Debt advice

Missflow72

Hi all, I’m new to this and this is the first time I’m reaching out for advice. I’m 51, female, employed and earning over £45,000 annually (before tax). For various reasons ( mh, no financial support from any other source and generally not good with money) I’ve found myself in over £30,000 of debt. I’ve now consolidated all bar one of my credit cards into loans just so there’s an end to this being paid off. Having done this, I’m having a bit of a panic knowing my ‘spare’ income will not change and I’m looking for advice on how to manage my budget and keep motivated?

sourcrates

Its unfortunate that you didn`t come here for advice prior to taking the consolidation loan, we don`t usually recommend a loan to pay off existing debt, they do tend to fail on a regular basis as the incumbent tends not to change there bad financial habits of the past, and then proceeds to rack up the debt again, within a short space of time.

To make this type of loan work requires you to live within your means, and not take on extra credit, a fact I think you have now cottoned on too, a lot of folk cannot do that, and end up back at square one, but even worse off than they were before.

Loan`s just tend to move the debt sideways, they don`t provide direct solutions for ridding yourself of it, and the fact that you are already in panic mode as regards your disposable income, suggests this was not the best move you could have made.

Others will be able to offer advice on budgets etc, I do wish you luck with it, but please do not be tempted to use any further credit.

fatbelly

This is just about budgeting to see if you can make the new contractual payment.

Can you post a soa?

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

EssexHebridean

Sourcrates has already clarified why we generally advise against consolidation - however, it CAN work, but you do need to be very disciplined. First question from me is whether you have closed the accounts on the now empty cards? and are you intending to use the remaining one that you haven't transferred the balance from?  

Budgeting is key - that's true generally, but all the more so when you are trying to clear debt.

A further question is whether you are fully aware of what lead to the debt in the first place - was this just living beyond your income, or was there a life-event of some kind that caused the issue. (Some people get into debt as a result of problematic building works or planned home improvements done on credit rather than by saving then spending). The budget is the first step in proving yourself wrong about not being good with money though - that is a very easy cop-out - and I'm not meaning that rudely at all, I spent years convincing myself that I wasn't good with money to excuse why the overdraft in use every month, the credit card balance and the loan for a replacement car in spite of me having had plenty of times to actually save for the thing! having learned to budget, I discovered that actually - shock horror - I AM good with money, who knew?! No reason whatsoever why you can't find the same thing too. 

On response to "how to manage your budget" then the answer is simple - first, make a budget... a proper, written down one, that you then live by. 

RAS

I'd add the biggest problem with the budgets put on MSE is what's missing. A lot of people think they have enough for discretionary spends and then freak out when the car needs it's MOT, the holiday has to be paid for, or Christmas comes round, and put it on a card. That and the inertia that means they don't seek out good prices at renewal time.

So doing an SOA based on what you've spent money on over the last 6 months really helps. If you choose to put it up there may be areas where we can suggest savings, or help identify what's missing. Then you can see what the next few years look like.

Andyjflet

Best idea is not to consolidate as you are just "kicking the can down the road" and not dealing with your money issues, IE, living beyond your means, unable to budget and poor money management. 

Now that you have consolidated you need to look at your last 6 months statements and do a full budget and identify where the hole in your budget is.

Missflow72

Thanks for the comments. The reason for consolidation was about seeing an ‘end’ to credit card etc payments if that makes sense. The debt has been accumulated due to a combination of house renovation/repairs and generally overspending/unconscious spending.I don’t have many additional expenses other than a car, which I need for work. I’m at the point where I have to deal with the debt as I know it’s the only way I’ll be able to live comfortably further down the line. So I will have to be disciplined with my spending for the next 3 years while the majority of the loans etc. are being paid off.

I dont intend to use any further credit going forward and need advice on the best way of paying my remaining debt off. I have one credit card with around £4000 and 3 or 4 smaller debts of a few hundred pounds each. Is it best to pay the smaller amounts off first or work through the larger? 

essexhebridean is right, I have the ability to manage money. I’m on top of my bills, always ensure I have the best deal with insurance, utilities and so on. I need to apply these principles to my everyday spending. 

Martico

Some would suggest aiming at the lowest value debts, for the morale boost that clearing those would give. I'd target the ones that charge the highest rate of interest, as that would clear your overall debt quicker. 
Best thing is to do whatever feels right for you, either method has value