Would you consolidate

[CashMeOutside]

Name changed as I have been talking about this outside Mumsnet... cancel the cheque!

Over the last few years I've taken a significant pay cut due to covid related redundancy and confidence to apply for another role of similar level. As such, things have been tight and I've slowly rolled through all of my savings.

Yesterday I had an unexpected bill pop up of over £500 which isn't a lot but if you don't have it, it doesn't matter how much it is. From looking at ways to pay this, I realise I actually have quite a bit of debt.

I have a loan for a car 6.5k 163 a month with 48 months left over

A credit card for 4K from my last consolidation. It's currently interest free but not for much longer and is £80-100 a month

A credit card that I did consolidate but over the last year (last consolidation in may) have used up again £2.5k and minimum payment is £50 I think.

Total debt just over 13k which to me is massive as previously was a few k here and there.

I pay £293 a month in debt alone from a take home of just over £1800 with a quarterly bonus that means every third/fourth pay slip could be up to £2200. Bills are £1300 a month.

I looked last night and a consolidation debt of £15k over 5 years which was between £280 and £310 a month but means the debt moves rather than minimum payment or balance transfers every year or so. Normally I get a credit card for just the credit card debt but I'm probably robbing Peter to pay Paul anyway.

So to sum up, should I get this massive loan which is actually half a years salary to roll all my debts into one, pay for my unexpected bill and leave some for a rainy day or carry on with car loan plus balance transfers?

I would enter details of all the current debt into Debt Payoff Planner app, along with the minimum payments and how much you can pay typically each month.
See what that gives as the debt free date based on Snowball and Avalanche methods.

Looking at the figures, my gut says that you will be debt free faster than 5 years. So I would not consolidate.

Another reason not to consolidate is that you have done so in the past but have continued to build up debt.

Cashflow can be a problem though and consolidation can help with that. Getting more income and reducing expenses can help with that too.

Listen to The Ramsey show on podcast/YouTube and give the debt snowball method a try. It is hard, but it does work and can stop you taking out debt ever again.

Your car loan sounds cheap - loan rates have gone up quite a bit in the last year.

Consolidation is only worth it if you're paying less interest over all. It sounds like you're still accruing debt so the risk is it "feels" like you've done something positive by moving your debt around but nothing has actually changed and it keeps going up.

Definitely don't borrow more "for a rainy day". Only borrow what you need.

I'm sorry things are so tight but the only way out of the hole is to budget for the debt payments and a slush fund for the unexpected expenses - I do get that if the money isn't there then it isn't there though.

It requires discipline and commitment. Like PP said shifting the debt to a higher interest rate is not achieving anything. There are loads of 0% deals for credit cards and money advance credit cards on the market at the moment. Get the £500.00 from one of these, swap to all 0% deals and pay the debt down as soon as possible. Get a second job maybe? It’s hard I’ve been there and I’m still bad with money but it’s all 0% and I’m getting better at controlling it. I also have a positive net value balance across my accounts so I could pay off my credit cards tomorrow if I want to but I was in a similar position to you a few years ago so I can empathise. It is a mindset.

It's often mentioned on debt help forums that people who consolidate end up running more debt.

I would look at the Moneysaving Expert debt help section and really go through your budget and look at all the advice. It will also talk you through different options for getting out of debt, without a detailed picture of your finances and circumstances, no-one can advise as to what the best option is for you.

I suspect that you might not get approved for a consolidation loan on top of your existing debt on your income anyway (the lender has no way of knowing that you'll pay off all the debt instead of spending it, so has to assume you'll do the latter for underwriting purposes).

You might however be able to get another credit card balance transfer offer, so that might be something to look at, will also likely be cheaper than a loan.

Another one here who recommends the Dave Ramsey method.

Consolidating sounds like a bad plan in your circumstances. I’d look for a new 0% balance transfer card, move the £4K and find the £500 that way.

It’s concerning you’ve run up £2.5K in 10 months - you’re overspending by £250pcm, so it’s not just this ‘unexpected’ £500. You obviously haven’t been able to cut your outgoings/expectations in line with your lower income. And of course cost of living and inflation will be making that worse.

Do you have a good budget worked out? Or are you winging it every month after fixed payments?

Thank you so much for the responses here. I didn't expect so many and you're all spot on. The problem is overspending and this is a cycle.

I'm all honestly it's not just £250pm as I have eaten into my savings too. It's around £4-450 a month. I was credit neutral and could have paid them off but at the time there was no need... or so I thought. On my commission months I just about make even.

I have thought about getting another job and DP said that I just need to be careful with my money as there should be no need and it will make me miserable as I work a lot anyway. This was last summer and I thought he was correct so tried to improve. He has even started paying for much more to help but I still overspend.

I have a spreadsheet with all my bills on have a bill account which is untouched. Then my spending account which I think I need to break up more as I do wing it on food shopping and petrol. I also have become lazy and buy a lot of ready meals or meal deals instead of cooking. That really adds up.

I will look at this method.

I could just consolidate the credit cards all to 0. Will take a look.

In addition, I don't really count the car as a problem debt because it's a car but it is against me.

The car loan is 4.97 and this loan would be 5% on the moneysupermarket list but don't know if I would get that.

I will have my mortgage paid off quicker than this debt as that has 7 years left. We have to remortgage in 2024 and I don't want to be fucking that up! DP is the opposite to me and has loadsa cash. One of those who fixes his clothes and never buys unnecessarily.

Do you live with DP and if so, do you share money fairly?

Ideally you should end up with the same amount of personal money, so check that this is so and that you account for any differences in income when splitting household and any other joint costs, eg DC. It could be that you're spending more of your money on these items than he is.

Or if not, you need to identify what you're buying when overspending and how to stop or reduce. Do you have lots of 'stuff'? Can you sell anything? Or are you buying more or more expensive versions of things - clothes, make up, food and drink out or whatever.

If I only loan what I need - £13k it's a £40 saving per month and definitely cheaper than currently paying so not shifting.

Tonight I will amend my monthly spreadsheet and work out costs each way.

I feel for you and the hardest part is recognising your overspending. I still do it but now it feels different and I try hard to then offset it. For example I was in a funny mood yesterday (teenagers!) and I just went out and blew £600.00 on wine, champagne and food. We were suppose to be going out for a family meal next weekend for my birthday but I confessed to my overspending and have cancelled this meal now and I don’t want presents anymore so that helps. I was also suppose to be getting my hair done but again have cancelled this. I calculate even with these cut backs I am still £200.00 over what I would have spent. I’ll try and shave it off the food shop next month. You just have to keep policing your spending all the time. You can do it. Ask your partner for more help if necessary even if it’s just emotional support.

Why are you over spending? because you need to - bills, basic food - or because you want to?

i think you need to figure that out in order to break the cycle of behaviour.

No debt charity or advisor will recommend consolidation as a solution, if yo7 are still leaking money.
grab your calculator and work out how much a coffee a day will cost you.
I make the sum to be £2.50 x 5 days = £12.50 x 4 weeks = £50 x 12 months =£600.
That is a ton paid off, if you buy a thermal mug and a jar of instant @ £25.00 for the whole year.

You have to find a way to stop this leakage of cash that needs to go on your debts

Can your DP lend you £500? Then you can address the credit cards when you’re not panicking.

We do live together and fairly is subjective. He earns double me and pays more for most things but not bills. Bills are split equally and this is on me as I refuse to have him say at any point that he has paid more to the house etc. obv mortgage is joint with both names and I am legally entitled to half but as I am a worrier I don't want any argument on that.

I do go to the shop more and pay more but that's taken in to our bill split to even it out. If we go out he pays 2 times to my 1 and if I take DD out he pays for her and him.

I don't believe that he should have the same money as me left over because he has a much more stressful job that he worked hard for. He has been the consolidator of my debts a few times. I think he would be more generous if I stopped fucking up and wasting money but he is very generous.

Yes he can and he will. He's was getting me a present for Christmas that's £250 and he had kept that until I've picked the right one. He said I could lend that and then pay him back and when I pay back we can re look at the Christmas money. I didn't say any more but thought I could / would ask for the whole amount. That's the problem tho, I hate asking for help and often end up paying more out of some stupid pride that I can do this myself. I clearly bloody can't. He offered to pay my credit cards but while they are interest free, no pint.

It sounds to me as if you need to go back to basics on the budget itself (joint bills and spending for DC etc etc) and go through it with him.

If he’s got £250 Christmas spending money to ‘lend you’, but could also pay your credit cards off, it all sounds confusing and head-fucky. He also doesn’t want you to work more.

Go back to first principles. How much 50% bills. How much 50% of DC costs. How much 50% food. How much petrol, car loan and a fund for car maintenance. Then what is left over for debt payments and fun money? Then budget that strictly.

Don’t take a consolidation loan at 5% if a lot of your debt is currently at 0%, and your DP could afford to lend you the money instead.

He's was getting me a present for Christmas that's £250 and he had kept that until I've picked the right one. He said I could lend that and then pay him back and when I pay back we can re look at the Christmas money.

Is he lending you £500 or £250? Can’t he lend you £500, and you can pay him back £250, and just not have the Christmas present?

you need to get to grips with your spending, consolidating again will only work if you dont use the credit cards and run them up again, ive been there it is easy to do

Is your DD his too? Have you done more things at home and for DD and is this part of the reason why his career has progressed more than yours?

Don't forget that running a home and caring for DC is also hard work that is a valuable contribution and can be stressful. Would he have been able to dedicate so much time to his career if he'd have also spent the same amount of time on childcare/parental leave etc?

He mentioned lending only £250. If I asked I am confident he would lend the full amount.

A couple of really practical bits of advice:

Take both physical credit cards, put them in a tub, cover them in water and put them in the freezer. Delete all of the card details off your laptop and phone.

Starting today have a couple of no spend weeks. Don’t buy any food (use what’s in the cupboard), petrol (walk everywhere you can); days out; treats etc. Anything you want to buy put it on a list and decide in a couple of weeks.

Look through the house and see if there is anything which you no longer use - baby stuff? Clothes? Etc. Pop it onto Facebook and use the cash for shopping next week.

In your position I would work to get your monthly spend down to under your wage. Then use the bonus to pay off the debt faster.

Good luck!

Yes shared DD. However, I only took 6 months off mat leave and wasted my time at a bad company. Finally left and got promotions etc and was so proud of my achievements and then covid. I am still wasting time with poor employers because I am scared of god knows what. I am working on that.

I've done my spreadsheet for the month.

Take home plus CB £1906
Bills £1186
Petrol, food and weekend money £440

Remaining £280 based on a 4 week month.

You need to look at what those bills include and how they compare to what your partner pays.

You share a child, a house, a mortgage. You're not 2 single people living as flat mates. If he earns more he should be paying more. Do you spend money to keep up with a certain lifestyle expected as a "family"? Do you have a joint account for child related spending? Who takes responsibility for childcare etc? What's stopping you from getting a different job? Is it home responsibilities?

Do you plan to marry?