Younger me it turns out was an idiot, and I'd like to make changes

kindofagilr

If you used the £200+ that you already use and the £400+ you have spare to pay the debt off then it will be paid off in 14 months? I fail to see why you wouldn't just do that?
Or at least look for a 0% credit card instead of adding it to your mortgage or getting a 8.9% loan

Bertrum

I was in a similar position to you about 4 years ago, maxed out £2500 credit cards etc, total of about £23k in debt.

Was being paid about £2000 per month but could not make any headway.

I was offered consolidation, more cards etc....none of it helped as i never addressed the real problem....my overspending.

I finally stumbled on a solution and in 4 years I have gone from being £23k in debt to having £13k in savings...

How did I do that.....simple.

I opened another bank account, worked out how much i needed for 'petrol food and entertainment' in my case £400 a month, and at the beginning of each month transferred myself that much, and put the card to the other account somewhere safe leaving enough money to cover my fixed i expenses plus a bit, in the overdraft account.

I then quickly learned that I was spending more than I thought I was, as I was running out of the £400 by week 2...Adjustment in my spending habits now means i am left with £100 at the end of each month.

Doing this I cleared the overdraft in 6 months!

Try it. Takes 2 seconds to open another account with your bank...

enthusiasticsaver

Bertrum wrote: »

I was in a similar position to you about 4 years ago, maxed out £2500 credit cards etc, total of about £23k in debt.

Was being paid about £2000 per month but could not make any headway.

I was offered consolidation, more cards etc....none of it helped as i never addressed the real problem....my overspending.

I finally stumbled on a solution and in 4 years I have gone from being £23k in debt to having £13k in savings...

How did I do that.....simple.

I opened another bank account, worked out how much i needed for 'petrol food and entertainment' in my case £400 a month, and at the beginning of each month transferred myself that much, and put the card to the other account somewhere safe leaving enough money to cover my fixed i expenses plus a bit, in the overdraft account.

I then quickly learned that I was spending more than I thought I was, as I was running out of the £400 by week 2...Adjustment in my spending habits now means i am left with £100 at the end of each month.

Doing this I cleared the overdraft in 6 months!

Try it. Takes 2 seconds to open another account with your bank...

This is the way to clear debt. Budget and spend within your means. Well done Bertrum

sourcrates

wingingit wrote: »

Thanks all for more replies!

I do agree that the personal loan is a no no, but I do think I'm going to go for the mortgage option. It'll get me back in the black on all accounts, and although my mortgage is 25 years (23 now), I certainly don't intend on staying in that flat for all of them. As I understand it when I come to sell it will clear my mortgage, and my secured loan. If I stay in London I'll end up with another mega mortgage, and if I move literally anywhere else in the country I'll have a much smaller one.

I'm sorry for posting in here as my problems are probably quite small, and thanks for all of your advice!

Sorry, but I think that would be a Hugh mistake.

But sometimes people need to learn these lessons for themselves

I'll speak to you again in a couple of years, good luck !!

sourcrates

Bertrum wrote: »

I was in a similar position to you about 4 years ago, maxed out £2500 credit cards etc, total of about £23k in debt.

Was being paid about £2000 per month but could not make any headway.

I was offered consolidation, more cards etc....none of it helped as i never addressed the real problem....my overspending.

I finally stumbled on a solution and in 4 years I have gone from being £23k in debt to having £13k in savings...

How did I do that.....simple.

I opened another bank account, worked out how much i needed for 'petrol food and entertainment' in my case £400 a month, and at the beginning of each month transferred myself that much, and put the card to the other account somewhere safe leaving enough money to cover my fixed i expenses plus a bit, in the overdraft account.

I then quickly learned that I was spending more than I thought I was, as I was running out of the £400 by week 2...Adjustment in my spending habits now means i am left with £100 at the end of each month.

Doing this I cleared the overdraft in 6 months!

Try it. Takes 2 seconds to open another account with your bank...

Winginit,

Read and inwardly digest.

This is the common sense approach, and the ONLY solution that works !!!!

wingingit_3

Thanks again all for your suggestions. I'm taking the excellent one about opening a new bank account and transferring "pocket money" to myself so the majority of my wage sits in another account.

I've cut up my credit card

When I get the consolidation loan I will pay off all debts with it, and set up overpayments on my mortgage

I'm looking at it as a 2-3 year loan, on better terms than my current unsecured debt. Obviously if I lost my job, I'd have to sell the flat anyway and downsize potentially, so an extra 10k on top of the mortgage and a reduction in equity doesn't immediately concern me. If my unsecured debts were 25k+ it most certainly would.

I think my aim is to break the cycle by shifting everything into the black, and hoping the extra amount on my mortgage gets replenished by London house prices over the next three years.

A also know myself relatively well, and have no interest in living in a very expensive city and cutting all expenditure back to the absolute minimum. I know that isn't necessarily the most financially astute, and I respect anyone that can, I know I want to make the most of my current location.

theoretica

Are you still thinking about the mortgage/secured loan? Have you taken all the cost into account, not just the headline monthly amount?

Mortgages often come with fees - what are they?
Will the whole thing be at your current good rate or will you be paying more on the main mortgage?
Are there early repayment fees due currently on your mortgage that you would need to pay to change your deal? There are probably administration fees even if you are out of the early repayment time.
How long would you be tied into the new mortgage - will you be tied in to early repayment fees when you come to sell?
Is your current mortgage going to a higher rate and up for renewal anyway?

redux

Taking out a loan and then using a residue of it to overpay the mortgage doesn't make sense. Presumably you meant extend the mortgage.

I would say review your spending down a bit, get a 0% balance transfer credit card and move say £3000-3500 to it (including spending in next 3 months), keep the existing credit card for current spending and always pay in full, work hard to clear the overdraft in 3 or 4 months, the loan by the end of next year, then you'll just have the 0% credit card balance to go.

MrsTinks

wingingit wrote: »

I think my aim is to break the cycle by shifting everything into the black, and hoping the extra amount on my mortgage gets replenished by London house prices over the next three years.

A also know myself relatively well, and have no interest in living in a very expensive city and cutting all expenditure back to the absolute minimum. I know that isn't necessarily the most financially astute, and I respect anyone that can, I know I want to make the most of my current location.

As Sourcrates said - see you in a year or twos time - let us know how that worked out for you.

As we put it on DFW: You haven't had your lightbulb moment yet

To be honest until you do then you'll think we're all talking nonsense, even if most of us have BEEN where you are, and a lot of use made the exact same mistake of not planning or dealing properly with our debts... I hope it doesn't scupper your plans in the future when this one comes home to roost - best of luck

nearlytherenow

I very nearly did this and asked a Q on here about how to become a saver. I got lots of similar advice to you, mainly 'don't do it' which really made me think.

I didn't add debt to mortgage, means I still have some debt but I'm learning to spend less and expect to be debt free by this time next year hopefully!

You haven't actually listened to the majority of advice on here. One question for you to consider is if you have over £400 spare at the end of each month why are you in debt? You don't know how much you're spending I don't think.

Whatever you choose to do good luck.