Soldato
Getting the father in law or whatever to do it would probably make sense if they can get a better rate, but you'd need to be disciplined at paying the monthly fees without fail.
Borrowing more on mortgage
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Getting the father in law or whatever to do it would probably make sense if they can get a better rate, but you'd need to be disciplined at paying the monthly fees without fail.
Soldato
His disposable income will be decent though once he removes all of the existing loans. So providing he's able to get a loan to cover all the existing credit (i'm not sure the amount has been disclosed), i'd expect he'd get a half decent rate.
His current credit repayments come to £1190 If he can get a £25k loan at 4% over 5 years he'd only be repaying around £500 a month leaving an extra £700.
Even at 6% he'd have a much lower monthly repayment which would be better in the short term even though it may cost more over the life of the term.
His current credit repayments come to £1190 If he can get a £25k loan at 4% over 5 years he'd only be repaying around £500 a month leaving an extra £700.
Even at 6% he'd have a much lower monthly repayment which would be better in the short term even though it may cost more over the life of the term.
Working in Risk I know exactly how it works, which is why I advised him to go to one of his current lenders, or do it via his father in law......
Soldato
So the first thing to do is to list out the APRs, just item by item and put the list in order, highest at the top.
Of the things that are most likely to be towards the top of your list the only one that should be tricky is current account, as there are often fixed elements. What sort of amount do you owe in overdraft to suffer £50 a month payments.
Your first target should be the highest APR item. Ignore all but minimum payments on all but this one, its probably a credit card, but could be your overdraft, then can end up as silly high APR if your only minorly using it.
Then you can look at current account switching. Its possible there is a better one out there for you. Assume you have just one and are not spreading costs across more than one.
Credit worthyness comes into this, but there are often switching bonuses. Nationwide do one if you get referred. Others do them as well you just need to use the switching service. As long as your overdraft isnt high your likely to get accepted, your a target, someone who uses the overdraft makes them money.
If the car loans are PCP look at the rates, they can be quite high. It could be that a relatively small personal loan may help, so you use that to pay off the PCP and reduce your outgoings, maybe over a slightly longer period.
You can ask the PCp loan companies for a settlement quote at any time. For a personal loan look at ZOPA first, I helped someone I know halve their monthly interest payments by just that switch. Same term, just less interest!
It certainly seems that you have a short term cashflow issue, which is increasing your costs (ie overdraft) and you should be far better off once you get past this hump. But the baby incoming is going to hurt. Whats your plan at 6 months going to be?
Do you have old CDs, phones, tables etc you can sell to someone like music magpie. Think of these things as costing you money, if you can sell them on then you can immediately pay that off your debts, saving you interest.
Think a little outside the box, can you travel slightly earlier/later and avoid traffic? Are you sure tyres etc are fully inflated to reduce drag, can you drive a little slower. Maybe eek out a few extra MPG over a month may save you a little. Also may be slightly mechanically sympathetic on your car.
For food, dont assume the discounters are always cheaper as they arent. Eg the cheap tinned toms in tesco are cheaper than both tesco and aldi. Shop less frequently as its easier to control urges, and if you have a freezer look at frozen meat and veg, normally cheaper and easier for portion control.
Of the things that are most likely to be towards the top of your list the only one that should be tricky is current account, as there are often fixed elements. What sort of amount do you owe in overdraft to suffer £50 a month payments.
Your first target should be the highest APR item. Ignore all but minimum payments on all but this one, its probably a credit card, but could be your overdraft, then can end up as silly high APR if your only minorly using it.
Then you can look at current account switching. Its possible there is a better one out there for you. Assume you have just one and are not spreading costs across more than one.
Credit worthyness comes into this, but there are often switching bonuses. Nationwide do one if you get referred. Others do them as well you just need to use the switching service. As long as your overdraft isnt high your likely to get accepted, your a target, someone who uses the overdraft makes them money.
If the car loans are PCP look at the rates, they can be quite high. It could be that a relatively small personal loan may help, so you use that to pay off the PCP and reduce your outgoings, maybe over a slightly longer period.
You can ask the PCp loan companies for a settlement quote at any time. For a personal loan look at ZOPA first, I helped someone I know halve their monthly interest payments by just that switch. Same term, just less interest!
It certainly seems that you have a short term cashflow issue, which is increasing your costs (ie overdraft) and you should be far better off once you get past this hump. But the baby incoming is going to hurt. Whats your plan at 6 months going to be?
Do you have old CDs, phones, tables etc you can sell to someone like music magpie. Think of these things as costing you money, if you can sell them on then you can immediately pay that off your debts, saving you interest.
Think a little outside the box, can you travel slightly earlier/later and avoid traffic? Are you sure tyres etc are fully inflated to reduce drag, can you drive a little slower. Maybe eek out a few extra MPG over a month may save you a little. Also may be slightly mechanically sympathetic on your car.
For food, dont assume the discounters are always cheaper as they arent. Eg the cheap tinned toms in tesco are cheaper than both tesco and aldi. Shop less frequently as its easier to control urges, and if you have a freezer look at frozen meat and veg, normally cheaper and easier for portion control.
Soldato
It's a long and useful post but i did find it amusing that Tesco is cheaper than Tesco
Caporegime
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that isn't how they determine risk for a loan.
they will look at how much he can afford based on his current income and current obligated outgoings.
also i believe once you go over £15K the APR% increases too. the optimum amount depends on the lender but it's usually around £7.5K to £15K.
sometimes 10K-15K like I say depends on the lender. i can get a loan for £25K @ 3.3%. or £10K at 2.9%. but i would say i am a flawless case. i don't have any car loans. i have mortgage, solar power loan (almost paid off 2 years early and is £60 per month iirc), 0% interest credit card for 36 months with a monthly payment of like £60. paypal 0% interest free credit loan of £50 per month for another 6 months then done.
the reason why i'm skint every month is because i have made £25K worth of overpayments to the mortgage in 2 years. i've overpaid the solar loan to get it paid within 16 months versus 36 months.
the best advice has has been given is to curb spending and get his bank account into credit and make bigger payments towards his credit cards. also to look at 0% balance transfers. he's currently paying 18.9% APR. by paying a 3% one off fee he can save himself 16%.
he doesn't seem to acknowledge any of the good advice as being taken up.
Caporegime
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him getting an extra 2mpg per month isn't going to help him pay any debts. it's literally pennies. he could save 100 times that by not having £80 a month in phone contracts. then another £80 a month in car insurance.
Soldato
Yeah, i think my 25k loan was 3.2%, although that was prior to the recent base rate increase so might be higher now.
You say he's ignoring advice but he's already said he can't get a 0% credit card. He's also discussed reduced spending and when you actually read his posts he's not been particularly wasteful or careless with spending. Sharing a car and make both his and his wifes working day 2 hours longer with unnecessary commutes would be hugely stupid. Yes he's overextended himself but it's nothing extravagant.
Just because you deem it good advice doesn't make it actually relevant to the situation. Something you seem to do in pretty much every thread you post in.
Caporegime
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if he can't get a credit card then he won't be getting any cheap loans then.
he needs to curb spending and pay well above the minimum on his credit cards and get his current account into credit ASAP.
he says his loans are tempoarary blip but his HH income is about to take a tanking and he will have another baby to look after. he's literally living on borrowed time if he doesn't curb spending.
There is a huge difference between a best solution and a reasonable solution that also very quickly gets them out of a position of critical exposure.
@Psycho Sonny while you are suggesting the solutions that are closer to the "best" end of the scale they wont actually improve the OP's position even close to quickly enough for him and his wife to stabilise their position before maternity leave begins and their potential exposure to a critical even happens.
Consolidating debt, having a much smaller/more manageable monthly payment isn't the cheapest solution but it has the added benefit of being far better then the situation they are in now.
A combination of debt consolidation and cost cutting might end up being cheaper if a commitment to saving and overpay happens as well.
@Psycho Sonny while you are suggesting the solutions that are closer to the "best" end of the scale they wont actually improve the OP's position even close to quickly enough for him and his wife to stabilise their position before maternity leave begins and their potential exposure to a critical even happens.
Consolidating debt, having a much smaller/more manageable monthly payment isn't the cheapest solution but it has the added benefit of being far better then the situation they are in now.
A combination of debt consolidation and cost cutting might end up being cheaper if a commitment to saving and overpay happens as well.
Associate
Sorry if I missed this somewhere while reading the thread - but what's the plan after 6 months of maternity pay is up for the Mrs? After 6 months the money in will go way down, and then the normal bills will be hard to cover, and childcare is definitely scary expensive.
Soldato
She also gets 50% for the remaining 3 months.
I believe this is why reducing the credit repayments is the answer. Get them to a manageable level by increasing the term and it allows them to build some savings in the short term.
Associate
That 50% cut in income from the main earner will hurt - based on the outgoings listed above. After that childcare costs will be impossible to cover? Hopefully family to the rescue with looking after the little one?
Soldato
Oh yeah, assume he knows what I mean thoughIt's a long and useful post but i did find it amusing that Tesco is cheaper than Tesco
Soldato
He needs to do all. These sorts of thing are about spotting all the opportunities and doing them. Every pound saved (and thats what your talking about per fill up in effect) is ore by the end of the year.
Its the mentality of just a few pounds here or there that is how it snowballs for people.
Hes already said he cant affect the phones yet, car insurance he said he looked for good quotes anyway.
Soldato
Yeah, to be honest. £86 for car insurance for 2 cars is pretty decent i'd have said. Especially when you factor in they charge a decent premium for paying monthly. Can't see them coming down much. Not everyone has 9yrs no claims!
Soldato
Its normally the opposite, but can vary by lender.
When I refinanced my PCP I got a better rate by borrowing over £20k vs £15k or £20k. Then I just repaid a lump penalty free to get back to the £20k I really wanted.
Caporegime
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yeah but he could instantly reduce that by say £200 a year by paying up front. he seems to be keen on paying stuff over time vs saving up for them.
if his fridge and car broke down. he would likely stick both on credit cards. rather than pay the car using disposable and then get a cheap fridge off gumtree for £50 to last him until he has enough cash to buy the £10,000 fridge he has stuck on the credit card.
it's overspending compounded by bad choices. he's spending money like he's earning £15K more a year than he does.
saving £2 a month isn't going to help him. he needs to get the big bills down.
i've just been notified of a price hike on my energy. so tonight i'll be comparing energy providers and moving to the cheapest. this could save me up to £200 a year or something. it's well worth me spending an hour on the pc using a comparison engine to save £200.
him making sure he is in the optimal gear and using the correct RPM's to save £2 a month is laughable. i would personally say he would be better off making his driving habits worse if it means he can save £200 elsewhere in a year. the flooring finance may have only been £1200. but £1200 is more than your disposable per month. so i would have looked into cheaper options if you couldn't afford it. i did half my home for £400. it's these decisions he needs to get wiser with. not making sure his tyres are at 36 PSI all year round. yes check your tyres once a month it's wise to do so but it's not how to save money.
I have been reading this thread with interest but at no point has anyone mentioned the 20% HTB loan on the house. I would imagine the interest for this 20% will kick in after 5 years. The idea being that you work your asses off for the first 5 years living in a house and try and put as much money towards reducing that 20% as much as you can because you will also be paying for a increase in the value of the property as its 20% of the value of the house when you come to settle the loan rather than the loan amount at the time.
You current financial situation probably doesn't allow you to think about this at the moment but you really do need to think about it.
If your property rises by 50k over the next 5 years, you will owe 10k of that to the government. The bigger the rise the bigger the amount you have to pay.
Also, why would you ever consider cancelling a pension? that 5% your employer is paying is FREE money which you are going to need much more when you retire. This is not a long term solution and give than by the time you retire you will probably be at least 68 it just doesn't make sense to do that to your future self.
Before you spend any money on anything from today towards, firstly consider if the item you are buying is a need or a want. If its a want put it back then keep a diary of what you both spend. Its good to have budgets but people rarely stick to them, try and be more aware of what you are spending (the diary helps) Then at the end of each money sit down and go through each and every entry in the diary and consider if you really needed to make that purchase. Trust me, do this for a couple of months and it will become 2nd nature because you will automatically consider every purchase.
You current financial situation probably doesn't allow you to think about this at the moment but you really do need to think about it.
If your property rises by 50k over the next 5 years, you will owe 10k of that to the government. The bigger the rise the bigger the amount you have to pay.
Also, why would you ever consider cancelling a pension? that 5% your employer is paying is FREE money which you are going to need much more when you retire. This is not a long term solution and give than by the time you retire you will probably be at least 68 it just doesn't make sense to do that to your future self.
Before you spend any money on anything from today towards, firstly consider if the item you are buying is a need or a want. If its a want put it back then keep a diary of what you both spend. Its good to have budgets but people rarely stick to them, try and be more aware of what you are spending (the diary helps) Then at the end of each money sit down and go through each and every entry in the diary and consider if you really needed to make that purchase. Trust me, do this for a couple of months and it will become 2nd nature because you will automatically consider every purchase.
Soldato
I mentioned the htb loan briefly in post #32 but it's got to be so low down the priority list compared to everything else at this stage.