Consolidating debts

Katieann

Hi, I have two bank loans and a credit card totalling £10000. I would like all of these to be together so I can pay them off from one place rather than three. My credit card is Aqua so the interest rate is so high at the moment and I’m just not sure what steps to take.
My credit rating isn’t great but I can comfortably afford to pay back £250 a month as that’s what I am already doing. I just want it to be abit easier but more importantly I don’t want the credit card hanging over my head so would rather all the debts come from one place. 

Any advice would be great and I’m happy to provide more information 

TryingToPay

Are you self-managing orin a dmp? Consolidation loans are known to cause more trouble than they solve.
I'm self-managing 10 debts and keep track on a spreadsheet, obviously there's no one size fits all approach but I find it easier than, for example Stepchange who advised me to let everything default / go to court judgement and pay back incredibly small sums as token payments.

sourcrates

Consolidation just makes your debts bigger, and keeps you in debt for longer.

Contact one of the free debt advice charities and ask about debt management.

Further borrowing is never the right way to deal with debt.

Jude57

Just a word of caution here. If you can, on paper, manage to pay your monthly contractual payments then you won't be offered a debt management plan by the reputable providers (StepChange, National Debtline, Payplan). This is because the reputable providers generally have a good relationship with the creditors and rely on that good will when asking for interest on debts to be frozen. They forward a copy of your budget to the creditors which, if you can meet your contractual payments, would give the creditors no reason to justify freezing interest. I don't want to put you off the DMP route but I also don't want you to have unrealistic expectations of what the reputable providers will offer.

However, the likelihood is that your budget could do with some tweaking, to make sure you're prioritising your living costs so why not post your budget here and let the experienced members give it the once over? Please don't be tempted by fee charging debt management companies and please don't rush into anything. Good luck.

[Deleted User]

After personal experience of debt consolidation for most of my adult life, if I had my time over again, I wouldn't have done it.  Over the years we built up credit cards then consolidated them.  Four years ago we racked up more debts on card and car loans it was getting hard to manage so we decided the consolidate as a remortgage on the house (big mistake).  We said enough was enough, but about a year later we racked up more debts (our current ones) so not only am I paying nearly £300 extra on my mortgage and am now pay off more debts.  MrBB's solution again was to re-mortgage.  My answer this time was no, after spending a lot of time lurking on MSE on the best way forward, I decided that we must pay it off, not to consolidate, we needed to learn the value of money and not to spend money we haven't got.  So far, it's working.  It's slow and frustrating at times but it's teaching us how to manage money.  I use a spreadsheet on my computer, 4 accounts - made of of 2 current and two savings pots.  Everything is listed and accounted for.  

I've spent most of my married life in debt and even though we have 'managed', I've missed out on my dream home, holidays abroad.  Money we owe and have nothing to show for it.  I still need a kitchen after 14 years, it was falling apart when we bought it.  We have prioritised our bills and looked at essentials, then looked at luxuries such as sky, amazon, memberships etc.

I would personally look at you income and expenditures and see if you can tweak anything before looking at any additional borrowing.  I've used the snowballing method in paying off my credit card debts, leaving the personal loan and car loan payments as they are for now.  Once they've gone, which is hopefully a year from now, I will then evaluate our current circumstances.

Best wishes xx 

fatbelly

Katieann said:

Hi, I have two bank loans and a credit card totalling £10000. I would like all of these to be together so I can pay them off from one place rather than three. My credit card is Aqua so the interest rate is so high at the moment and I’m just not sure what steps to take.
My credit rating isn’t great but I can comfortably afford to pay back £250 a month as that’s what I am already doing. I just want it to be abit easier but more importantly I don’t want the credit card hanging over my head so would rather all the debts come from one place. 

Any advice would be great and I’m happy to provide more information 

I think, rather than consolidation for the sake of it, you need to be asking 'how can I reorganise my finances to pay less interest?'

I suspect the balance on Aqua is the smallest debt but the highest interest. and if you are just making minimum payments, you won't be making much headway.

£250 per month should be enough (just) to service £10k without defaults. Why not post a statement of affairs and let us have a look at the detail?

User_060921

One of the biggest reasons I am so far in the soup is because of years of robbing Peter to pay Paul. Consolidation. 

We did remortgage our house many many moons ago, and we do have lots of equity so it was tempting to try again, but I am so glad I didn’t.

I am £54k in debt for various reasons. It all came to a head when I ran out of zero interest options and my business (second income ) went tits up.

DMP was the only option for me as bankruptcy or Iva would result in me losing my job.

It was / is scary - but I am 18 months into my DMP and have managed / prioritised my finances far better. It’s not perfect but I am getting there and I won’t consolidate every again 

Karonher

Most people will say don't consolidate because you can end up running up the cards again. Only you know if you will be able to put them away and not keep using them. I did it in the early 90s and was out of debt in about 15 months. It was £1000 in my case so not as much, but it taught me not to overspend.

TheAble

Katieann said:

Hi, I have two bank loans and a credit card totalling £10000. I would like all of these to be together so I can pay them off from one place rather than three. My credit card is Aqua so the interest rate is so high at the moment and I’m just not sure what steps to take.
My credit rating isn’t great but I can comfortably afford to pay back £250 a month as that’s what I am already doing. I just want it to be abit easier but more importantly I don’t want the credit card hanging over my head so would rather all the debts come from one place. 

Any advice would be great and I’m happy to provide more information 

It might sound odd but sometimes high interest rates can be a blessing in disguise. Better to be paying £50 a month (say) in interest which is curbing your spending, than £0 in interest and £xxx in mindless spending, which will only go to increase your debts.

Suck it up and pay it off. If you consolidate it might feel good at first but you'll only go on to rack up more. Those who do it tend almost always to regret it.

findingthisdifficult

As someone in their mid 30s, I have spent my whole adult life in debt thanks to a vicious cycle of consolidating loans/credit cards - I can't even think of how much interest we've paid on top of what we actually spent.

We became debt free (excluding my mortgage) in January this year, I'm not going to lie and say we haven't been tempted to borrow again as we have but this time we took more time to consider it and actually backed out of a loan application because actually it's been nice to have more of our income for ourselves to build up savings (never had them at all until now) and be able to afford to replace things if we need to without panicking about how we will pay for it.

Most people on here can offer great advice, they could maybe help you work out how to bring your interest rates down and point out where there may be some areas you can spend less to enable you to pay off your debt quicker.

enthusiasticsaver

There is no advantage whatsoever in consolidating debt and invariably it leads to higher debt in the long run.  If you do not have a good credit record then you are unlikely to get a good rate anyway.  I would focus on paying off the Aqua and take it from there.