Consolidating debts

Tash2103

Hello, I currently owe around £10,000 in credit card debt, I transferred some of the debt to an interest free card but ended up using the old card again so got into even more of a mess. I’m paying roughly £400 pcm at the minute but due to interest etc I don’t seem to be getting anywhere and still using the credit card to subsidise myself. I know I need to budget better, but do you think it would be worth getting a loan to cover the debt and cancelling the credit cards? Also I want to improve my credit rating and don’t know if this is the best way to do that?

Thankyou

enthusiasticsaver

You have already found that consolidating debt does not work. You need to cut back on expenses and live within budget. Ditch the credit cards completely. If your credit rating is bad you will not get a favourable rate anyway. Post an soa and format it for MSE and we can suggest a way forward. http://www.stoozing.com/calculator/soa.php

Ilona

As ES says. You tried it once and it didn't work. Destroy the cards, cut them up, then close the accounts. You say yourself you need to budget, the SOA is a good start. You need to know where every penny is going.

Ilona

enjoyyourshoes

Stop the spending.
Work out why you are led to spending more than you earn.
Resolve this issue, its possibly psychological.
Burn the cards.
Pay off the debt by knowing how much is in you bank account every day, accruing for medium term bills and using this site to reduce your costs of living.

MrsSave

Please don't consolidate. There will be nothing to stop you spending on the cards again and ending up even further in debt. Post an soa (use your bank statements to make it as accurate as possible) which will help with you moving forward. You need to learn how to only spend what you have.

EssexHebridean

OK - so you consolidated before, and it didn't work? And you're still living beyond your means? So why is it that this time, if you consolidate, things will be different?

They won't - it's as simple as that. And the reason they won't is that you're not living to a budget. So in a couple of years tie you'll be back here again, only this time you'll still be paying down the loan, and you'll have another 10k on the cards to worry about on top.

Stop the cycle. Learn to budget. The SOA as others have said is the perfect place to start. Fill it in openly and honestly - go back through bank statements and card statements and make sure that all the amounts you fill in are accurate - if you've been spending £500 a month on food, so be it - you need to know that before you can fix it. Putting in inaccurate information doesn't help you - it's about what is happening in your finances, not what you feel should be happening, or what you think we expect to see.

Once you've reassured yourself that you DO have enough money to live on - then cut up the cards. And until you've done the SOA stop and think EVERY time you get a card out to use - do you really need the thing? Or do you just want it. can you manage without it? Is there anything you already have that will do the same job?

As for your "credit rating" - forget about it - at the moment the very LAST thing you need is more credit. Learn to live within your means first, THEN worry about your mythical credit rating after that. In terms of your credit history, which is the thing that matters, your best way of starting to rebuild it now if it IS bad is to start proving that not only can you borrow, you can re-pay that debt, too.

Dobbibill

Do not consolidate - it rarely works.

Address the reason you have the debt.

Do a SOA and you will get tailored advice about where savings can be made to throw at the debt and start making a difference to it.

What are you hoping to achieve by improving your credit rating?
Any further lending such as mortgages etc are based on your history of responsible lending and affordability. At the moment you wouldn't have any ticks in any of the boxes.