Best option to go for to reduce outgoings - advice please

lsatdown

This is my current status:

Santander loan
£1154 outstanding
£169 p/m
Ends 04/2015

Sainsburys CC
Balance: £2519
APR: 21.9%
Interest: £51 p/m
Paying minimum payment

Barclaycard
APR: 19.9%
Balance: £5969
0% BT on £4463 ends 05/2015
Interest: £20 p/m

HSBC CC
Balance: £400
APR: 19%
Paying minimum payment, £20 p/m


Do I:

1. Get £10k loan at 8.9% to clear all of the above at £205 p/m over 5 years
2. Get new 0% CC to transfer some of the above, and a loan to cover the rest?
3. Other?

I need to reduce monthly outgoings so the loan would fix that, however would it be the best solution?

2bak860

Thanks for sharing lsatdown!

I'm not a credit card expert user, but have you checked your credit rating on Experian at all? Would be worth finding it how good it is and whether there are any small things you can do to improve your score.

I'd be interested in seeing what others suggest here!

~Beanie~

You don't say what you earn but with £10K of debt already, you are unlikely to get a loan for another £10K. Lenders can not guarantee that you will use the loan proceeds to repay existing debt and so will look at your overall debt amount being £20K.

Million_Percent

If you do go for a consolidation loan make sure you close the credit card accounts as soon as they are paid off.

The general feeling on these forums is that consolidation loans don't work. I did one five years ago and immediately closed all the CC accounts. It took 4 years to pay off but it worked for me. Just make sure you aren't over optimistic about how much you can afford to pay back each month. At the last minute I added an extra year to the term of my loan and I'm glad I did. My advice would be to work out what you think you can afford then add an extra year onto the loan.

Edit to add: A consolidation loan won't work if you haven't resolved the problem that caused the debt in the first place. You need to have put together a meticulous and realistic budget plan that allows you to live within your means and pay down the loan. You need to track your spending and review your budget continually. Living beyond your means will only result in more debt.

PinkPoppies

You might find the snowball calculator useful to work out the cheapest way of doing things, a brilliant tool to have a play about with- http://www.whatsthecost.com/snowball.aspx

When I read the title of your thread I was expecting a question about reducing household outgoings generally... but actually given most of your debt is on credit cards I think perhaps trying to shave some money off other outgoings wouldn't be a bad idea?

Lots of far more knowledgeable and experienced people than me on here who I'm sure would willingly help you pinpoint savings that could be made if you posted an SOA?

Moneymash

I took a consolidation loan way back in 2008, but failed to get rid of my cards and ran up debts on these again, six years later and I am only just debt free.

Also, you don't say why you need to reduce your outgoings, is this a change in employment, new addition to the family, or priority bills or debts you need to cover?

Kitty777

Perhaps you could post us information of your monthly household etc outgoings to see where you can save some and help you repay it faster?

Are you struggling on the money you are on now and racking up more debt?? Or can you afford everything you need atm?

Pixie5740

2bak860 wrote: »

Thanks for sharing lsatdown!

I'm not a credit card expert user, but have you checked your credit rating on Experian at all? Would be worth finding it how good it is and whether there are any small things you can do to improve your score.

I'd be interested in seeing what others suggest here!

Don't waste your money buying credit scores from Experian. Experian don't lend money so any score they generate for you is worthless.

It would be better to put together an honest statement of affairs and post it for advice on how to boost your income and decrease your expenditure.

http://www.stoozing.com/calculator/soa.php

Consolidation loans rarely work and people who take them out usually end up back at square 1 but with twice as much debt as before. To kick your debt into touch you need to start budgeting properly and work out the root cause of your debts otherwise you won't be able to move forward.

[Deleted User]

As well as respending on the cards, the other thing to watch for, is refinancing the loan.

About 11 years ago, I took out a loan, to clear 2 CCs, a store card, and an overdraft.

The loan was for five years, but it ended up taking nearly 10 years to clear it.

What happened was, my bank managers said "We can give you a loan, which will reduce your monthly payments".

The idea of an extra £50-ish in my wallet each month, sounded too good to miss.

Trouble was, it also put me back to 5 years of repayments.

I'm ashamed to say, I refinanced twice.

foxgloves

I agree with Bedsit Bob. We re-financed too........for exactly the reason Bob gives.....the extra pounds in our wallet each month, but we re-financed 3 times, because we didn't address our spending habits, still didn't bother to budget & didn't cut up the cards or ask to reduce our overdraft limits, so consolidating for us, as with so many people, was only of benefit to the bank!

moohound

Me too, consolidation was an epic fail.