Considering getting a Consolidation loan...

kolin_2

bsms1147 wrote: »

That's correct.

For most people snowballing should be the way they go, rather than consolidation.

Ok, so i believe i will change payments on CC1 to 200 and CC2 to 150, and get rid of CC1 asap, try and use as much as possible left at the end of the month after all payments, to go on CC1

for myself, the OD, although very annoying to be nearly at it every month, is only costing £20/mth.

[Deleted User]

kolin wrote: »

however I assume by snowballing you mean paying of the 24.9% first, and then use what gets freed up to pay off the 16.6%?

Pretty much.

If you put all the details of the 2 loans, into the Snowball Calculator (link below), it will tell you exactly how much to pay, per month, to each loan, to pay it off as quickly and cheaply as possible.

You can also change the top figure, to find out how much quicker/slower (and how much less/more interest) you will pay, depending on how much you commit to your debts.

http://www.whatsthecost.com/snowball.aspx

kolin_2

bsms1147 wrote: »

I'd agree with this. Having savings is costing you money.

In any normal circumstance I would agree with you, however, having savings for us, is a mental boost, as we don't live in a particularly nice area and want to leave asap (however the rent that we pay is very very good), and certainly don't want our child growing up here. The fact that we have some savings (only 2K of which is mine) is one of the few things keeping us mentally sane!

This is why I am both saving a small amount every month, and paying off larger amounts of the debts than I need to. The savings may also be necessary when the OH maternity pay is down to SMP only.

If we didn't have children, I would certainly be paying a lot more on debts than savings, but i also want to look out for my little one.

kolin_2

Bedsit_Bob wrote: »

Pretty much.

If you put all the details of the 2 loans, into the Snowball Calculator (link below), it will tell you exactly how much to pay, per month, to each loan, to pay it off as quickly and cheaply as possible.

You can also change the top figure, to find out how much quicker/slower (and how much less/more interest) you will pay, depending on how much you commit to your debts.

http://www.whatsthecost.com/snowball.aspx

Thats an amazing tool. :eek:

[Deleted User]

HappyMJ wrote: »

You have savings....use them and pay off the debt.

I agree.

Increasing the amount you pay to the CCs, from £300pm to £600pm, will reduce repayment time to just 14 months (down from the current 27 months), and reduce the interest to just £644, compared to the current £1,333.

Once the CCs are cleared, you will then have £600pm to put toward savings.

RAS

You have £900 spare capacity on the lower rate card already.

If you can be very very disciplined you can slowly transfer the debt to the lower rate card.

Pay a large bill that would be paid out of normal expenses with the lower rate card, then use exactly the same amount from the normal expense account to pay off the high interest card.

That way you still owe the same amount but have transferred £900 to a lower rate of interest.

Should enable you to pay off the high interest card quicker.

[Deleted User]

sourcrates wrote: »

Consolidation loans are a complete car crash, I would say most people who take one out, to settle existing credit, end up taking that credit out again, long before the consolidation loan is settled, thus doubling there debt, and continuing the spiral.

Or, they take up an offer to refinance the loan, to reduce the monthly payments, thereby resetting the loan to (or in some cases beyond) the original repayment period.

To my eternal shame, I did that twice turning a 5 year loan into a 10 year one.

FireWyrm

In the meantime, much as all this talk of snowballing and strategy is important, it is equally important to fix the underlying problem - which is, inefficient use of what resources you do have. I realise this is a lot to get your head around, but if you dont address this problem first, the next time you hit an 'unplanned adversity', you will reach for the credit card and you'll be right back where you started.

I and most serious DFWs would recommend https://www.youneedabudget.com. I strongly recommend that you download the trial this afternoon and make it your business to watch all the walkthroughs and tutorials to learn how it works. Once you have that programme working for you, you can be sure that every penny of your income is being spent efficiently. I realise that the programe costs money (there are periodic flash sales on Steam for instance) but I can almost guarantee that it will change how you manage your finances. My guess is that you are burning money every month of frivolities and stuff you dont even remember buying. This will make you stop that, and also, will help you arrange things so that you are not labouring under a massive weight of frugality which, like crash dieting, never lasts more than one month. You need a sustainable and reasonably comfortable plan and this will help you arrange your priorities into needs and wants, rather than just indiscriminate spending. If you follow the principles, you will not only get out of debt with the aid of the snowball method, but will be able to know for sure that your finances are on track and working for you.

FireWyrm

Bedsit_Bob wrote: »

To my eternal shame, I did that twice turning a 5 year loan into a 10 year one.

Three times in my case. I'm still effectively paying an original loan I took out over 10 years ago.

[Deleted User]

kolin wrote: »

In any normal circumstance I would agree with you, however, having savings for us, is a mental boost, as we don't live in a particularly nice area and want to leave asap

A very expensive mental boost.

What you are earning in interest on the savings will be tiny, compared to what you are paying in interest, on the debts.

If you put the money you are saving, toward the debts, you could be DF in about a year (and avoid around £700 in interest), at which point you could put £600pm (£7,200pa) into your savings.