Newbie, scared, confused and needs help, please!

Girls4

Well, not new to debt, as now in my late 30s I have had some sort of debt since my late teenage/ Uni years. New to wanting to sort it once and for all.

So, the current position is that my DH and I have £25k in credit card debt. We know we need to re finance some how to get rid of it.

Today, somewhat foolishly, I know think, I took to doing an online tesco loan application for the full £25k. It was refused as their experian search showed one of us had a higher level of borrowing than they like. So, now we have a big fat red x on our credit scores, at least this is how I understand it!

Anyway, I m looking for advice really on how we can become debt free by refinancing. We both work, me part, him full. We have four kids, oldest is 8. We are in an odd position in that we rent the house we live in but own (mortgage) on another property we rent out. We don't gain anything from that; the resnt covers mortgage etc.

Our wages are enough for us to pay the bills, do the shopping, run the cars, and to cover the CC payment each month, but obviously the balances aren't going down. I would love to have one payment each month to cover them all, but can not see how we can do this. I rally wish I hadn't have been impulsive this morning! Any advice, greatly appreciated. Thank you.

Red-Squirrel_2

Don't worry about the credit search, it doesn't show as a rejection on your file, just as any other search.

That said, I probably wouldn't go applying for anymore loans. The chances of you getting one for 25K are slim to none so you'll just end up with more searches.

If I were you, I'd forget about 'consolidating' the debt for now and look at getting it reduced asap so that as the numbers go down you'll have more options for 0% BT cards etc. You could apply for one 0% now, and see what happens, but don't go mad and apply for loads or keep trying if you get a rejection!

There's a site that's often linked to on here that will help you to create a 'statement of affairs' or SOA, and also that will help you calculate how to 'snowball' your debts so that you're paying them down in the most efficient, cheapest way. I don't have the links but I'm sure somebody will be along soon who does!

immoral_angeluk

Girls4 wrote: »

So, the current position is that my DH and I have £25k in credit card debt. We know we need to re finance some how to get rid of it.

No, you don't. Usually it just delays the inevitable and makes a bad situation worse. Don't do it unless it's your absolute only option.

Today, somewhat foolishly, I know think, I took to doing an online tesco loan application for the full £25k. It was refused as their experian search showed one of us had a higher level of borrowing than they like. So, now we have a big fat red x on our credit scores, at least this is how I understand it!

The search on your credit file won't make any real difference. But how much debt you have vs your income, how much have access to and how you have managed it are huge factors in how creditors 'score' you.

Anyway, I m looking for advice really on how we can become debt free by refinancing.

Short answer, DON'T.

We both work, me part, him full. We have four kids, oldest is 8. We are in an odd position in that we rent the house we live in but own (mortgage) on another property we rent out. We don't gain anything from that; the resnt covers mortgage etc.

Any equity in the property? Have you considered selling up if so?

Our wages are enough for us to pay the bills, do the shopping, run the cars, and to cover the CC payment each month, but obviously the balances aren't going down. I would love to have one payment each month to cover them all, but can not see how we can do this. I rally wish I hadn't have been impulsive this morning! Any advice, greatly appreciated. Thank you.

Consolidation loans nowadays are simply a nonstarter. Creditors have wised up to the fact that it just becomes a spiral. You either need to look at reducing the interest, or reducing the payment to something more affordable, reducing your expenditure, or increasing your income.

Have a look at doing a full income and expenditure so you can see exactly where you stand.

PollyPrissypants

I'm with everyone else. We 'consolidated' and ended up doubling our debt. Having a look on these forums will show you that 99 out of 100 people on here consolidating end up with more debts. Unless you're super, super disciplined you'll go the same way. It's so tempting to treat the credit cards as 'back up cash' and before you know it, you've spent on them again so you're paying both them and the loan.
It's painful at first but budgeting is the only way to go. Look at everything you're spending money on, post a soa on here if you like and let's see where you can make cuts. For us the easiest way to do it was switching gas, electric and broadband then cutting our food budget. Doing this magically freed up nearly £300 a month to throw at our debts.

sourcrates

Hi OP,

Your post is reminiscent of many on this forum, who, rightly or wrongly, believe they can borrow there way out of debt, i have to say it rarely goes well for most of them, including myself at one point.
The temptation to use the lines of credit again proves to be too much in most cases, and they end up 12 months down the line, with twice the debt, and don't know what there next move will be.

If you can, it would be a much better move to throw as much spare cash at your debts as you can, if that is not possible, then some sort of debt management plan may work for you, speak to National Debtline, they will be able to give you free, impartial advice on your available options.

I would STRONGLY advise against a consolidation loan, for the reasons stated above, also the interest rate on any loan you were approved for, would be high, due to your existing credit levels, possibly the only loan of that sum, you could get, would be a secured loan, which would be an even bigger mistake, my advice ? steer well clear.

Mort

Consolidation loans can be dangerous, there are a number of people on this forum who have had trouble with them - I am one.


You can snowball your debts, this works out which debts you should target first with any spare cash you have.

Working out your spare cash can be the hard part. Have a look at this page on budgeting. There are other ways such as You Need A Budget which has a thread on this forum.

You can also post whats called a Statement Of Affairs (SOA), this can then get commented on by other members (format it for MSE).

andyfromotley

You won't get a 25k loan.

Follow the above advice, post an SOA and explore your other routes to debt freedom.

FatVonD

Just in case you haven't read the other million times I've posted the following on here (it really is the only useful bit of advice I have to give!

If you have one card with a lower balance than the others (and they all have similar interest rates) throw everything you can at that one to get it paid off quickly as it's very likely, once you have a zero balance, that they will then offer you a 0% balance transfer deal to get your business back again. You can then move the next lowest onto it and rinse and repeat until you have it all on 0%.

Even at 0% you may not be bale to pay it all off by the time the 0% deals end so always try to keep just one credit card with a zero balance. They will send oyu new offers every couple of months so hopefully you can move stuff again before it reverts to the default interest rate.

Remember though that you can't transfer balances within the same 'group' (eg MBNA and HSBC) so that may effect your order of paying off too.

Remember also to cut up the cards, you don't need them to do balance transfers, just the statements, so that way you can't use them again.

Like others on here I have a consolidation loan, I also have £2,000 on a 0% deal (card cut up) but I currently have a months worth of shopping on a Tesco card that I kid myself is okay because it's paid off every month but it's still debt because, if I were to become unemployed tomorrow, I couldn't actually pay it off. If it helps in any way as a cautionary tale re cutting the cards up, until 3 months ago I'd had a zero balance on it for at least a year but one bad month and it was too easy to use it.

rockm87

You could always make a start on a proper budget..there is a reason you have got into debt and never got out of it, that needs to be addressed!

alot of people start with a statement of affairs, just to see where the money is going EXACTLY and how to pay off debt, and live within your means without the use of credit cards for 'unexpected' costs.

There is no 'quick' or 'easy' solution, but it all starts with working out whats going on http://www.stoozing.com/calculator/soa.php

its_maths_not_magic

Like everyone else, I'd advise against a consolidation loan. What usually happens is you end up in the same spending patterns that got you into trouble the first time. Personally, I'd never get one for myself because I know that I'd just blow through that as well and just end up in the same place, except with more debt.

I would strongly advise working out what you want to do about your debts as well as why you are in debt. For us, it was living above our means, so we moved somewhere cheaper. If you find out what is causing your debt, you can change so you are no longer spending more than you earn. I hope that helps.

phoenixx

I cannot agree more with those who have advised against consolidation loans. We tried that when we had £25K debt and look at our signature...At its worst we ended up pushing £100K of debt in 2011. Don't end up where we did - nip it in the bud now. Confront your spending habits, do SOA and deal with it now! I know it's tough but we nearly lost our house and possibly our marriage over the debts. You can do it! :A