Debt Management

lyrh2017

Hi all,

I currently have £8261 on 4 different debts.
Current Loan = £1620 = £177/month.
Overdraft = £1300 = £20/month
Credit Card 1 (18.9% interest) = £316.66 = £49.99/month.
Credit Card 2 (0% Interest) = £2195 = £30/month.

Total debt is £8261.

All are paid each month on direct debit.
I can afford the payments, but I would like to try get them paid off ASAP as we would like to proceed with our mortgage application. Using our mortgage deposit isn't an option.

Would it be a good idea to get another loan to pay them all off then have one monthly payment and close all the debt accounts down??
Or keep paying then off each month??

Thanks for your advice. :beer:

EssexHebridean

Nope - it definitely would NOT be a good plan to get another loan to clear the loan (and other stuff) you already have - consolidation is a bad plan for the majority of people on many levels. Someone will elaborate on that in due course I'm sure but for now I'll make a suggestion of where you need to go from here.

First step is to get together your full SOA (Statement of affairs) - you'll find the link to do it in the "Sticky" post at the top of this board. To do it you'll need ideally 12 months of statements on your finances - you can do it with 6 but you run the risk of missing the odd annual item that way. Fill everything in accurately as you can but make sure it reflects the way things are right now - an SOA that's done to reflect what you *think* you should be spending is no good to man, beast, or MSE'er! You can then post that SOA into here if you want and we can run through it and see if there is anywhere that you might be able to make savings that will free up further money into a surplus so enabling you to get those debts cleared faster.

Make a note of things like when your 0% interest period on the card expires. It may also be worthb a look online (use the MSE Credit club and eligibility calculators) to see if an additional 0% card might work for you - you could potentially balance transfer the interest bearing card iover to a 0% and close the old card, that way.

Final question - have a think about how the debt was accrued and what you've put in place to stop this happening again in the future. Also have a think about the amount you're paying in interest at the moment on the debts, and how fast if those debts were cleared you could replace any savings you'd used to clear them...

datlex

I actually disagree with the above. Consolidation can work. What you need to look at is the total amount of interest you would pay over the length of your existing loans and cards as stands and how much you would pay consolidating them.
What is important with the cards is to ensure you don't just pay the minimum payments. You can make additional payments to your cards in addition to your monthly payments. Ideally you should aim to get them paid off in full. For example you can decide one day not to buy a coffee and instead use that money to pay a card.

For you my biggest concern would be your overdraft. You really need to clear this. You don't say what interest rate is on it. You are also hardly making any dent in it.

Gettingtherequickly

The total debt you are quoting is about £3k higher than your breakdown?

EssexHebridean

datlex wrote: »

I actually disagree with the above. Consolidation can work. What you need to look at is the total amount of interest you would pay over the length of your existing loans and cards as stands and how much you would pay consolidating them.
What is important with the cards is to ensure you don't just pay the minimum payments. You can make additional payments to your cards in addition to your monthly payments. Ideally you should aim to get them paid off in full. For example you can decide one day not to buy a coffee and instead use that money to pay a card.

For you my biggest concern would be your overdraft. You really need to clear this. You don't say what interest rate is on it. You are also hardly making any dent in it.

It CAN - but for most people it doesn't, because they've not done the background stuff first. which is why we always ask questions and suggest people do an SOA before agreeing that is the right route for them.