Consolidating debts

Chappers27

If it were me, I'd take the personal loan and immediately pay off the credit cards. Having a fixed amount and a plan is half the battle. Do not get another credit card. Be disciplined about your budget - you said you could find savings elsewhere. Where from? Cancel subscriptions, look at your food budget, cut back on special treats etc that you dont really need. I got into this mindset and it can be quite interesting finding ways to shave chunks off your costs.

EssexHebridean

Remembering that this is a money saving forum, we'd be well off-track to recommend consolidation which can frequently cost more, across the board.

The theory about closing the cards is a good one, but in practise, if the original source of the debt hasn't been identified and addressed, it won't help long term as spending will still outstrip income.

This isn't just about people getting out of debt "right now" - and that in itself is an issue with how many see consolidation. It's also to do with creating the habits and mindsets that ensure that they don't find themselves back in the same situation in the future. the action of paying off debts one at a time, regularly revisiting budgets etc, and the small wins of seeing credit history improve and total debt fall through to the "big one" of celebrating a Debt Free Day are all part of the process and invaluable for a lot of folk.

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/81879936#Comment_81879936

The question you have to ask is why haven't you made changes to your spending already to stop your debts getting so big?

Please don't take that the wrong way, I was in a similar position and convinced myself that things would be different after I had taken out new credit cards but I didn't change my habits and just got into an even worse position.

foxgloves

Yes, another consolidation loan pair of failures here. It is a very common pattern. Our 1st consolidation loan failed because we didn't bother budgeting, so continued to live beyond our means. We took out the 2nd one to consolidate the credit cards we'd continued to use. Still no budgeting going on so we consolidated for a 3rd time. Still using cards, still overspending our decent earnings every month. Then some magic happened!! The lightbulb moment pinged! Well, for me....my husband was just starting to consider re-consolidation no.4. I vetoed this & debt-busting began. He got on board shortly afterwards when he saw how my debts were decreasing & he wanted in on the action. We have worked as a team on this ever since. The difference was me learning to budget. Despite then being in my early 40s, I'd never bothered with budgeting before. It took a few goes to get the best methodology but THAT was what got rid of the debts. In our case, as with many folk, consolidation loans only shifted debt as nothing in our spending behaviour changed.

Somewhere out there, there are probably people who do consolidate once while they effect a change in their day-to-day attitude to money, but I know from these boards that there are many, who like us, breathed a sigh of relief following consolidation, & continued out-spending their income, which needs to cover money put away regularly into an emergency fund, car maintenance pot, etc, as well as everyday bills.

The most useful thing for us was the realisation & acceptance that our monthly income is our money. There isn't any more because that's somebody else's money. Looking back, I'm shocked it took us so long, but offer our experience of consolidating as a cautionary tale.