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  • FIRST POST
    • loki9421
    • By loki9421 18th Oct 19, 3:24 PM
    • 1Posts
    • 0Thanks
    loki9421
    In catch 22, need help or advice
    • #1
    • 18th Oct 19, 3:24 PM
    In catch 22, need help or advice 18th Oct 19 at 3:24 PM
    Hi everyone,

    This is my first post so please move if in the wrong place.

    I really need some help and/or advice.

    Firstly, please allow me a few mins to introduce myself and explain my current situation. I've made some poor financial choices over the last couple of years which I'm attempting to resolve now. I work in IT and I take home a good wage (currently 50k p/a due to increase to 55k in the next 12 months and potentially towards 60k in 2 years).

    Over the last few years I've been on a much lower income ranging from 25k - 30 and unfortunately during this time I lived a little beyond my means and made some bad decisions. I found myself in a bit of debt and thought that a consolidation loan would help me, unfortunately due to my inexperience and catch 22 situation with credit usage and my credit report (poor) I was unable to find a lender with good rates and had to settle for a sub prime provider. I didn't learn from my lesson and soon found myself in trouble again and had to consolidate with another sub prime lender. This has left me paying out around 1200 p/m in loan payments, most of which is interest as the rates are between 40% and 70% (Everyday Loans & 118 Money).

    As I'm now on a good income I can afford these repayments but as you can imagine it's very frustrating paying so much interest each month and not really seeing my overall balance affected.

    In my mind I can be debt free in less than 2 years paying less than I am now if only I could find a lender willing to give me a good rate. At my current rate I will end up paying back around 50k over the next 5 years on a balance of 20k, it's insane! I could put a nice deposit down on a house for that amount.

    I'm nearly 40 with no savings and with reality hitting me hard I realised that I need to sort my act out and put money aside for the future. In my current state I'm going to be 45 before I'm debt free and able to start saving for a house, which frankly seems futile as by the time I get a deposit together I'll be too old for a mortgage! Just FYI I'm renting at the moment.

    My bank has advised that they're unlikely to be able to help due to my affordability for an additional loan, they understand that I'd use the money to pay off the existing loans but as they have no facility to do that themselves they have to assume that I wouldn't do that and the additional loan payment would be on top of my current outgoing, which of course would be unaffordable.

    I need help, and I'm willing to do whatever it takes to get out of this mess. I cannot get a decent rate on a loan to wipe off my existing debt.

    My monthly budget would be circa 1000 p/m and ideally I'd like a loan for no more than 2 years. The amount I need to consolidate fully is 20k. My current credit rating is just over the mid 'poor' mark.

    I need a company that will pay these loans off at an affordable APR or at least trust that I will pay them off, but because nearly half my wage goes on repaying existing loans no one will touch me as my credit is bad and affordability is low. I just need someone who can make a decision and see that I'm paying everything on time and if I can afford this amount every month then of course I'll be able to afford a consolidation loan on a much lower APR, but as everything is digital now no one can help as 'computer says no'.

    I've was advised to ring my current creditors and ask for lower interest rates; when I did this, as you can imagine, they practically laughed at me down the phone.

    I was also advised to try credit unions but the ones I spoke to said the amount I needed was outside of their limits (10k max).

    I feel completely trapped, on one hand I could pay these off over the next 5 years and be debt free with no money in the bank, and my other option is simply stop paying, deal with the letters and in 6 years have a clean slate but with money in the bank from saving on the repayments. I must admit that the latter sounds much more attractive

    I want to be clear, I'm happy to pay what I owe, I just want a fair rate. On 50k p/a I could easily have this debt paid off in less that 2 years, comfortably, I just need a company to be able to see that.

    I clearly suck with money management and have learnt some hard lessons recently. I need out of this situation.

    Thanks for reading! I really hope someone out there can help.
Page 1
    • zx81
    • By zx81 18th Oct 19, 3:32 PM
    • 24,399 Posts
    • 27,195 Thanks
    zx81
    • #2
    • 18th Oct 19, 3:32 PM
    • #2
    • 18th Oct 19, 3:32 PM
    You won't get a consolidation loan with that debt and credit history, so don't waste any more energy on that.

    Go to the DFW boards for advice on cutting costs and repaying faster.
    • sourcrates
    • By sourcrates 18th Oct 19, 3:48 PM
    • 18,783 Posts
    • 17,689 Thanks
    sourcrates
    • #3
    • 18th Oct 19, 3:48 PM
    • #3
    • 18th Oct 19, 3:48 PM
    I clearly suck with money management and have learnt some hard lessons recently. I need out of this situation.
    .
    Originally posted by loki9421

    Hi,

    You said it yourself, "you suck at money mangement", this is, unfortunately backed up by you still insisting (another) consolodation loan is the way forward, when clearly it isn`t.

    You will rinse and repeat this senario until you put an end to the behaviour that got you into this mess in the first place, its debt mangement advice you will benefit from, not more borrowing, it clearly dosen`t work for you.

    Your mind-set needs to change, you need to cut down on what your spending, maximise your income, and start to live within your available means, throw everything else at the credit debts, its the only way.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File and Ratings, Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to:
    forumteam@moneysavingexpert.com.
    Any views expressed are mine and not the official line of MoneySavingExpert.com.
    For free debt advice, contact either : Stepchange, National Debtline, CitizensAdviceBureaux.
    • kazwookie
    • By kazwookie 18th Oct 19, 4:08 PM
    • 11,115 Posts
    • 131,346 Thanks
    kazwookie
    • #4
    • 18th Oct 19, 4:08 PM
    • #4
    • 18th Oct 19, 4:08 PM
    What are you spending your day to day / monthly money on?


    You need to cut these down to help pay towards the debt


    How much is your rent / gas/ elect/ water/ food / hobbies / cars/ pets etc
    Sun, Sea

    • Ben8282
    • By Ben8282 18th Oct 19, 6:08 PM
    • 4,397 Posts
    • 2,420 Thanks
    Ben8282
    • #5
    • 18th Oct 19, 6:08 PM
    • #5
    • 18th Oct 19, 6:08 PM
    You have written a long OP and provided lots of information, but even after reading it through I\m not really sure how much you actually owe, to who and why exactly you have a poor credit history.
    If your total debt is actually only 20k,against an income of 50k p/a due to increase to 55k in the next 12 months and potentially towards 60k in 2 years, your situation really isn't as bad as it may feel to you at the moment.
    Could you perhaps provide amount of debt, name of lender, remaining term, APR and, monthly repayment figures?

    I'm willing to do whatever it takes to get out of this mess. .
    Originally posted by loki9421
    Not sure what you mean by this, but don't do anything stupid.
    Last edited by Ben8282; 18-10-2019 at 6:19 PM.
    • Willing2Learn
    • By Willing2Learn 18th Oct 19, 6:26 PM
    • 4,764 Posts
    • 4,307 Thanks
    Willing2Learn
    • #6
    • 18th Oct 19, 6:26 PM
    • #6
    • 18th Oct 19, 6:26 PM
    ...I'm nearly 40 with no savings and with reality hitting me hard I realised that I need to sort my act out and put money aside for the future. In my current state I'm going to be 45 before I'm debt free and able to start saving for a house...

    ...on one hand I could pay these off over the next 5 years and be debt free with no money in the bank, and my other option is simply stop paying, deal with the letters and in 6 years have a clean slate but with money in the bank from saving on the repayments. I must admit that the latter sounds much more attractive

    I want to be clear, I'm happy to pay what I owe, I just want a fair rate...

    ...I clearly suck with money management and have learnt some hard lessons recently...
    Originally posted by loki9421
    I do not agree with your self-assessment when you say you have learnt some harsh lessons. The evidence seems to indicate the opposite. You are again looking to consolidate without addressing the fundamental flaws within your monthly budget and money management.

    It is a bitter pill to swallow, but paying your debts the hard way will improve your financial health and prognosis moving forward. Why do you consider paying your debts in five years as an unacceptable option when it is the obvious solution? You need to tackle your debts, not run away from them as otherwise you will continue to learn nothing.

    Besides, as you say, by the time you are 45, you can be debt free and saving toward owning your own home. You do not need to consolidate. Consolidation would probably consign you to many more years of living in debt, without any realistic potential of owning your own home.

    Please do not take offence at anything I have said. I am trying to be constructive and helpful, hopefully guiding you toward a future without debt.

    If it were me, I would start a new thread on the Debt-Free Wannabe (DFW) sub-forum, posting up your fully completed Statement of Affairs (SOA)
    Last edited by Willing2Learn; 18-10-2019 at 6:29 PM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • zippygeorgeandben
    • By zippygeorgeandben 18th Oct 19, 7:46 PM
    • 1,027 Posts
    • 1,425 Thanks
    zippygeorgeandben
    • #7
    • 18th Oct 19, 7:46 PM
    • #7
    • 18th Oct 19, 7:46 PM
    First of all, well done for owning up to making mistakes in the past and not using other excuses. You talk about your pay going up annually by 5 grand but that shouldn't really be the mindset. Ask yourself this question 'Will my outgoings increase when my pay increases?' Most people tend to spend more when they earn more.
    I still budget each day. My pay has increased over the past three years (you can see my sticky on the loan page) but I am aware of my incomings and outgoings every single day. If I overspend, I know I have to reign it in. I have taught myself to question each financial decision I make. I certainly didn't do this before post number one on my thread.
    Savings as of October 2019

    Savings account 1 - 8626.57
    Savings account 2 - 500.00
    Current account - 4584.08
    [I]Total - 13710.65/I]
    • tlc678910
    • By tlc678910 21st Oct 19, 7:02 PM
    • 917 Posts
    • 1,398 Thanks
    tlc678910
    • #8
    • 21st Oct 19, 7:02 PM
    • #8
    • 21st Oct 19, 7:02 PM
    Hi,
    If you owe 20k why not decide to do everything you can - extremely frugal living as far as you can - to race to get it down to 10k. At that point you might well be able to borrow at a lower rate in order to pay the remainder off with less interest.
    • DCFC79
    • By DCFC79 21st Oct 19, 7:29 PM
    • 35,379 Posts
    • 22,328 Thanks
    DCFC79
    • #9
    • 21st Oct 19, 7:29 PM
    • #9
    • 21st Oct 19, 7:29 PM
    OP a consolidation loan wont work (if you could get 1). I see 2 options you either cut back on your spending and I mean cut back, so look at your food shopping, ditch the brands and buy own brands, give serious consideration to shopping at Aldi/Lidl. Cook from scratch and buying reduced items can help.


    Look at what your buying is actually the cheapest, a branded good may well be cheaper but do the math. Look at your energy bills, could be overpaying, insurances too.


    There's other ways you can reduce your spending.
    Last edited by DCFC79; 21-10-2019 at 7:58 PM.
    • foxy-stoat
    • By foxy-stoat 22nd Oct 19, 10:40 AM
    • 5,417 Posts
    • 3,301 Thanks
    foxy-stoat
    List out your outgoings and look to change your lifestyle, down value everything, where you live, what you drive, etc etc.

    Forget about another loan - you wont get one at the rate you need to make that work.
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