Debt consolidation?

Readytomakechanges

Help.

We've been burying our heads in the sand for far too long and after a shock this week where we totally ran out of money and had to raid the piggy banks for pennies for food, I'm finally trying to sort the money situation out.

I've made a list of all incomings and outgoings and looked at ways to maximise the former and reduce the later.

I'm not particularly savi with loans etc. and wondered if there was a way of consolidating the two loans that we're currently repaying to make the monthly repayments lower and perhaps pay less overall.

Here is a breakdown of our current loans and mortgage:

Total owed to Sainsburys = £9207.3
Annual interest rate: 6.3% Original amount of credit: £10,000. Statement opening balance = £11,754

Total owed to Santander = £6396.88
Annual interest rate: 5.1% Original amount of credit: £6050.00. Statement opening balance was= £6853.80

HSBC overdraft = £2000 (unsure of interest rate)

Natwest overdraft = £2100 (unsure of interest rate)

Therefore total owed = £19704.18 in loans/overdraft

Therefore total monthly payments on loans = £310.13 (plus attempts to pay overdraft)

Mortgage: £48,942.21 with monthly payments of £285.60

Our credit rating is 'fair', our annual household income approx £35,000.

Any advice will be much appreciated.

Readytomakechanges

Sorry, this may be relevant: our house has recently been renovated by us so is in good condition and similar houses on our road have sold for £80-£85,000 recently. Just to give an idea of house value.

nomoneytoday

Generally consolidation isn't a good idea, unless the APR is lower, and the source of the original debt is changed.

Snowball the highest APR debts first

Readytomakechanges

Sorry, this is probably a silly question, but what does "Snowball the highest APR debts first" mean?

rockm87

Here is the snowball calculator: http://www.whatsthecost.com/snowball.aspx

plug your numbers in and it will give you an estimate of how long it will take to pay off and how much it will cost.

It means as you pay off balances you have more available money to throw at the remaining balances.

I wouldn't bother with debt consolidation, paying debt with debt is rarely a good idea.

andyfromotley

Hi ready, welcome.

good news, The majority of your debt is lowish interest rate. Although your overdrafts will be expensive! Your have a decent income and lowish housing costs.

Bad news - you have aquired a big stack of debt there. How did you manage this? If it was just da to day living then it sounds like you r spending was way out of control. It will take some paimful changes to get that under control. Your debt took some time to accumulate and will take some time to get rid of. Consolidation or some other financial trick isnt likely to be the answer. spemding less than you earn, (a lot less) budgeyting and paying down your debt is usually the way forward.

The best way forward is to fill one of these in, and posti it on here. This will give you and us a general picture of your finances and the best way forward.
http://www.stoozing.com/calculator/soa.php

You are in the right place and there is NO debt situation that cant be resolved.

andyfromotley

Sorry about the typos - New Laptop!!

Vikipollard

Snowball, don't (try to) consolidate!

You say your household income is £35k, and your existing debt is £19.7k. The general rule of thumb on here is that lenders seem to balk at debt taking you past 50% of income - and you are already there. You would effectively have £39.4k of debt as they cannot know that you will use a new loan to pay off the existing debt.

Echo what other posters have said - and fill out an SOA so that the goodly people on here can look for opportunities to save.

HappyMJ

Readytomakechanges wrote: »

Help.

We've been burying our heads in the sand for far too long and after a shock this week where we totally ran out of money and had to raid the piggy banks for pennies for food, I'm finally trying to sort the money situation out.

I've made a list of all incomings and outgoings and looked at ways to maximise the former and reduce the later.

I'm not particularly savi with loans etc. and wondered if there was a way of consolidating the two loans that we're currently repaying to make the monthly repayments lower and perhaps pay less overall.

Here is a breakdown of our current loans and mortgage:

Total owed to Sainsburys = £9207.3
Annual interest rate: 6.3% Original amount of credit: £10,000. Statement opening balance = £11,754

Total owed to Santander = £6396.88
Annual interest rate: 5.1% Original amount of credit: £6050.00. Statement opening balance was= £6853.80

HSBC overdraft = £2000 (unsure of interest rate)

Natwest overdraft = £2100 (unsure of interest rate)

Therefore total owed = £19704.18 in loans/overdraft

Therefore total monthly payments on loans = £310.13 (plus attempts to pay overdraft)

Mortgage: £48,942.21 with monthly payments of £285.60

Our credit rating is 'fair', our annual household income approx £35,000.

Any advice will be much appreciated.

The interest rates aren't too bad. It's unlikely that debt consolidation would save much.

You could try for a 0% on balance transfers credit card but you've got to never use the card you just paid off ever again. As you've got no food in the house this would be very very tempting so not recommended but if you have no emergency fund and no access to credit I'd only consider applying for a card with a very small limit just to pay down some of the overdraft.

It doesn't reduce the payments as you'll still be paying pretty much the same percentage of the balance just to a different provider.

12_month_challenge

Hi

I totally agree with the advice you have been given Snowballing is the best way to reduce your debt.

I consolidated a few years back but obviously didn't make it work in my favour. Hence the reason I am on here.

I am not saying you would do the same but it is so easily done

I have started with the snowball technique and feel so much better about my debt.. I now have a plan in black and white which I intend to stick to like glue.

I am paying all of the minimum payments and am putting any extra I have towards one debt at a time. Then I will tackle one more and so on.

Although I have a high amount of debt I am not so stressed about it so much any more as I am paying my debts monthly and my snowball shows me my debt free day. :T

Good luck

Readytomakechanges

Thank you so much for all of the replies.
I will look into snowballing.
In the meantime, I'm going to have to look at ways to seriously decrease our spending and overhaul our attitude to money. I'm really anxious/stressed about the whole thing.