Looking for advice on loan decision

scotschick_2

Hi All,

I have been lurking in the background, reading up on DFW posts for several months, and have not got to the point of making a change in my life.

I am about to try and consolidate debts that I have, and select a loan to start paying it back, and getting myself debt free.

I think that the many posts and stories I have read have just gave me such inspiration and focus on doing this. I will put on an overview of my circumstances in the next few days, but I want to get some feedback on a decision regarding a loan.

The amount I want to borrow is £11,000, and this consists of my two main debts:

Virgin Credit Card - £7000
Overdraft - £3800

With both these debts I am not focused on paying them off, and keep spending when I shouldn't. I have now started tracking all spending in the past 2 months, and I am reversing out of terrible spending habits.
Being honest this mainly comes from the last 18 months, when I had to move jobs and took a 6K wage drop.....haven't quite recovered from it, and have been overspending since then, and trying to live as I used to. I HAVE NOW WISED UP!!!!!:o

I would like to set up this loan, and I am planning to pay this back over 6 years. I have compared the option of using 0% CC's but I have been thinking hard over the past 2 months, and I know how I got into this situation, and need something disciplined with regular payments.

I just want to reassurance that I am doing the right thing. After some investigation I am planning to apply through TESCO Loans, and the payments will be affordable for me, now that I have started dropping luxuries out of my spending.:D

As stated I will drop a note of my spending statement on the site in the next few days, but looking for some moral support. I realise that looking at other people's debts, my worries are less, but I was feeling like I was caught in a spiral..!!

Looking forward to posting more in the future.

Take Care
Cheers
Scotschick:cool:
xx

Burlesque_Babe

Nooooooooooooo!!!! Please don't get a consolidation loan!

You are going to be paying interest on top of the interest you've already incurred.:eek:

If you have the option of moving to 0%, you'd be mad not to! You say you want to be 'disciplined' but you would be with a 0% CC because you'll have a DD set up - AND - you can overpay it if you have some extra cash at any time.

Consolidation loans are rarely the answer and if you can afford to pay the money back, why are you choosing to pay more in the way of interest when 0% is more than probably an option?

If you pop up your SOA, we can all have a look and help you with suggestions how to shuffle your budget/what to cut back on.

Cleosmum

Cut up the cards now so you arent tempted to spend on them and do an SOA at http://www.makesenseofcards.com/soacalc.html and also compile a snowball at http://www.whatsthecost.com/snowball.aspx and put all thoughts of consolidation out of your mind. http://www.moneysavingexpert.com/protect/demotivator/ is a handy tool too

vandanfc

Assuming that you get the "typical" apr rate, the figures without insurance would be:

Your monthly repayments would be £185.41

For a £11000 loan repayable over 6 years and 0 months with a 6.8% APR

The total amount repayable is £13350.
What do you currently pay on the 2 debts you want to clear with this loan ?

What are the aprs ? Can you afford to pay anymore than the £185 above, if so have a look at the snowball calculator and see what this will mean for you debts if you continued to pay them. http://www.whatsthecost.com/snowball.aspx

scotschick_2

Had a feeling that this would be the advice. I had thought about the CC shuffle, but I am concerned that it will get a bit confusing. My CC was 0% until just over a month ago, and so I am keen to get it moving. Applied for a Tesco CC and got confirmation of acceptance, but told that limit is £2200. Was hoping for a higher balance than that.

This is what was making me deliberate...and consider if I should apply for another card to spread out the money transfer to other cards. My only concern with doing this, was I was worried that it would affect your credit score if you apply for several different CC's. Or does this make no difference.???

My main issue of concern is my overdraft, and it is here that I feel I cannot claw myself out
What makes it worse is that I am skating close to the limit, and due to the change in interest on my CC...I got notice that a £155 payment is going to come out of my account...and I feel really stupid for not switching:o

This is where I feel despondent.....and was hoping that getting this loan would discipline me. Was also watching Martin on tv several weeks ago, and he commented that, depending on your discipline, a loan is sometimes a preferred option.

Will focus on getting my details up....for comment and honest advice.:D

GettingThingsDone

Hi scotschick

I agree with the posters above - don't consolidate!

I found the easiest way of managing initially was to use http://www.whatsthecost.com/snowball.aspx and plugged all of my debts in there. This effectively gave me a single payment figure and the discipline to make the payments.

I was lucky that I could reclaim my bank charges and just got rid of my overdrafts which really helped.

As soon as I could, I took up the offer of a 0% card and have moved everything onto there.

Sorry to nag, but don't consolidate!!! I started off with the same kind of level of debts as you back at the end of 2006 and I should be debt free someday soon...

gtd

Burlesque_Babe

scotschick wrote: »

I had thought about the CC shuffle, but I am concerned that it will get a bit confusing.

Better to be a bit confusing than a bit expensive

scotschick_2

Thanks for the feedback so far....think I had my reservations, which is why I posted for advice.

Will go to the snowball calculator, and work it from there. I take it that when it comes to overdrafts the advice is to chip away at it??? Was considering if it would best to try and move it onto a 0% card.

On a positive note these are the two main debts that I have, but I am just so dissapointed that I let it get to this point over the past year....spending more than I earn.

My main concern now is that I have about £100 to last me over the next 2 weeks, and I in danger of going over my overdraft limit with the CC payment that is due. I know that £100 seems enough, but my travel costs are quite costly.

My focus is on not going over the limit of the overdraft and allowing the back to hit me with charges. I may ask my boyfriend to help me with £20-£30, since from calcs I believe I may only go over by £20.

Thanks for help so far.
Just wait until you can see my SOA.

Cheers
Take Care
Scotschick
x

Burlesque_Babe

OK, if you have £100 for 2 weeks, what exactly do you need to spend? Write it down - the essentials (ie petrol, bills due to go out of your account), not the luxuries and see what you have left and then divide that by 14. If it is scarily low and you need food, hop over to the Old Style board for lots of ideas for meals which will cost you literally pennies.

TurnaroundSue

It might be worth opening up another current account with another bank and have your wages put into there instead. You can then slowly but surely reduce your current account and eventually pay it off. That way you know that your monies are not going to be swallowed up in unauthorised bank charges.

I agree with the others, that consolidation is not the best way and from experience and alot of other comments on this board, you most probably will find that in a few years time you will be back up on the cc's as well as having the consolidation loan to pay back. In my experience I think that is the only way to change your spending habits - it really makes you think on what you spend your money on.

Good luck and keep posting.

Persolv0

Hello Scotschick
Im with the all the other posters advice above for the same reasons outlined but with one additional angle that you may or may not have reflected on.
The consolidation is a quick fix for now and as long as your disciplined enough never to borrow anything else then the consolidation will work over the six years (but it will be the more expensive option because as already stated its interest on interest )

I really do mean this question kindly and based on personal experience...you say your still backtracking on your spending habits....are you self disciplined enough not to take advantage of the next offer from cc company etc and in turn end up with more cc debt and od debt???(I stress im not having a go but it is one of the key ways people go from having manageable debt to it all going very sour)

I think your far better to see your at the gate of real debt issues if you continue as is and to put your efforts into a zero % card and as for the overdraft it may be a good idea to change banks then treat the overdraft for what it really is(an open ended loan that can go on for years taking your money from you in od charges.

Best wishes R