Loan for home improvement?

MallyGirl

£1700pcm seems perfectly reasonable to me - many people live comfortably on a lot less. But we don't know what commitments she has - rent/mortgage, bills, other debt, travel, etc. All the things that normally go on an SOA.

Emily_Joy

MallyGirl wrote: »

£1700pcm seems perfectly reasonable to me - many people live comfortably on a lot less. But we don't know what commitments she has - rent/mortgage, bills, other debt, travel, etc. All the things that normally go on an SOA.

I've included the outgoings save the petrol and food in the first post in fact.

Emily_Joy

Update.

She decided to take the 6.9% loan offered to her to settle both the Hitachi car finance and the old loan from her bank. If my calculation is correct, there will be a surplus of £400 afterwards.

She is happy for me to help her to start saving and to deal with the loan...

Basically, once we sorted out the budget I need a workable plan to help her to hide money from herself :-)

1. I understand correctly, she should overpay the new loan, and perhaps by £100 every month to start with?
2. Emergency saving pot. This should be not-very-easy to reach account. Perhaps Virgin regular saver? (as it is passbook only)
3. Holiday/Home improvement fund? Where to put it?
4. Every extra should be thrown into the loan? (e.g. we figured out she is due flight delay compensation, perhaps switching banks might also help to get a bit extra?)

dawyldthing

She needs to forget saving and pay off the debt. No good having savings getting 1% if your lucky when you are paying interest to someone.

She ideally needs a couple of months bills behind her, but put in a separate account. Could be online only account.

Holiday account - I’d put that on hold until bills are paid. Then think about holidays as the savings she will make once she is clear of debt will probably pay for the holiday or go a long way towards it. Could she just have a cheap break this year? Seems absurd to be paying interest on something when you could pay yourself back by paying the debt off quicker then freeing the money for other stuff.

Everything extra should go towards credit card (as it’s higher interest rate) then whatever next until she’s paying off the smallest interest rate. She also could do with a statement of earnings drawing up as I earn a heck of a lot less than £1700 a month but haven’t racked up debt like it. I’m sure there’s savings that could be made. From gas and electric to insurance.

Make every penny work for her

Emily_Joy

dawyldthing wrote: »

She needs to forget saving and pay off the debt.

Agreed, but she need to have emergency fund.

dawyldthing wrote: »

She ideally needs a couple of months bills behind her, but put in a separate account. Could be online only account.

The bills are included in rent, so we are talking about 2 months of rent. Ok.

dawyldthing wrote: »

Holiday account - I’d put that on hold until bills are paid.

In her case no holiday means not to see her son. That's not going to happen. Our children are young only once. We will look into a cheaper car insurance, thanks.

BrassicWoman

if the house will sell with new windows etc, the house will sell as a project now. Best time is now while the pound is weak.

dawyldthing

Emily_Joy wrote: »

Agreed, but she need to have emergency fund.

The bills are included in rent, so we are talking about 2 months of rent. Ok.

In her case no holiday means not to see her son. That's not going to happen. Our children are young only once. We will look into a cheaper car insurance, thanks.

Sure.y she can just get cheap flights etc. If you shop around it’s cheap enough. I’m sure Germany do camping so could keep costs down etc (I think you said Germany)

Until she sees debt as paying yourself for the future (like savings, pensions etc) then she might struggle to change. As your paying more off now to have a greater saving long term plus then your wages are your own.

I’m so glad my mum taught me the biggest lesson in life years ago when she spent a grand one Christmas on me after splitting with her husband and it took 3 years to pay it back. It was the biggest lesson in life I ever needed