Considering DMP - SOA advice please

AliceBanned

Hi Catriona

Thanks, I'll add the extra info this evening.

I have tried the MSE tool - just now tried it again and it says I have 80% chance of a Capital One card with 0% BT for six months. No other balance transfer offers (well 10% chance of acceptance which is really a 'no').

As I already have 2 Cap1 cards I am not sure whether the tool is factoring this in or not.

catriona79

Ok, great. Will have a look in a bit.

Re card, it's difficult to tell... Maybe someone else on the cards forum might know? It's prob worth asking. 6 months at 0% could really help you save some £ on interest.

If 0% not an option, I think it would be good to move onto low interest. It's always a saving!

catriona79

Ok, here are my first thoughts. If it was my debt, I would do the following:

1. Use the mse tool to find out if you can get a low interest loan.
2. If you bank with FD I think they have personal loans at around 4%? I'd get that and pay off the cards and then close the cc accounts

3. I'd leave these be:

Barclaycard - £3200 - 6.9% - for 2 years
Co-op - £2380 - 6.9% for next 2 years

4. I'd think that this needs to be moved onto a new rate v soon...
Capital One - £840 - 0% until Jan 2016 then 34%

5. Lower the cost of borrowing on these:

Capital One - owe £900 - 34%
Halifax - £3100 - £21.9%
First Direct - £1990 - 19.9%
CU loan - £199


So, really, it's all about trying to borrow the same amount £6200 + £840 (Cap one almost up)
And paying less for the pleasure. Also, paying the difference you'd have to pay towards interest, towards the actual debt itself instead.

At the same time, it is important to make sure that you don't spend on the cards again, so it's vital that you cancel them. Take it from me, I didn't and run up debts again.

Have you tried the snowball calc?

This is from mse:

Cheapest loans for £7,500 - £14,999

Sainsbury's* 3.4% rep APR (Nectar cardholders only, 1-3 year term)
Sainsbury's* 3.5% rep APR
Marks & Spencer* 3.5% rep APR
Clydesdale*/ Yorkshire* 3.5% rep APR
Zopa* 3.5% rep APR (2-5 years)
Zopa* 3.6% rep APR (1 year)
Cahoot* 3.6% rep APR
Tesco Bank* 3.6% rep APR (Clubcard holders only)
Tesco Bank* 3.8% rep APR

All significantly lower than your current APRs.
But this is effectively consolidation - only you know whether you have the discipline not to overspend.

So, there are potential options. What are your views in consolidation and the possible consequences? Have you tried applying for low cost loans before?

I'll check up on you tomorrow.

AliceBanned

Hi Catriona

Thanks for taking the time and doing this. I will see what I can find but I don't seem to be eligible for cheap credit of any kind at the moment (apart from the Cap one card) otherwise I would have already switched some over. At least I have managed to get 2 low rates. I don't want to damage my chances further by applying for anything at the moment.

Noddle seems to be fairly accurate and it doesn't show me as being able to get a low rate loan. I think they are harder to get than credit cards. As I bank with FD I could try them perhaps but I am very doubtful as I tried a while ago. I think I need to pay down a bit more (perhaps even put some on a credit union loan as this is never reported to credit files unless defaulted) to make it appear that I have not nearly maxed out everything. On the other hand I am close to paying the CU loan off so it would give me £70 pm more to throw at the cards. The Halifax cc is a big problem and I have spoken to them about it - I have had the debt for longer than the others so the interest is around £50pm at the moment, only a bit more than I have been able to pay until this month. I paid £150 on it this month.

Also re FD I have the credit card with them and they are profiting from that, so why would they offer me a loan?! Probably not.

I like the idea of consolidation and I think I am getting more disciplined. I find I am able to not spend and enjoy that feeling of getting on top of things a bit more, and that is more important than spending.

AliceBanned

catriona79 wrote: »

Ok, great. Will have a look in a bit.

Re card, it's difficult to tell... Maybe someone else on the cards forum might know? It's prob worth asking. 6 months at 0% could really help you save some £ on interest.

If 0% not an option, I think it would be good to move onto low interest. It's always a saving!

Thanks, I will ask on the cards forum.

AliceBanned

I am only 20% eligible for loans according to MSE tool. I have tried £5000 and £8000. This has been the case for several years, which is why I have used credit unions.

AliceBanned

I keep deliberating on whether to get a credit union short term loan - 42% apr but charged daily and they do payday style with options to pay off in one or two months with no crazy charges for the latter. EG £300 paid over two months would cost me about £14.


This could then pay off some of the other CU loan, releasing the savings which I could use towards Cap 1.


However as Catriona for one has said, some people don't have the discipline. I am not sure whether I am in denial if I do this.


I have got in that state where I can't think properly to decide what to do. I know I just really want to make headway and feel better and that I am paying the cards off and getting to a more positive place. Am I too impatient?

Verbatim

Probably! But that's natural. Would there be much point in taking out anther cu loan to pay off an earlier one? Lower interest perhaps?

AliceBanned

Verbatim wrote: »

Probably! But that's natural. Would there be much point in taking out anther cu loan to pay off an earlier one? Lower interest perhaps?

I can only access the savings I have in the earlier one if I pay it off.

catriona79

AliceBanned wrote: »

Hi Catriona

Thanks for taking the time and doing this. I will see what I can find but I don't seem to be eligible for cheap credit of any kind at the moment (apart from the Cap one card) otherwise I would have already switched some over. At least I have managed to get 2 low rates. I don't want to damage my chances further by applying for anything at the moment.

Noddle seems to be fairly accurate and it doesn't show me as being able to get a low rate loan. I think they are harder to get than credit cards. As I bank with FD I could try them perhaps but I am very doubtful as I tried a while ago. I think I need to pay down a bit more (perhaps even put some on a credit union loan as this is never reported to credit files unless defaulted) to make it appear that I have not nearly maxed out everything. On the other hand I am close to paying the CU loan off so it would give me £70 pm more to throw at the cards. The Halifax cc is a big problem and I have spoken to them about it - I have had the debt for longer than the others so the interest is around £50pm at the moment, only a bit more than I have been able to pay until this month. I paid £150 on it this month.

Also re FD I have the credit card with them and they are profiting from that, so why would they offer me a loan?! Probably not.

I like the idea of consolidation and I think I am getting more disciplined. I find I am able to not spend and enjoy that feeling of getting on top of things a bit more, and that is more important than spending.

Hello Alice,

Hope you are well?

I agree with you that on this journey we explore about ourselves and our attitudes to money. I know what my triggers for spending are, and like with most people, it's not about not knowing the principles of budgeting, but that I give in in "sod it!"-moments and spend emotionally. Working out the trigger is the first step to getting control.

Have you got the 0% card yet? It's always 6 months of paying no interest, it will go towards something else.

It is perverse that those who need those deals the most, are finding them hard to get, there was an article about it in the guardian a few days ago.

I remember the discussions we had in your earlier diary with you and ZTD where we were saying that the flat has crippled you financially and that perhaps moving away from it would be a better option. Your travel to work seems like an ordeal, and is London worth it.
Maybe this is something you need to consider, if you would like to achieve a level of comfort (rather than spend years paying debt off). I know we are all prone to stick with what we know, but emotions aside, this would be the best course of action, in financial terms.

Have you worked out when your debt free date is, if you carry on paying at the current rate?

How long will it take you to completely pay off your flat, are you able to do that before your retirement? I know it's looking far ahead, but it's an important question to ask. I don't know how much money you have invested in your flat, but is that enough to buy somewhere cheaper and maybe let a room out? Think of what your life would be like if you had a few hundred disposable each month - you could save and do a weekend in London each month, and probably be able to do more while you were there. If I were you, I'd just like to see a change and have money for a nice holiday every year and treats every month. Think of the life you could have.

If you are not going to move and need a mortgage, have you considered a DMP?

Also, have you been looking on any of the personals finance blogs?

Just my penny worth.

Ps Understand the impatience. Hence, to avoid frustration, the advice re relocating. I remember very well the hamster wheel feeling I had before I rented my spare room out - I was just breaking even, every month, and that affected my mood. Not sure how you are emotionally with the debt situation, but reading between the lines you too have some low days.