32k debt, where to start?

yat123

Hello All!

I'm new here so please forgive me if I'm asking something obvious. At this present time all together I have about 32k of debt.

So far I'm managing to keep up with payments. My debts are:

• 2k overdraft (17.9% APR),
• 12k credit card (7.5% APR),
• 18k loan (12.9% APR).

Where to start managing this debt? Is there any way to lower the interest via taking debt consolidation loan? How I can minimize money wasted on interest? What is the best (quickest) way of paying this off? (besides making regular payments). My 18k loan is with one of the major banks, they said I could suspend payments for a few months as long as I pay everything off within agreed term. They also mentioned this is going to be somehow recorded on my credit score. Is this worth considering at all? i.e. suspend the loan and put this money towards other lenders? What else I can do to make the most of the payments I'm making?

Any advice or directions will be much appreciated.

Kind regards
Yat.

elsien

A consolidation loan is rarely a good idea. If you're still overspending it is likely that you will consolidate then go back into the overdraft/credit card to run up more debt, as many people on here can testify from personal experience
The starting point would generally be to look at the reasons for the debt, work out where your money is going, cut back and chuck as much money at the debts as you can.
Have you done an SOA? You need to look at the full picture before deciding the next step.
Without knowing your income/debt ratio, is there any chance of a balance tranfer to a 0% card?

Willing2Learn

I also feel that consolidations do not often work. The evidence is from posts on this board. A consolidation will fail if the fundamental management of credit accounts and monthly budgeting are not addressed.

Have a google of snowballing debts. Also, I agree with elsien, in that you need to do an SOA, so that we can see the current state of your finances.

Unicorn_cottage

Hi Yat

Well done for facing your debts. A lot depends on your circumstances (salary, credit rating etc) regarding how to address this. Consolidation is generally not a good idea as it does not help address the issues of why the debt occurred etc.

Have you joined the MSE Credit Club? https://www.moneysavingexpert.com/creditclub - can assist with doing soft searches to find out if you are eligible for a 0% credit card to transfer your existing credit card debt onto etc.

It is worth filling in a statement of affairs for people to advise on as there are often lots of savings to made i.e. cheaper utilities etc. Going through this process also helps focus the mind to tackle the debt head on. http://www.stoozing.com/calculator/soa.php If you fill this in please format for MSE.

There is always a solution to address debt. It is just finding the right route for each scenario.

sourcrates

Hi,


Most bankrupts have consolidated at least once in there past, usually more than once, in 90% of cases, its a very bad idea.


Before anyone can advise you, you need to complete an SOA, available here :


http://www.stoozing.com/calculator/soa.php


This will then give us the information we need in order to make constructive suggestions to you.
Further borrowing is not advised, moving the debt to zero percent deals is only a temporary side step, long term solutions work the best.

yat123

Thank you for your quick responses and all info. My income varies and from initial analysis, I am hoping that on bad months I will still be able to make all payments and survive. Although, there will be no disposable income left. On a good month, I think I will be able to make some extra payments. I received a leaflet from Nationwide regarding consolidation loan around 3%APR. When I applied they said, based on my circumstances and fact that I don't have much borrowing power left. They very unlikely offer me a consolidation loan and even if they do, it will be something like 15-20% APR so not an option for me for sure.

Credit card balance transfer could be an option. However, would I still have a chance to get another credit card?

PS. I will post my SOA soon... thank you.

getmore4less

My income varies and from initial analysis, I am hoping that on bad months I will still be able to make all payments and survive.

When you do the SOA explain how the income varies,
If there is a min that it will always be more than that can help a lot.

If you can make a SOA balance on than min amount you then have the rest of the income for the year to use for debt reductions and other discretionary spends.

You could on the SOA have the income split, use salary for the min amount each month and other income to cover the monthly average of the rest

leicestersq

My income varies

Why not go back through your bank statements for the last 3 years and find out?

See if you can find out your mean income, your highest income, and your total income for the last 3 calendar years?

Just doing that will help you enormously. Knowledge is power and if you dont know how much your income is, then you will have much less power to fight your debts.

And once you have done that, why not go back through your records and find out how much you have spent on things by category? Before you know it you will have a SOA, and then you will be able to look at your options with a much better chance of knowing what to do.