Debt consolidation loan - Shall I?
Discussion
Hello all,
So Ill try be as accurate as possible:
Im 23 and due to a poor set of choices in the last 3 years I've wound up with 4 maxed out credit cards @ 1k a pop. The APR on these ranges from a decent 18% to a shameful 39.9%.
Ive recently started a new job which pays quite well but is a very long drive away so the increase in earning has been out-weighed by the increase in fuel costs etc. This means at present I can only really afford to pay the minimum on all 4 every month. This has been the case for the last 5-6 months at least and I dont see things changing anytime soon.
So here is what I am considering..
Take out a debt consolidation loan from something like Avant (high apr, short term) for 4k with repayments @ £160 a month for 2 years. Yes, Ill be paying a hefty bit of interest but it'll mean I can clear my CC's. The total minimum payments i shell out for all 4 cards atm totals to £200 a month so the loan repayments would be less.
Am I being quite daft?
Poor credit history too btw.
So Ill try be as accurate as possible:
Im 23 and due to a poor set of choices in the last 3 years I've wound up with 4 maxed out credit cards @ 1k a pop. The APR on these ranges from a decent 18% to a shameful 39.9%.
Ive recently started a new job which pays quite well but is a very long drive away so the increase in earning has been out-weighed by the increase in fuel costs etc. This means at present I can only really afford to pay the minimum on all 4 every month. This has been the case for the last 5-6 months at least and I dont see things changing anytime soon.
So here is what I am considering..
Take out a debt consolidation loan from something like Avant (high apr, short term) for 4k with repayments @ £160 a month for 2 years. Yes, Ill be paying a hefty bit of interest but it'll mean I can clear my CC's. The total minimum payments i shell out for all 4 cards atm totals to £200 a month so the loan repayments would be less.
Am I being quite daft?
Poor credit history too btw.
Whoops screwed up the details there.
It's about 160 a month for three years. Not two.
Also I would get a balance transfer card but I have a shocking credit history so no go.
In terms of outgoings and income. I have budgeted my entire day to day life and because of the mortgage I'm covering and extra bills and car costs etc I'm left with peanuts as disposable income.
It's about 160 a month for three years. Not two.
Also I would get a balance transfer card but I have a shocking credit history so no go.
In terms of outgoings and income. I have budgeted my entire day to day life and because of the mortgage I'm covering and extra bills and car costs etc I'm left with peanuts as disposable income.
Interest on the E60 is 6% with Motonovo. It was a 5k deposit + 7k financed.
The thing with selling it on is - Right now I am getting almost 600-700 miles per full tank out of the e60 and with a 110 mile daily commute that is working out pretty manageable for me.
The E46 is driven by my dad for local runs + insurance is paid off for the year along with tax and MOT, which is why I feel selling it will not really help the household situation much - but it is smarter, yes.
Having said that, I've taken all the feedback into account and I am actually looking at selling the E60 and E46 and ploughing all the money into my debt and cutting my cards. But I fear that if I am left with almost 1k to buy a car, which has to be a diesel and auto and must transport me 110 miles a day on motorways, I may wind up with a lemon which will cause me further headache.
Another update: Getting a 1.5 Bonus next month from work and that will be used to clear 1 credit card and the other 500 into another. Did some further calculations and realised IF I live like a complete hermit for the next 8-10 months, I can save enough to pay off all the cards without selling any cars.
By hermit, I mean spending no more than £100~ on social outings (This is needed due to where I work, client lunches/team outings etc) and taking food from home every day.
Hopefully, should be manageable.
The thing with selling it on is - Right now I am getting almost 600-700 miles per full tank out of the e60 and with a 110 mile daily commute that is working out pretty manageable for me.
The E46 is driven by my dad for local runs + insurance is paid off for the year along with tax and MOT, which is why I feel selling it will not really help the household situation much - but it is smarter, yes.
Having said that, I've taken all the feedback into account and I am actually looking at selling the E60 and E46 and ploughing all the money into my debt and cutting my cards. But I fear that if I am left with almost 1k to buy a car, which has to be a diesel and auto and must transport me 110 miles a day on motorways, I may wind up with a lemon which will cause me further headache.
Another update: Getting a 1.5 Bonus next month from work and that will be used to clear 1 credit card and the other 500 into another. Did some further calculations and realised IF I live like a complete hermit for the next 8-10 months, I can save enough to pay off all the cards without selling any cars.
By hermit, I mean spending no more than £100~ on social outings (This is needed due to where I work, client lunches/team outings etc) and taking food from home every day.
Hopefully, should be manageable.
g35x said:
Ultimately this is going to be a barrier, you can't afford the lifestyle you are currently living. Until you address that by either seeking out a better paying role, or adjusting your lifestyle any action you take will only provide temporary relief.
Why not sell the house and get somewhere closer/cheaper ?
I agree - The lifestyle is slightly more extravagant than should be. The only reason for this is due to the fact that I was going out far too much. Maybe 4/5 times a week and @ a minimum of £20 a week per night that does rack up quite a hefty amount.Why not sell the house and get somewhere closer/cheaper ?
Luckily, I've cut that down now. In May I went out once haha.
In regards to selling the house etc, it's not possible. It is my parents home and our family home so I cannot do that.
I can see though that debt consolidation loans are a literal no go - I read up about people with 20/30k of Credit Card debt and I refuse to let myself rack up any further debt. I've actually just cut up the two high interest cards and have re-adjusted my budgets so I go out a minimal amount and save every penny. Hopefully by making a few sacrifices ill be on the road to being debt free
Birthday money/Xmas money etc will all be put towards this.Cheers guys.
It's a difficult topic and often its people denying their own mistakes but I'm aware this is all my doing.
Funnily enough I can't shift the 325 right now. The cluster is dead and not working so until that gets fixed it won't be shifted. But yes that is a strong possibility. However dad uses it for work too and his monthly petrol is 150. If I get rid of it it's 120 for him by public transport. I think it would make sense selling the 325 once the insurance etc runs out. If I sell now, my e60 insurance will go up by approx £400 as its multi car.
In the long term the mortgage won't be an issue. Dads on an employment break at the moment so once he's back to work we'll be splitting it. For now, I just need to control my spending and live a little more like an introvert and sacrifice on luxuries. Once the debt is all clear (2 year target) my pay should be up by a further 10k. (Graduate scheme which promises 10k hike after your first two years) and I can begin a clean slate.
It's a difficult topic and often its people denying their own mistakes but I'm aware this is all my doing.
Funnily enough I can't shift the 325 right now. The cluster is dead and not working so until that gets fixed it won't be shifted. But yes that is a strong possibility. However dad uses it for work too and his monthly petrol is 150. If I get rid of it it's 120 for him by public transport. I think it would make sense selling the 325 once the insurance etc runs out. If I sell now, my e60 insurance will go up by approx £400 as its multi car.
In the long term the mortgage won't be an issue. Dads on an employment break at the moment so once he's back to work we'll be splitting it. For now, I just need to control my spending and live a little more like an introvert and sacrifice on luxuries. Once the debt is all clear (2 year target) my pay should be up by a further 10k. (Graduate scheme which promises 10k hike after your first two years) and I can begin a clean slate.
I wasn't aware that the profit thing was gambling. Didn't get a chance to check the link haha.
As for debt management. While I do feel I am a little buggered in this case, I think it is still at a manageable level. I have avoided dealing with it for a few years under the idea that "I'll deal with it another time". Well that time has come.
As for selling both cars, I should give a bit of background. I work for Ford and spoke to a local dealer this morning for financing a cheap PCP diesel fiesta and giving him both my cars (clearing any finance with difference as cash back).
So currently waiting on hearing back from him and it might just be something I may do. Better to suck up that ego for a few years and take this weight off my shoulders
As for debt management. While I do feel I am a little buggered in this case, I think it is still at a manageable level. I have avoided dealing with it for a few years under the idea that "I'll deal with it another time". Well that time has come.
As for selling both cars, I should give a bit of background. I work for Ford and spoke to a local dealer this morning for financing a cheap PCP diesel fiesta and giving him both my cars (clearing any finance with difference as cash back).
So currently waiting on hearing back from him and it might just be something I may do. Better to suck up that ego for a few years and take this weight off my shoulders
Nah never that!
Like I said, this looks like I blew the severity of my debt a little out of proportion to myself. It is bad but it's not life ending bad. If I change my lifestyle in different places and live a little more introvertly I'll manage to clear this off within two years.
Can I just say a massive thank you to all that have contributed in this. This issue was ruining my mindset up until I opened this topic and it's been a massive help and taken a lot of stress away.
Like I said, this looks like I blew the severity of my debt a little out of proportion to myself. It is bad but it's not life ending bad. If I change my lifestyle in different places and live a little more introvertly I'll manage to clear this off within two years.
Can I just say a massive thank you to all that have contributed in this. This issue was ruining my mindset up until I opened this topic and it's been a massive help and taken a lot of stress away.
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