Debt consolidation

Soldato
Joined
5 Jul 2007
Posts
5,505
Location
London
Hi there,

I'm not normally one for this sort of thing so bear with me.

The past two years or so I've been living beyond my means slightly, this is after having been to university. As a result of this I've run up my fair share of debt. I've since completely cut down my living expenses to a sustainable level and am paying back what I owe.

I owe just over £5000 at the moment. £2000 of that is student overdraft of which I am now paying 17% on, another £2000 is on a 0% balance credit card, and another £950 is on a 16% credit card. Realistically I can pay £200-250 off a month comfortably.

My employer is currently offering loans at 6.1%, as an employee I benefit from a 1% discount. So i could effectively borrow £5000 over 3 years at 5.1% and consolidate all my debt into one pay monthly solution.

Is this sensible? I feel like I want to get everything into one place and be done with credit cards, as they are just not the way forward for me.

What would you do?
 
When does the 0% run out?

I'd be tempted to pay off the stuff with high debt with your 'low rate' loan, but for gods sake cut up all your credit cards and dont ever take one out again if you have no self control.

If your finding it hard to live within your means, do a budget, and take out the cash you spend on food/going out/fuel/whatever at the beginning of each week. When its gone, its gone and you cant get into more debt.
 
Just pay off everything above 5.1% (i.e. everything except the 0% card) with a loan from your company.

This is the cheapest and best option in the long run.
 
Take the loan because it will clear all your debt and you will know how much your paying each month. 17% on 2k and 16% on 1k so about 16.5% on 3k is more in interest than the loan depending on how long you pay it for. Almost 3 times as much even though only 3/5 of the amount.

I am not a financial advisor. its just my opinion
 
Just pay off everything above 5.1% (i.e. everything except the 0% card) with a loan from your company.

This is the cheapest and best option in the long run.

Unless you have big penalties for early payments (which I doubt you do)

When you take out your 5.1% loan make sure that you can make overpayments without penalties. (or it is over an optimally short period)
 
When does the 0% run out?

I'd be tempted to pay off the stuff with high debt with your 'low rate' loan, but for gods sake cut up all your credit cards and dont ever take one out again if you have no self control.

If your finding it hard to live within your means, do a budget, and take out the cash you spend on food/going out/fuel/whatever at the beginning of each week. When its gone, its gone and you cant get into more debt.

Credit cards have long since been cut up, and I've long realised that I couldn't carry on that way. I've already budgeted myself and am set up paying it all off I just though this could be a better way to go.

I've got at least 12 months left on the 0%.

So I guess the best way forward is to leave the 0%. Thinking about it like that I'd rather not get a load to pay it and repay myself the high interest stuff first. At least that way I'll maintain flexibility, and have the option to repay quicker, which I wouldn't have with a loan.

EDIT, just checked, overpayment is allowed, I didn't think it was previously.
 
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At 250 pounds a month you won't have even started paying off the interest free credit card anyway even after a year if you are paying the others off first.

I would get your loan for maybe 3000 at 5.1% to clear the high interest stuff and try to budget to pay off both that loan and the 0% credit card at the same time.
 
17 and 16%. Jesus wept.

Get the loan to pay off everything and you'll save a fortune as long as you don't go back to your old ways.

Don't borrow any more than you need though and as other said, leave the 0% where it is.
 
Indeed, I was expecting at least 5 figures :p

If you can afford to pay 200-250 a month towards the debt then the amount you owe is pocket change really.
 
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