What would you do?

[mumtobe01]

Ok so hubby and I are trying to sort our finances out once and for all, we are in a fair amount of debt, a lot of it hubby accumulated before he met me and the rest we have managed to rack up together over the years.
Anyway we are in about 21k worth (if you go by the settlement fee for loan) of debt all put together

We feel we have two options:

1. Take out a HUGE loan to cover the lot and pay it over say 7 years which will end up us paying around 7k more due to intrest BUT would lower our monthly payment which would be very helpful at the moment.

2. Take out a loan to cover the credit card amounts only (not the existing loan) and pay two seperate loans, which may mean paying slightly less intrest if we get good deals.
Which means our existing loan will stand at around 17k, plus the credit cards would put us at 27k.

We need to sort this out as we have been cursing along now for almost 5 years as we are and we are really not getting any where and now with bub on the way we need to be more financialy sound.

 

[daddy2b]

Hi - wouldn't really want to say. Are you both employed?

I'd say get it paid off for a longer period of time but pay less monthly purely because you may need more disposable cash every month to finance your baby.

Whatever you decide to do you need to keep at it.

I was in a bad state once but worked hard and kept paying them off and soon, before you know it, you'll be debt free and one day reach nirvana where you can do pretty much anything you want.

You've made a great step in wanting to sort it and you can DO IT! I wish you all the best

 

[cw1975]

If you are going to pay off your credit cards, don't just cut them up, contact the companies and cancel the account. it is so tempting (speaking from experience) to reach for the plastic when you are strapped and you end up with the loan you took on to pay them off and back to square one with the cards xxx

 

[mumtobe01]

daddy2be- Thankyou for your opinion. I do not work due to my mental health illness but hubby does work full time.
I think we may have to go with the one HUGE loan and do it that way, it is just scary to think that is going to be hanging over our heads for so long but I guess it will anyway if we continue the way we are!!

cw1975- Thankyou for your advise, very good idea!!

 

[MissRoxie]

I would go for option 1 as I would rather pay 1 loan per month than 2 plus you said you are in 21k debt just now plus interest would make it another 7k thats only 1k more than for option 2..

 

[wannabenewmum]

I would do neither. I would look around for d debt management company my friend was in a similar situation although not pregnant. They borrowed a huge sum off her parents to pay it off. then ended back there within 2 years parentrs refused to help them out and she went to a debt management company. Her bills went from 1025 a month to the 80 she pays her company and and 400 for her morgage then the usual bills she and her family are much better off. It maybe something to look at.

 

[daddy2b]

I would do neither. I would look around for d debt management company my friend was in a similar situation although not pregnant. They borrowed a huge sum off her parents to pay it off. then ended back there within 2 years parentrs refused to help them out and she went to a debt management company. Her bills went from 1025 a month to the 80 she pays her company and and 400 for her morgage then the usual bills she and her family are much better off. It maybe something to look at.

This is good advice however an IVA (Individual Voluntary Arrangement) will hamper your credit score and only until after it's paid are you able to improve it.

Read this: https://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/PlanYourWayOutOfDebt/index.htm

It may help

 

[mumtobe01]

That is exactly what my OH does not want to do, he is self employed so it is hard enough as it is, so we really want to go about this in a way that is not going to screw our credit rating and ruin us for 7 or more years!
But thankyou for the advice!

 

[323laura]

i'd look into getting a big loan and pay it all off.

Im in the same boat. i have about £25k of debt, ive got 1 loan of £7k and the rest is credit cards/catalogues. I looked into going through a debt management company but dont really like the idea of it effecting my credit rating as in 5 years time we've got to try and increase the mortage to buy the rest of the house as we got it on the shared equity scheme. if i keep going the way i am, i should have it all paid off by then though. im managing without the credit cards, but its so hard not to order stuff from the catalogue when your skint, which is all the time lol.

Lloyds reckon that if i keep paying what i am off my credit card, then they'll be able to do something with my loan in 6 months time, which by the sounds of it will allow me to pay everything off and have a monthly payment which is less than what im paying now. If that does become an option i will be taking it.

 

[mumtobe01]

Laura that sounds excellent!!
We are kind of in the same boat, we have around £11k on loan and the rest split between 3 credit cards!
It is a scary thought having to take out such a huge loan but i guess it just brings it home how much debt we are still in which is the scary part.
I think realisticly we could be debt free in about 8 years if we take out the loan which is a long time but at least it would be gone!! We have had this hanging over us for 5 years now- far too long! Time to sort it out!

 

[323laura]

the thing that youve also got to consider if you get a large loan is whether you want payment protection cover on. Lloyds originally put it on my loan without me realising, and when the letter came through the door i'd be paying £20k back, that was on a £13k loan. i took it off and in 2 and a half years ive paid off £6k already. The only downside is if anything happens with work then i'll be stuck, but its one of those things that you really need to think about

 

[PeanutBean]

Here's what I'd do, I get some free debt advice from Citizen's Advice or here: https://www.cccs.co.uk/ There are loads and loads and loads of scams associated with debt consolidation. It would be much better to get some impartial advice and see what your options are.

 

[redberry3]

do you own a home? like have a mortgage? if so, I would refinance your mortgage to pay off all your debts and have the payment be your mortgage.

if not, i would go with option number1.

do you have anything you don't necessarily need right now that you could sell in order to help pay down the debt even more?

 

[secretbaby]

I would take LOTS of financial advise before you decide to do anything.

The Salvation Army (assume your UK) have debt advise centres (open to anyone) in some of there places - its free and they often have a shorter waiting list than the CAB (I know this as my friend used to be one of there debt advisors).

The CAB - is also another very good place to get advise.

For advise from others (not professionals) the moneysavingexpert web site has lots of good advise - and a section called Debt Free Wannabees where people can discuss ways to reduce debt, help support each other - they often do spread sheets of incomings and outgoings and people comment on them and suggest things (this was VERY helpful to me).

I have been in the position of taking a huge loan to cover debts and wish we had got better advise... actually got some professional advise rather than going with what friends had told us and we thought... but we did it, it was a long road but worth it.