To consolidate or not?

kcmatt79

I have unsecured debts of around £17k. This is nearly all on 0% credit cards (apart from a 2k overdraft & 3k loan).Anyway, I don't earn a massive wage (about £1200 per month) and the £453 repayments every month are getting difficult on top of mortgage etc. I find that some months I am having to resort to using my credit cards to pay for things like car tax etc which I haven't properly budgeted for. My partner and I are also considering moving soon and this might mean bigger mortgage repayments. I don't think I could cope with this. I wondered whether I should consolidate them into one loan. I know I will end up paying back a hell of a lot more than I do now (considering I don't pay interest on a lot of it). I have done a quick search and have seen a loan rate for 6.5% from Sainsburys. This would have a monthly repayment of £221 over 7 years. I just wanted to know what people thought. Is it a bad idea? Should I try to keep to what I'm doing and know that I'll be debt free in about 3 years, or make life easier for myself but extend my debt repayments to 7 years?I will be very grateful for any advice. I feel like crying - I have £30 to last me 3 weeks!

chilli_dog

What do you do for a living? is there any chance you can earn any more?

I delivered kebabs for nearly a year when we needed the cash.

I think the loan idea sounds good but will you be kicking yourself when you have paid all your debts and then realise you have 7 years to pay your loan?

How is your credit rating?

kcmatt79

Hi, thanks for replying. I'm a teacher and I already do tutoring on the side to earn a bit of extra cash. To be honest, I don't have a lot of spare time after this. Despite what most people think, we actually work very long hours!! My credit rating is OK. I don't really know. I haven't been refused anything recently (I have 6 separate credit cards and a loan). I know what you mean about the 7 year thing, I keep thinking "I'll be 35 by then".

Dylanwing

Tough one! Long-term it's better not to, but can you really survive the next 3 years if you don't? And as for "I'll be 35 by then" - Thats NOT old!!!!

glitzy

Hi

you have come to the right place - i posted much the same question whether to get a loan or credit card. I did neither and re-jigged the cards i had and used balance transfers.
your best bet is to post your SOA (statement of affairs) your monthly payments to everything - you will find people will give you excellent advice, also there is a site WhatsTheCost.com, where you can snowball, and it will tell you who to pay each month and how much, plus when your debt will be paid off!
good luck

kcmatt79

Thanks, which forum should I post my SOA on?

firesidemaid

hi there

having spent a lot of time on these boards over the last year or so, i think the overwhelming general answer to your question is : don't consolidate!

if you pay it all off at 0% you will pay off approx. your 17k. if you take out a loan @6.5% over 7 years, i dread to think how much more you will pay in interest.

also, the other temptation once you have £200+ more a month is to spend it on unneccessary stuff that you could have used to pay off your debts.

have you posted an soa (list of all incomings and outgoings)? be honest with yourself about what you really need. some people on here might not even have £30 for the next 3 weeks.

have you cut all unneccessary spending, reduced all bills to a minimum, used quidco for insurance, take lunches to work and reduced your food bills? have you stopped the spending that led to the 17k?

can you car boot and/or ebay stuff? do online surveys - there is also a thread on here about making extra money. as a teacher there are probably things like essay writing/marking and online question-answering.

do you think you should take on extra mortgage interest while you owe this money?

these are not my thoughts/comments, but just something to help you think about the pros and cons.

list an soa and you will be amazed at how the folks on here will help you. you may even find that you can reduce your current spending so you can pay off your debts even quicker.

firesidemaid

post it on this one - either on this thread or start a new one.

southern scouser has a sticky at the top of the DFW board that you can use as a template x

kcmatt79

Hi, thanks for your comments. I know exactly what you mean. I'm just worried that I'm not being realistic about what I can afford. I will put my SOA on here soon. I have it all on an excel spreadsheet. I do try to keep my spending to a minimum. I don't think I've ever been particularly frivolous; I was out of work for a while and ran out the huge credit card balances then. After that I was struggling on a low salary and stupidly carried on spending more than I earned.It's a tough call about consolidation. I just don't know if I can go on with these payments for 3 years.

firesidemaid

http://forums.moneysavingexpert.com/showthread.html?t=107280

this is the link to the sticky (i hope)! there are lots of people who have consolidated on here who will say they wished they never had and who got back into a similar position again.

if you can start with the lowest (amount) debts and try to overpay them off one at a time, it will help to motivate you. have a look at some of the other debt diaries - they really can be motivating.

well done you for keeping your debts on 0% anyway x

kcmatt79

Oh thank you, I was just searching for that! My repayments are my minimum payments, so I can't get them any lower/make overpayments at the moment.