Whopse - the spending got out of control!

freeman3030

Hi,
I've got 3 credit cards, they're all 0%. One of the cards is soon to finished its 0% deal (4 months) so I applied for a BT card in preparation and didn't get a large enough limit to transfer the whole balance. I accepted it anyhow and have just received the card and I think the balance is soon to be transferred across. Anyhow, that now leaves me with 4 cards.
Because my spending in recent times has become a bit... frivolous, over the last 2 months. I've thought about applying for a loan in 4 months time to consolidate the remaining 3 cards.
I score fairly well with Zopa for a loan to consolidate the cards. If I applied for a 3 year loan, I could afford the repayments as well as paying back the BT card. However, when I finish paying the BT card (12 months) I'll have that money spare and would like to start throwing that money at the Zopa loan as an over payment.
I've looked on their website and it says that minimum over payments are £10 (I would be paying £100 over payments). Will it reduce the term or the monthly payment amount?

freeman3030

Sorry, i've just re-read the terms and it says:
"The term of your loan will stay the same. You'll pay less interest overall, as we calculate interest on your outstanding balance."

Does this just reduce the monthly payment?

Gambler101

Aim to reduce your borrowing to zero asap but paying every penny you can to your debts.

Have zero debt stress, and no more borrowing from your future boom!

Ilona

Hi. I think the question you ought to ask yourself is not whether you should apply for a loan to consolidate your debts, but how can I stop my frivolous spending. Clearly you are living beyond your means, spending more than you earn. Ok, so if you do consolidate, we can expect you to come back here in a couple of years time because you are in an even worse mess, because you have not changed your spending habits.

Your solution to dealing with your debts indicates that you will be in it for the long haul, is this going to be the pattern for the rest of your life? You are borrowing against your future, how long will this go on? The future seems a long way off when you are young, but believe me, you will be old and still in debt before you know it.

Here is my solution, you can heed my words or you can ignore them. Grab the bull by the horns now. Fill out a Statement of Affairs listing all your incomings and outgoings, and your debts and interest rates. Post it up in the Debt Free Wannabe board and the good people on there will make suggestions on how you can cut your spending, and which debts to aim to pay off first. Here is the link.
http://www.stoozing.com/calculator/soa.php

I am sorry I cannot help you with juggling debts, because I have never done it, maybe those with more experience can advise on that score.

I wish you the best of luck, endless debt can rule your life, you don't have to go there.

Ilona

MallyGirl

freeman3030 wrote: »

Hi,
I've got 3 credit cards, they're all 0%. One of the cards is soon to finished its 0% deal (4 months)

Why would you take out an interest bearing loan to transferring 0% debt? That is madness.
Do an SOA and a budget, throw every spare penny at the card about to incur interest (the bit you couldn't BT). Once that is cleared, and closed, tackle the next to expire. Once you have made a bit of a dent you could try for another 0% BT.
You cannot borrow your way out of debt.

zippygeorgeandben

Yes I would not recommend consolidation - find my thread which I think is on page 3 perhaps? It starts with 'unsure whether to consolidate'.
Have a thorough read of it. I sounded like you, frivolous spending and wanting to reduce my monthly payments whilst having extra to spend on 'stuff'.
I'm glad thanks to posters on MSE I saw the light about 8 months ago. I've been tackling my debt which such ferocity!
and if I can do it, ANYONE can.
Hop over to the DFW boards, post an SOA and people will advise.

Candyapple

Don't forget that you may not even get a loan to cover your debts. A clear indicator that lenders can see how stretched you are is your low credit limit on the new card you took out. You will most likely fail on affordability, and/or the APR will be a lot higher than you think.

Same as everyone else, you need to tackle the root cause of your debt which in your own words is your frivolous spending. Otherwise all you will be doing is robbing Peter to pay Paul and what happens if you lose your job/become ill or an emergency happens? You will be right back where you started from - trying to borrow your way out of debt only this time chances are no lenders will touch you and then you'll really be up the creek with no paddle because you will be forced to face your problems head on but by this time probably several thousands of pounds more in debt than you are at this point in time.

Here is the link to the DFW forum:
http://forums.moneysavingexpert.com/forumdisplay.php?f=76

Here is the link to zippy's thread:
https://forums.moneysavingexpert.com/discussion/5567669

Here is the link to snowball calc:
http://www.whatsthecost.com/snowball.aspx

DCFC79

I'd work out why the spending happened, it could happen again and you could be in a worse position.

leeram

My advice, through personal experience, is that you cannot borrow to pay off debt, it just doesn't work. Pay as much of the debt off as you can and reduce your spending.

Cheers
Lee

freeman3030

Hi all,
Thank you for your responses, they really are much appreciated. Having read them, its given me a reality check and what you're all saying makes complete sense.
I have been living beyond my means. At age 18 my dad advised me to get a credit card to build my credit rating. It helped because 4 years ago, my partner and I bought our first home. The trouble I've had is, the credit card is now to my detriment as I've then used it when I've had a tight month or if I feel like I want/need something and I've become totally detached from the reality that I'm not spending my own money - its all borrowed.
I really don't want to be in a position when I'm in my 30's/40's and still chasing my tail in a circle of debt and I really don't want to loose our home- or disappoint my partner with all this debt.
I'm too generous for my own good and I really need to stop indulging myself with 'treats'.
I'm going to fill in a SOA and work out a budget. I've been living in a bit of denial, but it all felt manageable because there's been no interest. However, now it's imminent, I'm starting to feel the impending weight about to be put on me.
DEEP BREATH - lets get it paid!

DCFC79

freeman3030 wrote: »

Hi all,
Thank you for your responses, they really are much appreciated. Having read them, its given me a reality check and what you're all saying makes complete sense.
I have been living beyond my means. At age 18 my dad advised me to get a credit card to build my credit rating. It helped because 4 years ago, my partner and I bought our first home. The trouble I've had is, the credit card is now to my detriment as I've then used it when I've had a tight month or if I feel like I want/need something and I've become totally detached from the reality that I'm not spending my own money - its all borrowed.
I really don't want to be in a position when I'm in my 30's/40's and still chasing my tail in a circle of debt and I really don't want to loose our home- or disappoint my partner with all this debt.
I'm too generous for my own good and I really need to stop indulging myself with 'treats'.
I'm going to fill in a SOA and work out a budget. I've been living in a bit of denial, but it all felt manageable because there's been no interest. However, now it's imminent, I'm starting to feel the impending weight about to be put on me.
DEEP BREATH - lets get it paid!

You won't lose your home, well not if you keep on top of it.

Any chance you can increase your income ? Eg a second job in the evenings

You can do internet surveys to earn money, use quidco or top cash back for buying stuff and you earn cash back.