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?

You already got 4K on a credit card from your last consolidation and you have said that your DP has been the consolidator of your debts a few times before. So you have clearly consolidated (more than once) in the past which hasn't worked, why would this time be any different?

Work out why you are overspending and what on - cut the ready meals and meal deals for a start! Don't wing-it with shopping and petrol, set a budget for these thiings and stick to it.

If you need to re-mortgage in 2024, any debts will possibly reduce the amount you can borrow so you need to address it quickly.

I was previously spending more to match his spending or keep up but we have talked and I now pay less towards the bills to adjust this and he pays the lion share when we do go out as mentioned previously.

This is not a DP problem. He is not an unlimited bank if I am unable to make the required changes. PP are right and interesting that it's so obvious to you guys but not me. I can't keep consolidating and growing my debt. The problem is my spending and mismanagement of funds.

We have no childcare costs as both work from home and split office days to ensure it's not required. I have no additional home priorities than he has. There is nothing holding mee back but my confidence and fear of pressure I can't handle. He is very supportive in growing me but I don't know what I want. I have been with my current employer for 1 year. If no promotions in another year I will look to move on. I need to find what I want to do rather than drifting along in account management.

So now, which is the debt with highest interest ?
Send £200 now to pay extra towards that.
That leave £80 for your fun fund, so get the cash and spend £20 a week

Does ‘bills’ cover debt repayments too?

Out of that £280 per month, you need to start setting aside pots of savings that build up every month so that when you need to pay the car insurance, or new tyres, that’s covered. When you need to pay 50% of DC’s birthday spends, or Christmas, that’s covered. When you need to pay anything irregular but predictable, you want money put aside. It’ll be lots of £30pcm on this, £25pcm on that, but it’ll go down quickly and you’ll see £280 doesn’t go far. You need a budget for everything - clothes, makeup etc.

I’m a big fan of YNAB but something like Monzo pots would help you to do something similar.

Basically, you can only spend each £1 once. When you don’t split it up into a proper budget that accounts for everything, the temptation is to think £280 will go further than it actually will.

Yes bills includes all debts. Debt is the car, payment on a consolidated credit card currently interest free til may and my daily credit card where minimum payment is £53.

I previously counted bills and then the rest was disposable so I thought how can I be struggling with £700 disposable but that's not the truth is it.

What's YNAB? Monzó pots sounds good. I said I might buy jars to put cash for each weekend/food/petrol in but not everywhere takes cash or if you need to order online so that may solve that!

YNAB is an app & web-based budgeting system. It takes a bit to get into it but once you do it’s very useful to see exactly how much you spend on different things and how that affects what you want to spend on instead. But it does cost after the free trial. And might be less useful to you than to me as we have pretty joint family finances. Have a look here. www.youneedabudget.com/

But I’d definitely recommend doing something like Monzo anyway and really working out how much things cost you annually then dividing by 12 for a monthly amount to put away, as there’s so many things like that when you have a house, a car and a child!

I do use an app called Emma, the free version. It did actually really help at first but it's quite basic so has a limit. I'm taking a look at ynab now to see if it suits.

I also think my bank causes problems. I have a text when my balance is under £100 but that's available and not including any pending transactions (even tho the balance has actually reduced on the app) so it's always extremely late. My bank also allows me to spend past £0 (I don't have an overdraft) and doesn't notify me. I want to change but Barclays don't offer any incentive and I'm not sure how good first direct are. Lloyds have a £200 offer but it's a £21 per month account.

That £100 is not available, and you have to start to remember what it is really for, rather than just thinking whooppeee £100 to spend.

Have you look at moneyvsavingvexpert website - there's some fantastic stuff on there. The debt free diaries are really good, lots of tips etc. short term have you anything you can sell ? Bags you dint use ? Baby clothes ? Books ? And chuck all the money at the debt

Co op at the minute have a switch offer I think, £175 if you know someone with an account to refer you. I have one so happy to refer, but if you know someone even better x

£125 it is, sorry

@Thisisnotmyname2022 thank you very much for your kind offer. I've just taken a look online and TSB have a £200 offer and first direct a £175 so I'll pick between the two of them. NatWest also have £200 if anyone is interested.

OP the Lloyds one has a loophole- as soon as you get the money, downgrade the account to a basic/free account. Can be done in the app in a few mins.

They pay out the £200 within 10 days of the switch I believe (mine was quicker). I never paid the silly monthly fee.

And the benefit of the Lloyds off is it has no hoops to jump through in terms of direct debits/minimum deposits etc.

Serial bank swapper here

That's very interesting as that's why I didn't chose them! A lot of people on the Facebook advert commented that they hadn't got the funds too.

Mmm that's odd. I got mine super quickly, within days of the switch.

Some of them did have Lloyds come back and say there was a reason such as terms and conditions (although there was no further comments so I'm not sure how they knew!) but there was a good amount. I've signed up for the first direct one as it had 5 stars and have heard good things. I will miss my cash back from NatWest but none of the rest.