it saved you the trouble of thinking?

Well done you. I'd lay money on the expectation you will have revolving credit card debt before that loan is paid down.

The way you deal with debt is suck it up, cut down your spending and live below your means for a couple of years. It's not fun, it's not pretty but it works. Actually choosing to pay more on your debt takes you even further away. But each to their own, if that's how you like your debt divvied up, good for you. Just don't deceive yourself saying this is progress, or 'paying it off'. Because it isn't.

ben-dover

Mara_uk7 wrote: »

Close them, but keep one back for an emergency. Ask them to reduce the limit to around £1000 which will cover you for any GENUINE emergency.

Probably will do, as I really don't need this amount of open credit!

chesky wrote: »

The benefit was -and is - that the OP is lazy. So he really couldn't be bothered to sit down and work out a strategy for paying off his credit cards. So he'd rather pay more just to avoid doing a couple of hour's work.

The benefit of the internet is that you can sit behind a PC and call someone lazy, Just for your information I work part time (read as 24 hours per week) in an office, and I’m also self-employed probably doing another 40-50 hours a week more on good weeks, but less on bad weeks! And on my slow days I’m normally sorting paper work, doing quotes etc, but don’t let the fact that you don’t know me let that get in the way of you making a ‘off the cuff’ comment about how little effort you presume I've done in working through stuff, or thinking about what implications this has on me right now and in the next 24-36 months.

The fact is I’ve juggled credit cards and loans around for over 9 years and in that time my credit card debt has risen, only blaming my self here! And with my income being so varied a loan may not be the cheapest option in the long run but it’s a lot easier than having to dip into my ‘tax’ money to make payments on bills etc!

dealer_wins wrote: »

Lets hope the OP can be the rarest of the rare people and make it through 5 years without racking up further debts!

You never know! I do actually have a small plan, just because I’ve taken out a loan doesn’t mean I can’t pay it back earlier

ermine wrote: »

I see yet another debt-slave dig himself deeper into debt-slavery. Just kinda happened eh, the road to hell and all that.

So you've just idly chosen, of your own free will, to pay a higher interest rate for your past consumer spending? Because it saved you the trouble of thinking?

Well done you. I'd lay money on the expectation you will have revolving credit card debt before that loan is paid down.
The way you deal with debt is suck it up, cut down your spending and live below your means for a couple of years. It's not fun, it's not pretty but it works. Actually choosing to pay more on your debt takes you even further away. But each to their own, if that's how you like your debt divvied up, good for you. Just don't deceive yourself saying this is progress, or 'paying it off'. Because it isn't.

Lets get this straight I NEVER said that I was paying off debts, look back, I know I still have the debt and it’s probably going to cost me more in the long run. But at this moment in my life it’s easier for me and you know that you always pay for convenience, so yes, I’m willing to pay for that convenience of only having one payment.

And I agree 100% about cutting my spending, which we have done, but my wifes wages have dropped nearly £300 a month so it’s had very little impact..

Now, anyone that wants to call me lazy, idle, stupid, taking the easy way out then you’re more than welcome to come and take a look at all the different costing, spreadsheets, I’ve done over the years. Keeping a check on my credit file etc . I happened to know what my loans were costing me per day in interest, how much I’ve paid to transfer balances across to a 0% cards etc time left on cards, I even did my own snowball calculator, the more I actually looked into it it made me realise I needed to do something about it before it really got out of hand.

I could have reduced my debts quicker without the loan, yes, but I also know that 2 bad months and I need to start spending on my credit card, which is what pushes my debt back up! So you’re welcome to make all the uneducated comments you like because the truth of it all is that I’m the only one who knows the full story and my reasons for not cancelling the loan.

Good Day.

moxter

ermine wrote: »

Just don't deceive yourself saying this is progress, or 'paying it off'. Because it isn't.

I think some of the reactions have been very OTT. The OP is fully aware that the interest rates are higher and that it will mean taking longer to pay the debt off - so has made a rational, informed decision. If you are the sort of person who feels swamped with a large number of small debts and is struggling to keep on top of the organisation of it all, it's not totally unreasonable to simplify things, as long as that decision is informed.

The OP has said he is able to keep up with the payments, so this doesn't smack of a decision made in desperation. Yes, undoubtedly this can't help a credit rating, but if someone feels there's a risk of innocently forgetting to make a payment, that would hammer the credit file far more. There is something to be said for peace of mind and a feeling of calm that a certain amount will disappear from your account on a certain date of the month rather than various amounts dribbling out - fair enough for people who are superb budgeters and are comfortable with things moving on lots of different days but that's not for everyone.

I don't think it would be the decision I'd make personally, but the hyperbole from some people on here has really been special.

moxter

To add: the real danger, of course, is the additional credit limit that has now been applied. If times are tough, or the OP fancies a holiday/kitchen/car/other whim, then the level of debt could suddenly leap. It WILL need additional discipline, and only the OP knows how they will react.

badobsession81

Bedsit_Bob wrote: »

So open another bank account (with no card or cheque book, so you aren't tempted to dip into it on a whim), transfer all DDs for the debts to it, then set up a SO (for the amount you wish to put toward your debts) from your existing account, to your new account.

This is how I do it (except mine are bills, but the principle is the same), and it works .

If you don't want to move all the DD, do the reverse, and set up a new account, into which (the day after payday), you transfer enough to cover your monthly household expenses, leaving all remaining cash in the "debt paying account".

Whichever account you use for paying the debts, don't have a card or cheque book for it, but do get a paying in book, so you can pay in any "spare cash" you find you have, from time to time.

Cannot recommend this approach enough - I use it for bills. My wife and I pay a fixed amount into a bills account. This is then our budget, and we've got a spreadsheet that records our monthly outgoings so that we can make sure in >= out. As we try to pay everything monthly help budgeting, we can be certain about most things and make high estimates about things that vary e.g. Virgin Media TV/phone etc. (Out bills for this only tend to fluctuate by +/- £10 anyway. Things like food shopping and petrol transfer out into a separate account via standing order (fixed budget amount) and this separate account is where we pay for day to day joint living on food and petrol. The joint bills account never gets touched except for DDs so we have peace of mind that it needs only light touch monitoring.

Hope that helps