Thinking of consolidating debts

[Deleted User]

Hi all
I'm a complete newbie at all this so apologies if this is in the wrong place (feel free to move)

I decided my New Years Resolution was to pay off most of my debts before I am 30; I turn 30 in May 2017.
At present I have an overdraft of £1800 (of which I am mostly at the maximum) and two credit cards with a combined total of £350. One of the credit cards is a Vanquis card.

I have been looking online and I know a few people that have taken out a loan to consolidate their debts and only have to pay one monthly payment. However it does seem that this is only generally for debts of around £5000 (correct me if I'm wrong)

I have a relatively poor credit rating and almost two years a CCJ was passed against me due to an old overdraft with Lloyds TSB.

I am self-employed and work but I am still struggling and would really prefer one singular monthly payment and a better way of measuring progress.

Thanks for any help and advice.
C

Mahsroh

I don't think a loan is a sensible idea given what is a relatively small debt (appreciate it may not feel small, but believe me it is)

To achieve your target you need to be paying off approx £250 a month plus interest. Is this affordable based on your income/expenditure?

twiggy86

Hi


The advice I have seen on here is generally against consolidating. The reason for this is that there are many people on here who consolidated their debts only to then run up further debt by still using the credit cards etc. However, if you can guarantee yourself (and you need to be completely honest with yourself) that you will close the accounts, get rid of the overdraft etc, then you have to choose an option which works best for you.


Normally people advise newbies to post an SOA, or even if you don't post it on here but just do it for your own purposes, so that you/the helpful folk on here can try and suggest areas of spending that you can cut.


Hope that helps.

[Deleted User]

Mahsroh wrote: »

I don't think a loan is a sensible idea given what is a relatively small debt (appreciate it may not feel small, but believe me it is)

To achieve your target you need to be paying off approx £250 a month plus interest. Is this affordable based on your income/expenditure?

Yeah that seems to be the general consensus RE: the debt. Feels massive to be but to lenders it wont be.

I should've said the credit cards aren't really part of my repayment goal, both have small limits and only for emergencies.
But in terms of paying back £250 per month I could probably manage that but I seem to be unable to.

Mahsroh

colinahenderson87 wrote: »

Yeah that seems to be the general consensus RE: the debt. Feels massive to be but to lenders it wont be.

I should've said the credit cards aren't really part of my repayment goal, both have small limits and only for emergencies.
But in terms of paying back £250 per month I could probably manage that but I seem to be unable to.

Then I suggest you need to look at where you're spending your money.

First question is, are you likely to be accepted a new card with 0% on balance transfers? Appreciate with a CCJ on your record that might be difficult, but that would be the first port of call as you'll eliminate the interest element.

Then look at your income / outgoings. Are there things you can cut back on or save on? To name but a few:

- Are you getting the best deal on your energy bills / home insurance/ car insurance?
- Do you have a Sky/Netflix subscription that you could do without?
- Are you over indulging at weekends?
- Do you find that you throw away a lot of weekly food shop due to poor planning?
- Do you take a packed lunch to work or do you pay for your lunch everyday?

All these things can make a huge difference. I use my last point as an example - I did the Maths one day and realised I was spending £1800 a year on food and drink whilst at work. I take packed lunches now! It's saved me a fortune!

[Deleted User]

Mahsroh wrote: »

Then I suggest you need to look at where you're spending your money.

First question is, are you likely to be accepted a new card with 0% on balance transfers? Appreciate with a CCJ on your record that might be difficult, but that would be the first port of call as you'll eliminate the interest element.

Then look at your income / outgoings. Are there things you can cut back on or save on? To name but a few:

- Are you getting the best deal on your energy bills / home insurance/ car insurance?
- Do you have a Sky/Netflix subscription that you could do without?
- Are you over indulging at weekends?
- Do you find that you throw away a lot of weekly food shop due to poor planning?
- Do you take a packed lunch to work or do you pay for your lunch everyday?

All these things can make a huge difference. I use my last point as an example - I did the Maths one day and realised I was spending £1800 a year on food and drink whilst at work. I take packed lunches now! It's saved me a fortune!

Probably won't be accepted onto a new card with 0%

Regarding energy bills, I have just moved to a new flat over the weekend and the rent is £480 per month excluding bills, i've been told over winter I'll be looking at around £100 per month for bills and summer would be around £50-70 per month for bills.

I've been considering getting rid of my netflix subscription as I recently discovered Kodi which is free to use.

Weekends is where I do tend to overindulge; I tend to lose a bit of control when out at the pubs. I don't really go out to clubs or anything anymore and I much prefer drinks at my place or at a friends but we normally do head to the pub. Not every weekend mind.

I don't tend to throw away much in the way of food waste as I normally just bung everything into a pot and make some sort of stew with food going off. I'm vegan anyway so don't buy fresh meat/dairy etc.

I try and make my own lunches most days but there are days when I forget; last week I left my packed lunch sitting on the kitchen counter of my house.

Mahsroh

colinahenderson87 wrote: »

Probably won't be accepted onto a new card with 0%

Regarding energy bills, I have just moved to a new flat over the weekend and the rent is £480 per month excluding bills, i've been told over winter I'll be looking at around £100 per month for bills and summer would be around £50-70 per month for bills.

I've been considering getting rid of my netflix subscription as I recently discovered Kodi which is free to use.

Weekends is where I do tend to overindulge; I tend to lose a bit of control when out at the pubs. I don't really go out to clubs or anything anymore and I much prefer drinks at my place or at a friends but we normally do head to the pub. Not every weekend mind.

I don't tend to throw away much in the way of food waste as I normally just bung everything into a pot and make some sort of stew with food going off. I'm vegan anyway so don't buy fresh meat/dairy etc.

I try and make my own lunches most days but there are days when I forget; last week I left my packed lunch sitting on the kitchen counter of my house.

The list was gave was just a few examples? Can you post an SOA up so we can get a better idea of where your money is going?

[Deleted User]

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1360
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1360

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 480
Management charge (leasehold property).. 0
Council tax............................. 30.25
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 7.5
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 7
Groceries etc. ......................... 80
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 105
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 10
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 7.99
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 837.74


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Vanquis Credit Card............150.......5.........39.94
Capital One Card...............200.......5.........29.8
Total unsecured debts..........350.......10........-


Monthly Budget Summary
Total monthly income.................... 1,360
Expenses (including HP & secured debts). 837.74
Available for debt repayments........... 522.26
Monthly UNsecured debt repayments....... 10
Amount left after debt repayments....... 512.26

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -350
Net Assets.............................. -350

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

[Deleted User]

I would like to note that this SOA was done based on me working a full month of Monday - Friday with no days off. I am self-employed and do not receive pay when I am off; bank holidays and last week I was off due ro moving house and in the past month I was off a week due to injury so that means no income for that week.

Mahsroh

So you are left with circa £500 a month surplus? That's definitely workable.

Couple of comments on SOA though......

£80 a month on groceries? Seems very low. That's less than £20 a week. Suggests to me that a lot of your £500pm surplus goes towards eating out and takeaways?

TV Licence - Surely you are paying for one?

Council tax - £30 a month seems low - even with single person discount. Is this correct?

All in all, I think you just need to be stricter with yourself about going out and over-indulging. Keep a spreadsheet of EVERYTHING you spend. Set yourself a weekly budget and stick to it.

I think you can save £250 a month based on your SOA but only you can make this happen!

[Deleted User]

Mahsroh wrote: »

So you are left with circa £500 a month surplus? That's definitely workable.

Couple of comments on SOA though......

£80 a month on groceries? Seems very low. That's less than £20 a week. Suggests to me that a lot of your £500pm surplus goes towards eating out and takeaways?

TV Licence - Surely you are paying for one?

Council tax - £30 a month seems low - even with single person discount. Is this correct?

All in all, I think you just need to be stricter with yourself about going out and over-indulging. Keep a spreadsheet of EVERYTHING you spend. Set yourself a weekly budget and stick to it.

I think you can save £250 a month based on your SOA but only you can make this happen!

Maybe it is a little low, but I tend to not do a 'big shop' and will go to the supermarkets and spend anywhere between £10-20 as and when, I eat a lot of vegetables and grains. Like I said I don''t eat meat and dairy etc.
I do tend to enjoy eating out and getting takeaways though especially after a night out

I calculated the council tax per month based on the fact our house falls under Band E and for the year 2015/2016 it was £1,513.97 divided that by ten and there are 5 people in this flat so that works out at £30 per month. I've literally just moved to a new flat over the weekend.

I don't own a TV and only use Netflix and Kodi to watch online.

I certainly need to be far stricter.
Thanks