Consolidation Loan Loop

Erucsbo_2

So over the years I've added up through one way or another a decent debt on credit cards.

They are affordable as I have a good salary, I pay more than the minimum each month and I can still afford life but I really would like to just get rid of them once and for all.

So basically I thought I'd apply for a loan to consolidate the cards into one loan and then just close the card accounts and have a 5 year loan that I can simply pay off.

The problem is, I tried and failed to acquire a loan due to my existing financial owing as the computer decided that it would be more than the recommended level of borrowing. This is despite wanting the loan solely to pay off those other debts.

So aside from paying off these cards over what seems like forever, what else can I do to just get a timeline at least on getting rid of them?

Advise is appreciated.

redux

If you went to the debt-free wannabe board and posted there, they would advise you that a consolidation loan might initially seem like a solution, but people can end up doing new spending on the cards as well, and the debt amount keeps increasing.

What is really needed to start with is to analyse spending, and decide where cuts can be made. Plenty of people in that section will offer help.

Once the balances are down a bit, it could be possible to use card balance transfer offers to reduce the interest, but again, keep the overall amount going down

Pixie5740

Do you pay more than the minimum payments on all your credit cards or just the one with the highest APR? If it's the former stop doing that and start doing the latter. It's called snowballing.

http://mobile.whatsthecost.com/snowball.aspx

Erucsbo_2

Currently all 4 I pay more than the minimum but I see what your saying. Perhaps I can tailor it towards paying the most on the !!!!!! APR one.

I haven't used the cards in quite a while. I used them for work, staying for long periods in hotels etc and over the years it mounted up without giving it the right consideration. Now I have no reason to use them at all so I'd love to have em back and get my owing down again.

DCFC79

The lender will have no idea you will use the loan to pay the debts off, as far as they are concerned its extra debt for a car you want to buy for example.

Reduce your spending and pay the cards with the highest apr off first.

Why not make a start and close the card with the highest apr so you don't add to it.

-taff

Go to the debt free wannbe board, post an SOA, because while you might have used them in the past, you may well be able to cut spending in other areas to pay more off more quickly. It's amazing what a fresh set of eyes on your budget can do.

Another no vote for conslidation, it hardly ever works. It will only work if you cut up the cards and never spend on them again, and as it's already been said, you will struggle getting a loan because of your income to debit ratio.

See if you can swap any of your cards to 0% deals, at least that way you'll cut dowon the interest you pay.

Ilona

You can't borrow your way out of debt. I suggest you cut your spending down to the minimum for a while, it will be painful, but then you can throw more at your debts and they will go down quicker. It's not rocket science. Spend less, earn more.

Post up a Statement of Affairs on the Debt free Wannabee boards, and people will tell you where you might cut back on your spending.
http://www.stoozing.com/calculator/soa.php

Good luck.
ilona

enthusiasticsaver

Two things.

Consolidation loans do not work. Speak to anyone who has done it and you will find that it just delays people dealing with their money problems.

You say you have a good salary and you can afford life and yet you still have debt outstanding on credit cards. Why is that?

Once you have found the answer to the question above you will realise you are spending more each month than you have coming in and in spite of paying minimum payments (which probably does little to pay them off as they usually just cover interest if that) you are not reducing your debt.

Post an soa and start keeping a spending diary and it will enlighten you as to where your money is going and how much of an overspend you have to deal with.

No short fix to get rid of debt so you just need to start making overpayments (not just minimum) on credit cards and stop spending on them from today. Move them to 0% if you can and pay minimums on all but the highest charging card and make as higher payment as you can on that until it is paid off then close it. Carry on with all the others and when you get to 2 just keep those open and aim to get both to nil.

Dobbibill

Another vote against consolidation here too.

1- Snowballing is your first starting block.

2- Followed swiftly by the DFW board with a SOA to cut the cost of 'life' down to the bare minimum.

3- Back to the snowball calculator and see the difference the DFW board suggestions make, sometimes it can knock months off the end goal.

4- Stick to your new budget.......this will be the hardest of all the steps but also the most rewarding in the end.

There's no quick fix, the loan decline has probably been the best thing that could have happened for you (although you probably don't feel it is at the moment). All the best.

jonesMUFCforever

Reading between the lines - if you were spending on hotel expenses should your employer not have refunded the cost to you?

Erucsbo_2

Appreciate all the advice guys. I'll forget the consolidation based on all the no votes here. I'll find out which APR is my worst and will shift all of my extra spends onto focusing on getting that one gone.
In the meantime I'll check out the debt free forum section.

Thanks for the advice again! Wasn't sure where to start after the loan was a no go . Blessing in disguise perhaps.