Considering getting a Consolidation loan...

[Deleted User]

FireWyrm wrote: »

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

Fingers crossed, we have both learnt the lesson, and won't ever do it again.

kolin_2

Well thanks for the advice people,

I'm going to alter the priorities and amounts on paying the cards, however i'm still going to keep saving bits, and although to you people that may seem like a stupid idea, I have to think about my family now, and if I were to use my savings to pay off a massive chunk of the debt tomorrow, and were then to lose my job the day later, i'd be in real trouble. At least this way even if the worst were to still happen, i could support my family for a couple of months.

FireWrym : My guess is that you are burning money every month of frivolities and stuff you dont even remember buying.

I had to take a step back at this comment. As I do not deal with frivolities, I have learnt my lesson many years ago regarding loans and cards and propping up failing business. For example my frivolities this month have stretched to :
1 x Takeaway (the first in about 4 months) £24
1 x lunch at work £5
1 x cash withdrawal £20
1 x Prescription £24
That is my frivolities for the month, I haven't bought myself new clothes in 18 months, our last proper meal out was 5 months ago, our last holiday was our honeymoon 18 months ago. When we go away for the day, i'm always trying to save us money by making sure we make our own dinners to take. Hell, I even agonise over paying for ice-creams if we go to the seaside.

So although I have to understand that you people don't know the inner details of my monthly outgoings, it does rile with me when people tell me i'm being frivolous, when for the last 6 or 7 years I have been anything but.

FireWyrm

kolin wrote: »

I'm going to alter the priorities and amounts on paying the cards, however i'm still going to keep saving bits, and although to you people that may seem like a stupid idea, I have to think about my family now, and if I were to use my savings to pay off a massive chunk of the debt tomorrow, and were then to lose my job the day later, i'd be in real trouble.

Wouldnt a better thought be, that if you paid off a massive chunk of debt and you lost your job tomorrow you wouldnt have to service the debt whilst you were at the same time trying to keep your head above water. Money is easy to come by, far easier than people give themselves credit for. You could do paperounds, bar work, walking dogs, washing cars...anything to make a penny. However, if you are, at the same time servicing debt that you could have got rid of, I think you would kick yourself.

In any case, what are the real chances of losing your job tomorrow? I could get struck by lightening too, certainly possible, but not probable and that is the trick when budgeting. I dont budget for a house fire, but I do budget for a new fridge because mine is making alarming noises. You might lose your job, but far more probable is that you will continue to pay extortionate rates of interest on debt that you could so easily have slashed.

kolin wrote: »

At least this way even if the worst were to still happen, i could support my family for a couple of months.

And you could do a much more efficient job of it without the debt around your neck dragging you down and tapping what finite resources you have available.

kolin wrote: »

I had to take a step back at this comment. As I do not deal with frivolities, I have learnt my lesson many years ago regarding loans and cards and propping up failing business. For example my frivolities this month have stretched to :
1 x Takeaway (the first in about 4 months) £24
1 x lunch at work £5
1 x cash withdrawal £20
1 x Prescription £24

Barring the prescription, you have spent almost £50 that you didnt need to spend. This is the problem many people have, identifying the difference between needs and wants. You could have cooked a takeaway style meal, you could have taken sandwiches to work and I bet you cant account for that £20 in cash nor have anything much to show for it. This is what happens in life if you are not watching it. Salami slices of frivolous and unaccounted for spending that collectively add up to an awful lot of money over weeks and months. Should you continue on your 'austerity' drive, you will spend around £600 a year, money that would have got you out of debt and off the treadmill perhaps a month or two sooner. More than that, your £600 per year isnt just the headline cost, in terms of borrowing from the future (which is what debt is) you actually spent far more. If you extrapolate that £600 per year for the next 30 working years, you will have spent £18000 or if you had been wise and saved it into a pension, we would be talking about £720 a year of potential pension income. That little calculation is just what you have told us you spent this month extrapolated to one year. How about if you are not quite as frugal as you think, perhaps double it.

kolin wrote: »

That is my frivolities for the month, I haven't bought myself new clothes in 18 months,

Unless you grew out of them or they fell apart, there is little need for adults to buy 'new clothes'. The idea of 'fashion' and 'needing' this years' new clothes is one of the greatest cons of the Western world. In reality, a few pairs of jeans, a few tops, jumpers, underwear, coats and a party dress will do just fine for most of your life. How often do you wear any new clothes anyway?

kolin wrote: »

our last proper meal out was 5 months ago,

Congratulations, ours was 3 years ago. Partly, this is due to the logistics of childcare, but also to the certain knowledge that most commercial food is pretty dire and I could do better myself even whilst splashing out on some expensive ingredients. Again, going out for dinner, not necessary except on special occasions and then, you ought to be budgeting for it. Too often and eating out becomes mundane rather than an exciting treat to be savoured.

kolin wrote: »

our last holiday was our honeymoon 18 months ago.

I had 3 holidays as a child and two as an adult. Nice to have, but when you are deep in the stinky stuff, holidays ought to be the very last thing on your mind. Debt is a 'my hair is on fire' flaming emergency and should be tackled with the same urgency, focus and speed.

kolin wrote: »

When we go away for the day, i'm always trying to save us money by making sure we make our own dinners to take. Hell, I even agonise over paying for ice-creams if we go to the seaside.

Good, you're getting the idea. What would however be a better approach would be to nix the debt, put a proper budget in place and make room in that budget for those sorts of expenses. You can only do that once you stop paying someone else for the privilege of borrowing money from your future.

kolin wrote: »

So although I have to understand that you people don't know the inner details of my monthly outgoings, it does rile with me when people tell me i'm being frivolous, when for the last 6 or 7 years I have been anything but.

The lies we tell ourselves huh. Been there, done that. It wasnt until I really started paying attention that I realised just how many times the 'odd' takeaway happens and the 'throw the cat another goldfish I'm having it because I'm worth it' moments happen in shops.

I dare you to keep a spending diary for one month - just 30 days, that's all, but you have to note every single penny spent and on what. Cash withdrawals should be fully itemised and accounted for. At the end of that 30 days, look back at it and ask yourself, did I really want to spend that and was it actually worth it? Did I truly derive £25 worth of pleasure from that greasy takeaway? I think the answers might surprise you.

BTW, we're not being 'hollier than thou', we genuinely want to help, but as the saying goes, you can only lead a horse to water.

onamissionEU

Oh Firewyrm.... Your last post is so 100% spot on that I felt I had to comment!


For some reason humans try to convince themselves that things are more rosey than they are - maybe its a comfort thing. It applies also to people insisting on savings when they are in debt - it makes no sense!


Why on earth would any SANE human borrow from Peter, paying 15% interest and then go and lend that money to Paul at 1%...
That is what the OP is doing - borrowing from a CC (his debt) to lend to a bank (his savings).
If I suggested you lend me money at 1% interest, and you do not "have" the money, would you then borrow that money from my wife at 15% to lend me? You would look at me like some sort of idiot, wouldn't you... You would class me as a fool, classify me as insane.
How about if I told you that this arrangment would provide you with a safety net incase of job loss or financial emergency? If you were still listening at this point you would be calling the emergency services saying some nutter is harrassing you! You would want me sectioned, so crazy is the notion.... And quite rightly so.


OP, this is exactly what you are doing! Wake up & smell the coffee. Listen to the people here who have been there, done it. Over-ride that human desire to "see things how you want to see them" and look at the hard facts - you are paying a heavy price to lend someone money....

silentkiller

I thought a loan was the way to go to cut down my payments and the best thing that ever happened to me was Santander turning down my loan appeal (despite it initially being all positive). I am so glad I didn't get a loan and went down the DMP route to clear my debts (even if I've only just started DMP). In my experience I would probably have used the loan incorrectly and I've read somewhere that the general rule of thumb is to look at a loan as getting more credit (no matter what it's for) and that if you are trying to be debt free taking out more credit is not a good idea.

This all from experience though so you may find it easier but I've seen the general consensus seems to be against CLs.

Ilona

Excellent post FireWyrm. Spot on. :beer:
Ilona

dave030445

Are you still using the cc?

moohound

FireWyrm wrote: »

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

Yep been there and done that, I thought I was "freeing up" money - nope I was digging myself into the ground.