Money/lending advice

[Dinnerbag]

So here goes

owe £2679 on one card I pay £100 a month
Owe £2159 on one card I pay £100 a month
Both interest free but don’t know when it runs out
Also have a loan with £6780 left to pay and I pay £292 a month on it, that is finished October 2023

do I get a loan for £12000 and pay £229 for the next 5 years saving me £270 a month

or carry on paying near on £500 a month but be debt free in 2 years?
With the cost of everything going up I’m thinking of ways to free up some money

 

[BettyCrockerr]

So here goes

owe £2679 on one card I pay £100 a month
Owe £2159 on one card I pay £100 a month
Both interest free but don’t know when it runs out
Also have a loan with £6780 left to pay and I pay £292 a month on it, that is finished October 2023

do I get a loan for £12000 and pay £229 for the next 5 years saving me £270 a month

or carry on paying near on £500 a month but be debt free in 2 years?
With the cost of everything going up I’m thinking of ways to free up some money

What is your monthly income once you have paid all essential bills? Are you in your overdraft? Do you have any savings?

 

[Dinnerbag]

No savings and no overdraft. I have about £200 left after bills and that pays for shopping and any clothes the kids need

 

[BettyCrockerr]

No savings and no overdraft. I have about £200 left after bills and that pays for shopping and any clothes the kids need

You can’t afford to keep this up. Once the interest free period ends on those credit cards you are going to be swallowed by them.


Contact Step Change and look into a debt management plan. That’s the best way to deal with this at the stage it’s at now.

 

[Dinnerbag]

You can’t afford to keep this up. Once the interest free period ends on those credit cards you are going to be swallowed by them.


Contact Step Change and look into a debt management plan. That’s the best way to deal with this at the stage it’s at now.

I really don’t want to go down that route because I’m hoping in the future to buy my house. I have a good job but a tit marriage left me in a lot of debt that I’m trying my best to pay off

 

[yankydoo]

I think you need to find out when the zero percent ends on the cards. Then work out the amount of interest you’d pay on all three debts if you don’t consolidate them and compare to the loan. That will definitely give you a better idea of how much you’re actually saving, if anything, by getting the loan.

 

[saltandvinegarcrisps]

Depends what rate you get accepted for the loan, since you have a lot of debt at the moment. Check when your interest rates end, what will be the balance if you continue to pay at £100 a month. Check if the cards you already have offer balance transfers for 0% with a 3% -5% fee so you would be able to swap the balances over. make overpayments wherever possible.

Think how you can increase your income, if you could do extra shifts if in that type of job, will any childcare costs reduce in the future or your salary increase , maybe consider dog or cat sitting on weekends if kids go to their dads, selling anything you don't use on market place or eBay. Without an emergency fund you will end up in further debt when something comes up, if planning to buy a house in the future consider how you would manage things like washing machine, cooker and boiler replacements if that is something covered by a landlord.

 

[BettyCrockerr]

I really don’t want to go down that route because I’m hoping in the future to buy my house. I have a good job but a tit marriage left me in a lot of debt that I’m trying my best to pay off

You don’t really have a choice here. You don’t take in enough to comfortably pay off what you owe as it stands. You have a lot of unsecured card debt. You don’t have much surplus income. Wanting to buy a house one day in the future is all well and good but you have to sort out your debt in the here & now and at the moment you are already drowning in it. Taking out yet another loan to pay it off and then pay down that loan is madness.

speak to the guys at step change - please. They will offer you really good advice to really help you and will know the best course of action to help you now and future proof things so that you can move forward. But getting deeper into debt is not the answer and won’t help you be more favourable for a mortgage either.

 

[WilmaHun]

So here goes

owe £2679 on one card I pay £100 a month
Owe £2159 on one card I pay £100 a month
Both interest free but don’t know when it runs out
Also have a loan with £6780 left to pay and I pay £292 a month on it, that is finished October 2023

do I get a loan for £12000 and pay £229 for the next 5 years saving me £270 a month

or carry on paying near on £500 a month but be debt free in 2 years?
With the cost of everything going up I’m thinking of ways to free up some money

First of all I would be checking when the interest free periods run out. Once they run out you may find your £100 a month is pointless as the interest will mean your balance barely moves. One option on the credit cards would be to do a balance transfer to a singular card, which has say 22 months 0% interest. That way you know for 22 months you can continue with your monthly payments without having to worry about interest. I have recently done a balance transfer myself to avoid paying interest. There is normally a fee to do a balance transfer, but in the long run that fee will be less than the interest you pay.

As you say, you could consolidate it all into one loan, but what are your chances of actually being accepted for that loan? Have you just done a quick online search or have you actually applied? Important to remember that on loan calculators online they are a rough guide - you won't know your ACTUAL monthly payment until you get accepted in a lot of cases, as it depends on personal circumstances.

 

[Magee]

There is no shame in seeking debt advice from someone qualified to do so, for free too! Speaking to step change won’t affect your credit rating. Think of the long term goal which is buying a house, you have years to build your credit score and pay back debts so take the time now to make a good choice that’s realistic and achievable

 

[Anne1448]

The first thing to do is check when the interest free will end. Because you'll discover that your current payments may not be enough to cover it in the future.

Your current disposable income (the 200£ you mentioned) won't be enough to pay for the interest plus your shopping and savings. Which means that you may be under water for a while.

I know that you mentioned wanting to buy a house but with a disposable income of only 200£ and debts, no bank will offer a mortgage unless your salary is in the category of high earners. If you can get a different job or a higher position with a better salary it would help. Anything which could increase your disposable income would make a huge difference.

 

[Saddlesoap]

Are you still spending on the cards, or have you closed them?

 

[Ss1471]

Before going to step change you might actually be better off going to each lender and advising them you’re struggling with repayments, you’d be surprised how willing they are to help! That would have a much smaller impact on your credit score. A debt management plan really is hard to get a mortgage with. There are also a lot of Instagram pages about now detailing paying off debt, frugal living etc and also detailing their ‘side hustles’ such as delivery driving for just eat Uber eats etc when they have any spare time, and any money made from those going straight onto their debts.

 

[BettyCrockerr]

Before going to step change you might actually be better off going to each lender and advising them you’re struggling with repayments, you’d be surprised how willing they are to help! That would have a much smaller impact on your credit score. A debt management plan really is hard to get a mortgage with. There are also a lot of Instagram pages about now detailing paying off debt, frugal living etc and also detailing their ‘side hustles’ such as delivery driving for just eat Uber eats etc when they have any spare time, and any money made from those going straight onto their debts.

Step change are an independent, impartial charity who will advise on the best courses of action to help the person based on their individual circumstances. It’s not just a one size fits all “debt management” provider. The OP can speak to them regarding the impact on credit scores and looking to apply for a mortgage in the future etc - they are experts and will really be able to give solid advice and solutions.

 

[Ss1471]

Step change are an independent, impartial charity who will advise on the best courses of action to help the person based on their individual circumstances. It’s not just a one size fits all “debt management” provider. The OP can speak to them regarding the impact on credit scores and looking to apply for a mortgage in the future etc - they are experts and will really be able to give solid advice and solutions.

yep well aware what step change are and what they do - the OP could also make their own decision based on the different advice they’ve received.

 

[BettyCrockerr]

Have you made any progress with any of this @Dinnerbag ???

 

[Dinnerbag]

Hi guys,
I investigated when my interest free period ends on my cards, one is may this year so I’ve shifted that and got 0% for 18mths and the other finishes in October. My loan finishes October 2023. I’m not renewing my phone, just going to get a sim only deal, I’m going to start cycling to work after Easter. If I do that I’m going to be saving £150 a month, so that can go on the increase in energy bills. I’m doing online food shopping so I won’t be tempted to buy what I don’t need. I have a 28 day menu plan for teas, and I’m sticking to it. I’m going to grit my teeth, it’s 18mths of struggling but it will be worth it because I will be debt free. The cards I haven’t used for over 6mths, they are stuck in the back of a cupboard and I don’t know the PIN numbers for them. Everyone’s suggestions have been brilliant. It’s just not easy 7yrs down the line and I’m still trying to pay off debt I got into when I was married because he was a controlling abusive alcoholic so I used cards etc to feed and cloth the kids xx

 

[BettyCrockerr]

I think you are going to struggle, the £150
That you hope you save is going to be absorbed by energy bills going up and other costs going up so you won’t notice that as a saving, the interest free period that ends in October will then push the monthly cost of that card up and up so if you are only paying the minimum monthly amount on that card you’ll soon be in a position where your not even paying any of the balance down, you’ll just be paying a percentage of the interest month by month with the total balance getting bigger each month.


I think by the end of this year you’ll be exactly where you are now. Unless you dramaticly find a way to increase your money coming in?

 

[Dinnerbag]

I think you are going to struggle, the £150
That you hope you save is going to be absorbed by energy bills going up and other costs going up so you won’t notice that as a saving, the interest free period that ends in October will then push the monthly cost of that card up and up so if you are only paying the minimum monthly amount on that card you’ll soon be in a position where your not even paying any of the balance down, you’ll just be paying a percentage of the interest month by month with the total balance getting bigger each month.


I think by the end of this year you’ll be exactly where you are now. Unless you dramaticly find a way to increase your money coming in?

That’s my point, I want the £150 saving to go exactly on food and energy bills.
I pay more than the minimum every month so I’m paying it off quicker

 

[BettyCrockerr]

That’s my point, I want the £150 saving to go exactly on food and energy bills.
I pay more than the minimum every month so I’m paying it off quicker

You are missing the point thought, in reality there won’t be a saving of £150 - prices are increasing, so you won’t actually have additional money to put onto the energy bills or whatever else. The money you have available still won’t stretch far enough. Unfortunately your debts are high and your income isn’t enough to pay what you owe off, it’s as simple as that.