Debt Consolidation

Fighter1986

The maths in isolation is sound, but the maths isn't the only factor in this game 

Folks don't advise against consolidation due to the maths being wrong, but due to the psychology being wrong. 

That said, you seem to be very well aware of this.

I have every confidence you're going to help your partner's whole psychology surrounding and approach to money change for the better  

MovingForwards

The things you have missed are:

1. She needs an income.

2. With consolidation lenders take the view the original loans will not be paid off, and would assess her having the original loans and the new loan, doubling her debt.

3. Consolidation doesn't teach new spending habits, unless she has resolved the original ones and changed to new habits she will be in an even worse situation.

4. You already said in the other thread some of these were loans to pay off other loans.

5. Ignore the headline low APR, she probably won't be one of the 49% who qualify for it.

Nick_K

MovingForwards said:

The things you have missed are:

1. She needs an income.

2. With consolidation lenders take the view the original loans will not be paid off, and would assess her having the original loans and the new loan, doubling her debt.

3. Consolidation doesn't teach new spending habits, unless she has resolved the original ones and changed to new habits she will be in an even worse situation.

4. You already said in the other thread some of these were loans to pay off other loans.

5. Ignore the headline low APR, she probably won't be one of the 49% who qualify for it.

The reason this was asked hypothetically is because I am fully aware that she stands no chance of being accepted for a loan like this right now. I was simply asking in order to determine whether or not this could be an option if her circumstances change somewhat, and I wanted to be sure there wasn't something I missed from the maths.

1. This is something she is working hard to achieve. She literally finished her full time PGCE last week and has a couple of interviews lined up - so fingers crossed!

2. I hadn't really considered this but good to know, thanks. 

3. The root of her debt is poor spending habits, but after being with her for as long as I have, her habits are not the reason her debt has spiralled as it has. It is more of an issue with shame and embarrassment - borrowing the additional money to help mask her debt. I believe she is now being completely upfront about her circumstances - she feels relieved to have finally told me. I am much more on the opposite end of the spectrum and she has allowed me to help her manage her finances and budget.

4. Correct - It's like looking at a financial blackhole..

5. I realise that, especially in her current position but we're hoping that will soon change. She does have some money in savings which I have convinced her to use to pay down her highest interest loan. I'm hoping that by improving her position she'll look favourable enough to be considered for a better loan. 3.5% is probably optimistic, but hell, she currently has a loan at 93% - Surely we can do better.


Thanks for you comments.   

DCFC79

Its good she has allowed you to help.
Whats that saying, a problem shared isa problem halved. 

MallyGirl

"93% - Surely we can do better" At some point hopefully you can but it might not be yet. 93% sounds horrendous but some of the payday lenders were charging 1500% so it could be a lot worse.
"lending the additional money to help mask her debt" She didn't lend anything - she borrowed it. This could be read as her getting into trouble because she loaned money to people, when she didn't. It's an important one to get right if you want quality advice.
It does sound like you are going to work as a team - with her money - which is the best way for good results.

Nick_K

MallyGirl said:

"93% - Surely we can do better" At some point hopefully you can but it might not be yet. 93% sounds horrendous but some of the payday lenders were charging 1500% so it could be a lot worse.
"lending the additional money to help mask her debt" She didn't lend anything - she borrowed it. This could be read as her getting into trouble because she loaned money to people, when she didn't. It's an important one to get right if you want quality advice.
It does sound like you are going to work as a team - with her money - which is the best way for good results.

Thank you. I have amended my post