My debts are bigger than I thought!

Boriss

Hello all,
Advice needed, I tracked all my debts last night and set up a simple spreadsheet which horrified me! I have listed them below in descending APR order: -

Bank overdraft: £8,000 - 19.3% (£10,000 limit)
Credit card: £14,700 - 16.9% (£15,000 limit)
Cahoot flexi loan: £3,750 - 15.9% (£5,000 limit)
Abbey loan: £19,200 - 7.9%
Mortgage: £89,500 - 7.5%
Re-mortgage: £33,100 - 6.14%
TOTAL = £168,250

Fortunately, I have £12,000 arriving in my bank account today which will put the balance £4,000 in the black again - I intend to cancel the overdraft immediately as this is is my most expensive form of borrowing.

I think I can afford to pay £2,000 off my credit card and have enough funds until I get paid again at the end of the month.

I have a Credit Union account which has enough money to clear the Cahoot loan (I think).

So, this will leave me with £12,700 on the card, £19,200 on the Abbey loan plus my mortgage repayments. I am thinking of bundling both mortgage accounts together by moving from C&G and re-mortgaging again to raise capital to pay off the £32,000 expensive debt.

Obviously this will leave me with a much larger mortgage and increased monthly payments but I am currently paying out £2,100 a month now so anything less than this will feel like Christmas.

The house is worth approx. £200,000 so there is enough equity in it to raise the additional funds. However, I'm crap with money (you noticed?) and mortgages are quite confusing - should I go for a fixed or discount repayment mortgage? The interest rate cut of 0.25% today and any further reductions will make a difference but I'm very confused about it all.

Any advice will be very welcome....

PS.
If my debts are worse than yours, I hope you feel a bit better now

Sassamac

I got a bit lost with your mortgage and am confused as to why its in two parts (have you moved house?). I would lump the whole mortgage into one, get the best deal you can find (fixed might be a good bet so the outgoings dont change) and then ignore it. Its a secured debt, and the cheapest of the lot, therefore just keep trundling along with it until the rest of the debt is dealt with.

Which still leaves you with a fair whack.
If you could list your current minimum payments that would help.
I would avoid consolidating into your mortgage as the debt is hgh in comparison to the value of the house and you would risk everything if you couldnt meet the repayments.

What are the chances of you getting any 0% credit cards, or even low life of balance credit cards to pay off the 15.9% and 16.9% ones?

Boriss

Hi Sassamac,
We remortgaged the house so that we could build an extension. C&G set it up as a separate sub-account because the main mortgage was still within the fixed rate/low interest period or something...

The credit card has a 2% minimum payment per month, which is £300'ish
Cahoot loan is £76 p/m
Main mortgage is £725 p/m
Re-mortgage is £245 p/m
Abbey loan is a whopping £770 p/m (I think this was £25k over 3 years)

I'm currently looking at the 0% balance transfer cards but think I might have to set quite a few of them up to get the £15k debt down.

Thanks for your help

neverdespairgirl

Hi Boris,

can I suggest you post an SOA - a full list of your income and outgoings, incl. minimum payments?

Boriss

SOA? I'm currently compiling an Income and Expenses spreadsheet but it seems to be never ending.

Net income is approx. £60k per annum which might seem a lot but it doesn't go very far with my lack of money skills. The loans were put in place to pay off previous credit card debts which comprised the usual holidays, furniture, boys toys etc.

Unfortunately, I never seem to learn from my mistakes so the card debt has risen yet again...

TurnaroundSue

Boriss wrote: »

Unfortunately, I never seem to learn from my mistakes so the card debt has risen yet again...

I think that this statement alone is the number one reason on why you should NOT consolidate. What will happen when you have used all the equity in your house through consolidation and you find that you run up further debts? (Also I heard on the tv that they are expecting house prices to fall by around 35% over the next 5 years and this might even put you into negative equity if this were to become reality).

I am sorry if this sounds harsh, but from what I have read on this forum it is important that you try and control your spending and do not turn an unsecured debt into a secured one. I am not very good at advising on SOA'S but there are plenty of good people who will come along and give you excellent advice.

You have taken the first important step of recognising your debt and trying to sort it out. This is an excellent place to visit as you will get lots of advice and help and as time passes and your debts reduce you will once again feel in control of your finances.

Good luck and keep posting.

Boriss

I prefer harsh over softly softly every time and take onboard your point about consolidating and future house prices.

I'm hoping to get straight bit by bit whilst reducing the credit card limit each time I clear a lump off it - will leave a £5k cushion for emergencies etc.

neverdespairgirl

Boriss wrote: »

SOA? I'm currently compiling an Income and Expenses spreadsheet but it seems to be never ending.

That's the kind of thing - look at other people's posts on here where there is an "SOA" in teh title.

Boriss wrote: »

Net income is approx. £60k per annum which might seem a lot but it doesn't go very far with my lack of money skills. The loans were put in place to pay off previous credit card debts which comprised the usual holidays, furniture, boys toys etc.

You have a good income, which is bound to help!

Boriss wrote: »

Unfortunately, I never seem to learn from my mistakes so the card debt has risen yet again...

As you clear them, cut them up?