Debt consolidation.. I fucked up

[InternetSloth]

Think I’ve really messed up. I had £451 on a Barclaycard with 23% APR, £751 on Monzo flex with 0% APR and £921 on a Monzo loan at 21.1% APR and I needed £350 for emergency dental treatment so I took out a loan with salary finance through my nhs job for £2000 at 29.9% APR that comes out my salary. I paid off all the other debts, paid for the dental treatment and now am paying off the £2k salary finance over the next 12 months. I thought it made sense as it’s gone in 12 months, and it’s one payment rather than me trying to juggle debts in different places but I would of been way better off just doing that considering the lower or no interest rates. I’m an idiot! I can afford to overpay my 12 month loan by around £100, maybe £125 and still have some money to live off. Will that negate the interest? I did it this morning and paid off all the other debts and I’ve regretted it ever since but nothing I can do now. Is it as bad as I think?! How much money have I wasted?

By my calculations you’re okay.

You are going to be paying back £2598 for the loan through work. You should check exactly what the total amount payable is as monthly interest could accrue interest.
The Monzo loan would have cost you approx £1115 to pay back.
The Barclaycard approx £555 to pay back.
No interest on the £751.
You didn’t have £350 so had to access more money.
So 751 + 350 + 1115 + 555 = £2771

You also have to remember that you would have added interest to interest with the credit cards if you only made minimum payments. So the £1115 and the £555 would have actually been more.

You’ve done the right thing as one payment is easier to manage and all debt will be gone in 12 months.

Someone might tell me that my calculations are incorrect and apologies if they are but if I were you don’t worry as you are going to be debt free soon under your work loan.

In the grand scheme you have not fucked up. Personally I would put the extra £100 each month into a regular saver earning a good interest rate. https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#opentoall

This starts building up your emergency savings.

Ok, feeling a bit better now thank you! I'm terrible at maths but I'll trust your calculations as they've made me stop panicking 😂

The APR rate sounds high considering that you're repaying from your salary. What will you be paying each month? If you pay interest just on what's outstanding you shouldn't have to pay £598 in interest on the loan - if in the first month you pay £200 and £40 goes on interest (2% a month) then you repay £160 and next month you owe £1840 and interest is £36.80 so you repay £163.20 - half way through you're paying about £20 interest a month. If you can overpay by £50 you'll reduce the interest faster, £100 or £125 even more so. When you've cleared the debt start putting what you were repaying on debt into an accessible savings account which you could pay for something like emergency dental treatment with next time.

Having savings when you have a years worth of debt isn't what I'd do.
I think you've done the right thing OP

@Blueberry911 What happens if there is an unexpected bill - take on more debt or dip into savings?

Paying off debt in 12 months is achievable and the extra £100 may shorten it by one or two months at most.

First check for penalties for overpayment on the loan. I agree the consolidation sounds sensible as it will put everything in one place which can help with overwhelm. What are your savings like? I would ordinarily recommend overpaying if you can without penalty BUT what happens if your car breaks down or you get another dental issue? What's your plan to tackle that. You will most likely save money if you overpay but if that leaves you on your bare minimum have a plan for unexpected expenses ideally that doesn't involve borrowing more money.

Agreed. You'd be daft to have savings earning 5% interest when you have an outstanding debt with an interest rate of 29.9%.

Regarding overpayments - on a rough calculation:
Suppose you had £2000 to pay over 12 months at 0% interest.
Then you would be paying (rounded) £170 a month.
At your 30% interest, that's 2.5% a month.
2.5% of £2000 is £50.
Now - you may need to check how overpayments work and whether they save you interest over the year or not. If interest is calculated daily/monthly, that £50/month in interest will be decreasing as the year goes on.

If you can afford £100 / month overpayment, that's pretty significant and should shorten the term meaningfully. Once it's paid off, try to set up a "regular saver" at a decent rate.

If (and I hope this isn't the case) the terms of the loan mean that you'll have to pay the full 12 months' interest regardless of overpayments, then set up the regular saver now and put your £100/mth into that.

If you do go for the overpayments, can you potentially get more 0% credit if another emergency comes up that needs paying?

Good luck and just think how good a place you'll be in this time next year. In fact I think you'll be in a much better place before Christmas really.

Just think how good a place you'll be in this time next year. In fact I think you'll be in a much better place before Christmas really.

I agree with this from @Pythonesque . When it gets a bit tough remember this quote!

This is great advice, actually.

Make the regular payments to the £2K loan and pay it off in a year. Then save any ‘extra’ money into an emergency fund. That means when there’s another dental emergency, or the washing machine packs up, or you are off work for a month or so, you have easy access to money and don’t need to take out more credit at high rates.

OP, make sure your budget month by month allows for saving up for things like Christmas, gifts, clothes etc. Then the debt won’t accumulate again.

@InternetSloth did you pay it off in the year?