Advice needed (please)

Cammi_2

hi everyone, i have been looking at the MSE site/forum over the last few weeks but have just received a letter that has prompted me to join the forum.

i know that there are people who need help a lot more than me but i need to get my situation capped so that it doesnt get any worse.

i would really appreciate it if anyone can be bothered to read through my story and offer any pearls of wisdom...

steadily over the last 5-6 years i have accumulated around £11k of debt on credit cards. i have at various points tried to sort myself out but have been stupid enough to clear off card with loans but then build up debt on them again.

i just got a letter telling me that my credit card, balance £5,544 is going to increase to an APR of 27%. luckily i called them & they agreed to lower it back down to its previous rate of 16.9%, however could not guarantee the amount of time this rate would remain.

i have a loan at 12.3% APR that currently has £5,100 outstanding, and about 5 years left of £118pmth payments, and £400 in overdrafts.

last november i applied for a personal loan to consolidate all my debts (£11k) but the APR offered was 16.9% so i decided not to take it.

today I applied for a new loan as 6 mths has lapsed i thought i may get a better rate, which i have. it is 12.8% for 60 mths, meaning i would be debt free in 5 years but it would cost an extra £4k, bringing my current level of debt up to just over the £15k mark.

is it worth taking this new debt on to be in a position to be debt free in 5 years?

i make around £920 per month after tax & NI. i can afford repayments around the £250 mark, maybe £300 at a push.

am i better to consolidate again and this time get rid of my cards, or should i leave things as they are and try & pay off my card first with the snowball tecnhique and then concentrate on my loan?

please help me, i get more confused the more i try to make a decision.

thanks in advance, cammi

RAS

Hi

As a general rule, consolidation is a very poor decsion, as you have already discovered.

Not only are you likely to pay more interest oover the term of the loan than if you sort out the cards, but if your situation improves or nose dives, you have no flexibility to make over payments or negoitiate.

Whatever you decide, your debt levels are now equivalent to a year's salary which is difficult in this economic climate.

You would be advised to put up a Statmeent of affairs (will post link shortly) and to have a look at the snowball on www.whatsthecost.com.

It is likely that with a bit of time on e-bay etc, some careful budgetting and some tenacity, you can clear this lot much more effectively without taking the loan.

CAPSimon

I agree the loan probably isn't the way to go. You need to work out a managable budget where your priority expenses rent c/tax food comes first then with whats left make offer to creditors. So many people pay creditors then look at whats left to live on, often nothing. If after your reasonable living expenses nothing is left then insolvency. In your case looking at the amount you owe and your income unless you have exceptionally high living cost a repayment plan of under five years should be possible.

poppyg_2

Cammi wrote: »

today I applied for a new loan as 6 mths has lapsed i thought i may get a better rate, which i have. it is 12.8% for 60 mths, meaning i would be debt free in 5 years but it would cost an extra £4k, bringing my current level of debt up to just over the £15k mark.

is it worth taking this new debt on to be in a position to be debt free in 5 years?

No please don't do it!!!! I have made this mistake so many times myself, consolidation definitely does not work, important thing is to get yourself a decent budget to live on and pay your debts off

Do you fancy posting up a full SOA? I'm sure people on here will be able to advise on savings you could make

Anything you can flog on ebay to make a bit of extra cash to throw at your credit cards? Join some survey sites, good for making a few quid.