Is this a good idea?

Dantastico

Hi, I'm new to this forum and have just been looking around for a while. It seems like everyone on here is so friendly and helpful that I thought that some of you may be able to help me. I just would just like to know if anybody thinks this is a good idea (or not a stupid one at least) as I'm not the best at making decisions and need a little reassuance that I'm not doing the wrong thing.

Here goes anyway......

I currently have three debts which are as follows:-

An Egg card with £2050 to pay (paying minimum £41 p/m)
A Barclaycard with £1200 to pay (paying minimum £36 p/m)
A Barclayloan with $4020 left to pay over next 3 yrs (paying £136.88 p/m)

I thought that maybe I should take out a new loan for around £7200 over 5 years (maybe with Northern Rock (an online quote of £166.07 p/m)) and pay all off the above off with it. Also thinking of trying to save some money and pay off this loan early if possible. I'm sure this would benefit me, but I can't quite get my head round it all and would appreciate any thoughts and advice from others.

I also appreciate that there is probably a cheaper way of doing this, but I feel that a loan is probably the best way for me because the payments are structured and I would then be able to cancel my credit cards so there would be no more temptation.

Thank you for reading this post and any I would be greatful for any advice or comments. I will also try to contribute to this forum if I can, but as I say, a lot of the time I don't really believe what I'm saying is right, so it may be best for me to keep quiet (well, that's what some people tell me!).

asandwhen

Dont quote me on this perhaps someone else can confirm - I think northern rock loans are front loaded and not flexible - I think that if your were going to overpay you would be better off going for something like a cahoot flexible loan or similar just make sure it is flexible.

youngandreckless

Hi,

I've just done what you are contemplating - with a Cahoot flexible loan. It is working for me as it means that I can "start again" with my bank account and do all I can to get the loan down as quickly as possible.
Things to be aware of from my own experience:
Make sure you cancel all of the cards completely - otherwise there will be temptation to use again.
Be aware that with a flexi loan often you can draw more funds if needed so there is extra money you could be tempted into.
Overpay by all means, but make sure your budget is realistic. If you can live on it ok, you're much less likely to want to get into further debt (or do it because you see no choice).

Good luck, I hope whatever you choose works well, a loan was a good option to me, but do your research to make sure it will do what you want.

Y&R x

Dantastico

Ok, that makes sense, flexible is good. Obviously these are slightly more expensive (higher apr) but they will be cheaper in the long run if I am overpaying, yes?

Just checked the Cahoot and NR websites; Cahoot flexible loan is only an extra £7 p/m more than a NR fixed which I'm assuming is not bad for the extra flexibility. I will have a more detailed look into other flexible loans though.

Thank you for your prompt reply, it's very much appreciated.

By the way, what I am planning is right and should benefit me, won't it? I mean to me it looks like I'll save a lot of money, but I'd just like a nod of approvement to be sure. Money scares me most of the time!

asandwhen

It can work but you need to very disiplined if you doubt yourself dont do it - make sure you not only cut the credit cards up but call and cancel them if you no longer want them - good luck - keep us posted.

nelly_2

At present you owe £7270

and pay out £213.88 a month

That loan will mean you owe £9964.2,(166.07 * 60 which is £2764 added to your debt.



The new payments will leave you £47 a month better off which is less than £12 a week

Or look at it this way... paying that extra £12 a week will save you £2764 quid.

That only works if you do this;

The CC amounts grow, as they add interest each month, your best bet is to try and get another cc on 0% interest, swap your present balances to that card and pay off before the 0% runs out.

What was the interest ammount of your last £41 on the egg?

Dantastico

Firstly, thanks all for the advice and support.

As for your question nelly, the interest amount on the egg card was 1.240.

well my statement read:-

MERCHANDISE INTEREST AT 1.240 PER MONTH

so I'm assuming that's what that means.

Just in case it's useful, my Barclaycard is as follows:-

Interest on cash balance (1.991%) £5.26
Interest on standard balance (1.941%) £18.76

Also, I am paying a payment protection plan at £9.69! Do I really need to be paying this? It seems like an awful lot extra to be paying!

I understand that the CC idea is probably the best way to deal with this debt, but I'm not sure if I trust myself not to use the card if I did it this way. Also, I'm not sure I would be able to get a high enough credit limit to cover both of my current cards.

Thanks,

Dan

johannamse

Hi Dan,

I have been in your position many times...there is a massive temptation when you are new to trying to get rid of debt / moneysaving to reduce the number of payments you are making. I was like this for ages. You have to try and get it into your head that it really does not matter how many payments you make, but that you get rid of your debt in the most efficient mannor possible, and which costs you the least. Nelly's advice is sound.

I have to go...am very excited about the cricket...Good Luck. Hope this makes sense.

nelly_2

Dantastico wrote:

I understand that the CC idea is probably the best way to deal with this debt, but I'm not sure if I trust myself not to use the card if I did it this way. Also, I'm not sure I would be able to get a high enough credit limit to cover both of my current cards.

Thanks,

Dan

If you are serious about getting shut of debt then you HAVE to trust yourself!

I mean, you came here to get advise on how to deal with it didnt you?

Deffinately bin the protection and use it to pay off more.

It doesnt have to be just 1 card on 0% you can get 2.

It will only be the same as you are now, ie paying off two cards.

And cut the lot in half even the new ones, you dont have to own the bit of plastic to pay the bill.

Then the "trust" issue wont arise.

johannamse

I always ponder on the "trust" thing that crops up on the debt board all the time. People recurrently say, "I just can't trust myself not to spend on the cards again". I beleive that if you are still at this stage then you are not truly terrified of your debts and therefore will not be fully committed to paying off everything. You (this is not directed at OP - just generally) are still looking for the "easy" route, the one loan option, the low monthly payment option.

Well, if you are still in this stage, all I can say is, see you back here in a years time, when your debts will be bigger...it's really hard to get out of debt and if you arn't truly terrified yet, then read read read. Read the whole of the debt board and get scared. You have a choice while your debt is still manageable to either take control and change your life or float along for the next few years, until it all comes crashing down.

I am sorry to highjack this thread, it is just something that always comes up, and having bought the t-shirt I get really frustrated reading it all the time. Please, please, please stop spending on your credit cards, your life will be richer for it.

Dantastico

Ok, I'm going to take everyone's advice and do this properly. It's funny how I feel like I can trust people I have never met, but I do. And of course you are right, the quicker this is done the better it will make me feel and a better life I shall have! As long as I can remain a part of this forum, then I think that will give me the motivation to do it. That means me not making any more mistakes, so.........

nelly, I'm sorry to ask you, but I need to be sure of what I'm doing here.

nelly wrote:

At present you owe £7270

and pay out £213.88 a month

That loan will mean you owe £9964.2,(166.07 * 60 which is £2764 added to your debt.

The new payments will leave you £47 a month better off which is less than £12 a week

Or look at it this way... paying that extra £12 a week will save you £2764 quid.

That only works if you do this;

The CC amounts grow, as they add interest each month, your best bet is to try and get another cc on 0% interest, swap your present balances to that card and pay off before the 0% runs out.

Maybe I've got very confused and got this wrong but, are you saying to transfer the CC balances to 0% deals and leave my current Barclayloan as it is. I know this may seem a stupid question to some of you, but if I get things wrong then it's obviously going to cost me a lot more than it should.

If this is the case then my plan of action should be:-

1 Apply for Natwest credit card and check credit limit.
2 Transfer all of Barclaycard debt & possibly some of Egg debt to this card.
3 Set up tart alert for this card six weeks before the 0% deal is up.
4 If credit limit is not enough, then apply for Lloyds TSB Platinum card aswell.
5 Transfer remaining egg debt to this card.
6 Set up tart alert for this card six weeks before the 0% deal is up.
7 Apply for 'best deal' cards when the periods are up.
8 Continue to do this until both balances are at £0.

Is this right or have I missed anythig important (it wouldn't suprise me!).

Dan.