Question about snowballing or refinancing

matttye

monetxchange said:

matttye said:

ryanm8655 said:

What are the values of the debts and when do the 0% offers expire?

21% is a horrendous interest rate on a loan (and I’ve had loans at horrendous interest rates in the past) and, from experience, I‘d be very surprised if you can consolidate for cheaper. That suggests lenders view you as high risk. Not to mention, consolidation is generally a terrible idea as generally people come back a couple of years later with double the debt. Just look at my post history and you’ll see I was one of those people.

My advice would be to clear the highest interest rate debts first, so in this case, the loan. Set your dd on the credit cards to just above the current minimum to help with budgeting (also makes a big difference to the rate at which the balance goes down). Though if the 0% periods end soon then it may make sense to focus on those.

Have you properly addressed your approach to money? Why has the debt built up in the first place? Not meant as a dig, I’ve been in debt ever since I finished uni and only now (10 years later) has my mentality really changed.

I’d recommend completing an SOA as this’ll help people to offer more tailored advice.

https://www.lemonfool.co.uk/financecalculators/soa.php

One card is £5k, the other is £3.2k. Not sure when the 0%s expire but I’ll try and find out. The loan I owe just under £11k (been paying it for a year and still owe more than I borrowed!)

Credit cards were to fund studies which have lead to me doubling my income. I started off paying for my studies myself then moved onto credit cards when I ran out of money. The loan was for my wedding. 

No need for an soa - I have around £500 left each month for debt repayments on my base salary but I usually make anywhere between £400 to £800 in overtime too (has been higher recently due to colleagues being on furlough). I’ll be able to overpay substantially every month but just want to do it the quickest and cheapest way. Looks like paying off the loan rather than hoping to refinance it is the consensus so I’ll do that. 

My salary with overtime is about £42.5k. 

Thanks

Andyjflet said:

Please dont borrow any more money, pay the credit cards then snowball onto the loan. Listen to Dave Ramsey Podcasts it will change your life. 

I know his methods work for some but I feel I’m disciplined enough to pay it off in the cheapest way possible rather than targeting the smaller debts first.

Thanks

You say you're disciplined, yet you've both ran up debt and have a loan that's not been repaid down at all from the starting point in a year (I realise it's high interest) despite having £500-£1300 a month spare. So where has that money actually been going if not all on the loan? Why have you run up credit cards too? Why will you all of a sudden become disciplined?

Look, this isn't an attack as I've been there too, but it's very important to address triggers and behaviours at the start. The reason why I'd also advise against getting more credit to consolidate is because it's so early on in turning around your money habits that you can't be sure the temptation to run them all up again has completely gone.

You can absolutely do this on a healthy income. Just get them paid down while learning to budget month to month properly.

I’ve paid off £4400 in a year, it’s a 5 year agreement.

I have just had a payrise as I mentioned in the OP. My base salary has been quite tight but I’ve been able to overpay when I’ve had good overtime. I’ll be able to afford more going forward though.

Thanks

sharpe106

Throw everything you can at the loan short term and look again when the interest free period of the credit card up. Depending on the APR of them.

 

Forget about getting a different a lower loan for the time being. In the future you might be able to but no point planning on that, just a bonus if you can.