How to sort my debt out?

Billypie1984

Hello, I am in debt on credit cards (x2) and loans (x3) to the tune of £10,500. I am paying around £450 per month to pay these off. I do have around £500 left after I have paid all bills and debts, so while I am not destitute, these debts have become a constant worry.

I have tried to get a loan to consolidate my debts as a few are high interest rates (39%), but no one will lend to me.

Please help. What can I do?

Thank you in advance.

CliveOfIndia

A consolidation loan is not the way forward - you can't borrow your way out of debt. As you've already found out, the biggest hurdle is getting accepted in the first place. A lender has no way to force you to use the loan to repay the debt, however good your intentions are. They therefore have to assume that a loan would be in addition to - not instead of - your existing debts, and will factor this into their affordability calculations. The result being that you either get declined, or accepted but with a very high APR to account for their increased risk.

Fill in an SOA https://www.lemonfool.co.uk/financecalculators/soa.php

Use the "Format for MSE" option and copy the results into this thread. We can then have a look and get an objective idea of your overall financial situation, and suggest ways to deal with it.

sourcrates

What can you do ?…..you ask.

Well, it depends how much of a problem your debt has become, and from what you`re telling us, you have a hefty £500 disposable income left at months end, so an all out debt solution won`t be necessary in your case I don`t think.

And certainly forget any idea of a consolidation loan, you can either weather the storm or try and cut back on your spending in other areas, and throw as much as you can at the credit cards.

In the grand scheme of things a 10k debt is not the end of the world.

Brie

The short answer is to use the £500 excess to pay towards the debt with the highest interest rate. Once that is paid off move on to the next highest and so on. Each debt you eliminate will mean less interest being accrued and the more money you'll eventually have to pay off the debts. And eventually you'll have more money to pay yourself - savings, pensions, whatever.

The longer answer is to complete the SOA that Clive suggests and post it back here for us to see what else we can suggest to make more money available for you to pay things off asap. It's also a good way for you to see what you are actually spending your money on each month, it can be a real eye opener. Looking at your budget and doing something about it is the best way to get out of debt and also stay out of debt.

MasterG83

My advice would be to snowball these debts, start with the smallest debt and focus on that one, regardless of the APR, this is about mindset and momentum, paying the minimums on the others. Sell stuff, get a part time extra job and throw everything at the first debt. Once cleared you will feel like you have made a dent, then take that amount and add that to paying the next smallest debt. Worked for me. What is the list and amount of the debt.