Debt consolidation

[Thomas. PLease.]

You could have it all gone in just 12 months?

I could, but the last two months I've been limiting any social activity to a minimum etc, so it would probably be the most depressing 12 months of my life if I stuck to that, which is why I said £250 comfortably, allowing some money for recreation.

 

[cm1179]

I could, but the last two months I've been limiting any social activity to a minimum etc, so it would probably be the most depressing 12 months of my life if I stuck to that, which is why I said £250 comfortably, allowing some money for recreation.

with out sounding too harsh tough tbh. the only way you will ever get out of this is by sacrificing. what's one year, with maybe going out once every 6 weeks with a view to clearing your debt? it's a worthwhile thing to do, use it as an excuse to get uber fit or something. there's every chance you will continue to get into debt if you take your company up on their loan offer as the thought of splashing out will always be in the back of your mind.

 

[The_Abyss]

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?

There are some competing emotions here. Finance is not just about the numbers, it is also about your behaviour.

You say you want to be done with credit cards, yet you also say you have cut them up. If it was the latter and there were no further temptations this would not be a consideration.

You also haven't said whether you're tied in to your employer. You're going to need to be if you want them to be part of the solution.

Whilst you're paying off a credit card, even if you've cut it up, the temptation will always be there. For this reason, and based on the language you've used, I'd suggest you consider the employer offer (if you're committed to them) and pay a little bit more interest (tiny amount anyway) to get rid of the problem and to remove temptation.

Behavioural economics is not just about numbers. You sound like you're aware of your situation and are starting to understand your behaviour and temptations. Remove as much risk as you can.

 

[muon]

with out sounding too harsh tough tbh. the only way you will ever get out of this is by sacrificing. what's one year, with maybe going out once every 6 weeks with a view to clearing your debt? it's a worthwhile thing to do, use it as an excuse to get uber fit or something. there's every chance you will continue to get into debt if you take your company up on their loan offer as the thought of splashing out will always be in the back of your mind.

Well if he is willing to pay 3 years of interest at 5.1% APR and still live an okay life, then what's the rush?

In fact 5.1% is lower than current inflation.

 

[cm1179]

Well if he is willing to pay 3 years of interest at 5.1% APR and still live an okay life, then what's the rush?

In fact 5.1% is lower than current inflation.

because it's not usually as simple as that. ''i'll just get myself a new tv'' etc, ''spread it over another 6 months'' is how it usually goes. it's not a formula as there is massive room for human error.

 

[Thomas. PLease.]

There are some competing emotions here. Finance is not just about the numbers, it is also about your behaviour.

You say you want to be done with credit cards, yet you also say you have cut them up. If it was the latter and there were no further temptations this would not be a consideration.

You also haven't said whether you're tied in to your employer. You're going to need to be if you want them to be part of the solution.

Whilst you're paying off a credit card, even if you've cut it up, the temptation will always be there. For this reason, and based on the language you've used, I'd suggest you consider the employer offer (if you're committed to them) and pay a little bit more interest (tiny amount anyway) to get rid of the problem and to remove temptation.

Behavioural economics is not just about numbers. You sound like you're aware of your situation and are starting to understand your behaviour and temptations. Remove as much risk as you can.

I think you may have hit the nail on the head to be honest. I know I'm tempted to spend, as I think its fairly easy to do hence my thought about removing the credit cards altogether and replacing them with a fixed payment option.

Although having read the replies here I'm more tempted just to stick it out and try and pay it back myself exercising some self control. I think that would probably be more beneficial in the long run. Maybe its worth looking into a weekend job to supplement the income.

I think coming out and admitting I have had a problem is part of the issue tbh.

 

[Deleted member 66701]

Getting a loan to pay another loan is silly.

Well, not really. APR shuffling is a good way of reducing debt, as long as you keep an eye on any fees.

 

[[TW]Fox]

Cutting up cards is ridiculous, its just running away from a bizarre problem. Credit cards are useful and in many scenarios almost essential. Trying to live a life without them because you can't stop yourself buying things you don't have the money for doesn't seem like a good place to be for the future.

 

[Rich_L]

Yeah, the more sensible approach is to put it in a tupperware box, fill it with water and then put it in the freezer so if you want it, you have to wait for it to defrost

 

[Jimbeam3678]

lol, he owes £5k he hardly needs professional advice.

Indeed a few years ago I owed to the tune of 35k yep 35k. Worked hard stopped living the champagne lifestyle with beer money and life's good. Oh did I mention lesson truly learnt ?

 

[The_Abyss]

lol, he owes £5k he hardly needs professional advice.

The amount outstanding should not define the need, rather just the relative situation.

 

[Indigo]

Yeah, the more sensible approach is to put it in a tupperware box, fill it with water and then put it in the freezer so if you want it, you have to wait for it to defrost

That is absolute comedy mate.

 

[funkyphantom]

lol, he owes £5k he hardly needs professional advice.

Im not suggesting he goes on a debt management plan. I'm suggestimg he phones them to get some good sound advice on where he needs to go. I used their services when i was in a deep dark place debt wise and couldnt speak any more highly if them.