To consolidate or not

January2015

If you search the DFW forum for the word 'consolidate' you will find a number of threads asking very similar questions to yours. The answers are overwhelming that it is a not a good idea. This is a forum comprised {mostly} of people who have found themselves in difficulties with the debt levels they have accumulated. Many of them (me included) have learnt the hard way that consolidating may seem like a good option, but it is a quick fix which most often brings increased, longer term debt.

I hope you take the advice and guidance of others who have made the huge mistake of consolidating debt and don't do it. If you have to option to transfer some/all of the debt to 0% credit cards - that may be an option for you - but again, I was the queen of 0% transfers and whilst initially I was good and didn't spend again on the old cards, it didn't take long before the debts began to build again. I didn't 'budget' properly to clear those 0% cards within the interest free period either. When I took the offers, I thought I had it all planned and everytime I did this (or consolidated) I thought "this is it, I am going to do this and be debt free at the end of this arrangement". The only person I was kidding was myself (and dragging my husband along into my fantasy world). I needeed to learn to manage within our monthly income. That meant planning and sticking to a realistic budget, saving for regular expenses such has MOT, car insurance etc., saving for an emergency fund.

The last 21 months has been a huge learning curve for us. We are still learning, but we are getting there.

sourcrates

Speaking as another one who "consolidated" more than once, I echo Januarys post above.


Consolidation is only beneficial to the bank providing you the loan.

datlex

OP you have not said yet what your debt free date would be if you did not consolidate.

AnotherJoe

You will have £3600 net income per month between you, give or take.
With £1,000 a month of that, you can pay this off in less than three years, not a very unambitious six. You only mention spending £450 which is a very cheap rent. Is that a guaranteed property of some sort? Council?? If so I'd be very tempted to stay there and not buy, but save.
Anyway forget getting a mortgage with a whacking £31k of loans, whether its one or many so you'll have to plan on getting shot of it first.

lovelylass_2

Hi everyone - thank you for your feedback. I agree that the consolidation seems a quick win - bit like winning the lotto to clear off the debt. As you can work out my partner and I are useless when it comes to money. The money has accrued from when he was made redundant and we used cards to live off until he got a job - however, this was approx. 9 months late. We then continued in the keeping up with the jones' lifestyle. We are both ashamed of this debt but more so because we want to be able to give our son the best start in life. We would have loved a second child but agreed it wouldn't be wise given the debt. our dreams are to get married and own our house. we currently live in housing association house - run by a charity which is secured but not in the best area, hence the desire to move.

January2015

lovelylass wrote: »

Hi everyone - thank you for your feedback. I agree that the consolidation seems a quick win - bit like winning the lotto to clear off the debt. As you can work out my partner and I are useless when it comes to money. The money has accrued from when he was made redundant and we used cards to live off until he got a job - however, this was approx. 9 months late. We then continued in the keeping up with the jones' lifestyle. We are both ashamed of this debt but more so because we want to be able to give our son the best start in life. We would have loved a second child but agreed it wouldn't be wise given the debt. our dreams are to get married and own our house. we currently live in housing association house - run by a charity which is secured but not in the best area, hence the desire to move.

Post a full SOA (links in posts above) and the lovely folk of this forum will give you good advice on how to move forward towards clearing your debts.

lovelylass_2

We are just hoping our son gets into a good secondary school, as the ones by us are terrible. It would also be good for him to be with his friends but again we have screwed this up!

so here goes the SOA - I've always been too frightened to face doing this hence the delay.

Salary Adult 1 £1717
Salary Adult 2 £1600
Child Benefit £82.80 (always keep this separate to pay for son's birthday and Christmas)

outgoing
Swimming club £20.50
Netflicks £7.49 - going to cancel
Rent £450
Debt management £20 (old debt management - partners from 15 years ago)
Water £51.81
Gas £70.00
elec £56.00
Tv licence £12.12
Sky £73.68 (reduced now to £50)
Mob phone 1 £75.60 (reduced now to £45)
Mob phone 2 £56.50 (reduced to £45)
Mob phone 3 £9.99
Home insurance £23.91 (cheapest for shopping around)
Gym £9.99 (being cancelled despite being used)
Council Tax £89
Spec savers £15.50
Car Service plan £23.08
Household appliance insurance £59.98 (2 policies and ageing items)
Car insurance £56.30 (again shopped around and this was cheapest)

Debt
Family loan £200 pm (£4400 outstanding)
Santander loan £552.73 pm (£3791.70 outstanding)
Asda visa £250 pm (£7578.61 outstanding)
Santander visa £96.08 pm (2959.17 outstanding)
Barclaycard visa £179.64 (£7496.14 outstanding)

Overdrafts
Santander £1000 £5 account fee
Natwest £3000 £16 account fee £47 interest and £6 OD usuage
Halifax £1000 £15 account fee and £22 OD fee

Total Income £3317
total outgoing £2570.90

this does not include food, hair, petrol (although that's about £100 pm) dog insurance (got to get it)

AnotherJoe

lovelylass wrote: »

We are just hoping our son gets into a good secondary school, as the ones by us are terrible. It would also be good for him to be with his friends but again we have screwed this up!

so here goes the SOA - I've always been too frightened to face doing this hence the delay.

Salary Adult 1 £1717
Salary Adult 2 £1600
Child Benefit £82.80 (always keep this separate to pay for son's birthday and Christmas)

outgoing
Swimming club £20.50
Netflicks £7.49 - going to cancel
Rent £450
Debt management £20 (old debt management - partners from 15 years ago) Can you dump this? What are they doing for you?
Water £51.81
Gas £70.00
elec £56.00
Tv licence £12.12
Sky £73.68 (reduced now to £50) Get rid
Mob phone 1 £75.60 (reduced now to £45) These are still way too high
Mob phone 2 £56.50 (reduced to £45) As above
Mob phone 3 £9.99 Why three phones???
Home insurance £23.91 (cheapest for shopping around)
Gym £9.99 (being cancelled despite being used) Take the dog for a jog
Council Tax £89
Spec savers £15.50 Contact lenses? Otherwise, seems very high, whats it for?
Car Service plan £23.08
Household appliance insurance £59.98 (2 policies and ageing items) That is £720 a year !!!!!! I do not spend £720 a year on appliances. I doubt many do.
Car insurance £56.30 (again shopped around and this was cheapest)

Debt
Family loan £200 pm (£4400 outstanding)
Santander loan £552.73 pm (£3791.70 outstanding)
Asda visa £250 pm (£7578.61 outstanding)
Santander visa £96.08 pm (2959.17 outstanding)
Barclaycard visa £179.64 (£7496.14 outstanding)

Overdrafts
Santander £1000 £5 account fee
Natwest £3000 £16 account fee £47 interest and £6 OD usuage
Halifax £1000 £15 account fee and £22 OD fee

Total Income £3317
total outgoing £2570.90

this does not include food, hair, petrol (although that's about £100 pm) dog insurance (got to get it)

You could easily get to five hundred a month spare especially if you paid down the overdrafts asap. Two of them could realistically be gone by Christmas. And make it a frugal Christmas.

lovelylass_2

AnotherJoe wrote: »

You could easily get to five hundred a month spare especially if you paid down the overdrafts asap. Two of them could realistically be gone by Christmas. And make it a frugal Christmas.

Spec savers is my other halfs contact lenses - he is suspending it for a couple of months

insurance is appliances which most are coming up to 11 year old but can cancel one of the policies. so that's £28 less

phones are contracts so can only reduce which is what we have done - 3rd mobile is son's which he uses for when he is walking to and from school and at the time was the cheapest deal with the phone as could not afford to buy phone separate - he is tagged onto my account.

the overdrafts are the smallest but difficult ones to pay off (that's what my head is saying as its easy to dip back into)

enthusiasticsaver

lovelylass wrote: »

We are just hoping our son gets into a good secondary school, as the ones by us are terrible. It would also be good for him to be with his friends but again we have screwed this up!

so here goes the SOA - I've always been too frightened to face doing this hence the delay.

Salary Adult 1 £1717
Salary Adult 2 £1600
Child Benefit £82.80 (always keep this separate to pay for son's birthday and Christmas)
outgoingCan you reduce the amount for birthdays/Christmas to £50 and put £32.80 towards the debt or other part of your soa?

Swimming club £20.50
Netflicks £7.49 - going to cancel
Rent £450
Debt management £20 (old debt management - partners from 15 years ago)
Water £51.81
Gas £70.00 this is quite high. Can you get it cheaper elsewhere?
elec £56.00
Tv licence £12.12
Sky £73.68 (reduced now to £50) Cancel?
Mob phone 1 £75.60 (reduced now to £45) move phones to sim only when contracts finish?
Mob phone 2 £56.50 (reduced to £45)
Mob phone 3 £9.99
Home insurance £23.91 (cheapest for shopping around)
Gym £9.99 (being cancelled despite being used)
Council Tax £89
Spec savers £15.50
Car Service plan £23.08
Household appliance insurance £59.98 (2 policies and ageing items) £720 per year would probably cover 2 new appliances. I never bother with these.
Car insurance £56.30 (again shopped around and this was cheapest)

Debt
Family loan £200 pm (£4400 outstanding) Can this be postponed until you more on top of other debts?
Santander loan £552.73 pm (£3791.70 outstanding) How many payments left and what interest rate?
Asda visa £250 pm (£7578.61 outstanding) Interest rate and can it be moved to interest only?
Santander visa £96.08 pm (2959.17 outstanding) as above?
Barclaycard visa £179.64 (£7496.14 outstanding)as above?

Overdrafts
Santander £1000 £5 account fee
Natwest £3000 £16 account fee £47 interest and £6 OD usuage
Halifax £1000 £15 account fee and £22 OD fee

Total Income £3317
total outgoing £2570.90

this does not include food, hair, petrol (although that's about £100 pm) dog insurance (got to get it)

How much are you reducing the overdrafts if at all?

Focus your attention on the highest interest rate charging debt and pay it off first while paying minimum on the others. Snowball and find out debt free date by using snowball calculator.