# Best options to get rid of cc debt?



## finfix (30 Nov 2009)

My situation isn't quite as serious as others I know but I could really do with advice on how best to get rid of the debt that I have.

I have two credit cards, one has 2.5 k on it, the other 4k. I was studying and wasn't working over a period of 6 months this year and managed to kill off the other credit card that had 1k on it, but I had a loan from credit union taken out over 12 months ago of 6k which was to cover an old cc and holiday and some miscellaneous. I have cleared this 6k just now as repayments were 400 pm and I lived very frugally during past year. I have 1000 in savings there at the mo and my last payment on this loan goes out next week.

I earn c. 500 per week after tax. Rent is 425 per calendar month. I have those two credit cards, total debt on them is 6.5k.
My car broke down, was old and beyond repair, and I am now looking to buy one at 4.5k mark.
So technically I need 6.5k to clear credit cards once and for all, and then I need 4.5k to cover car. I will not be changing car for at least three years so that is why I am spending 4.5k on it and not a 2k one.

So... I had been working a bit while studying but only on Sundays and started the full time job I am in now in October, so I am just nearly two months working there. I haven't seen much of the money, it has all been going toward debts and bills and I am happy in one way they are just 6.5k now but I want to consolidate all of this debt and cut up the credit cards. I have learned my lesson!

So what can I do re. loans to consolidate the existing? I am just working two months and I'm thinking the banks and even credit union won't think that's good enough.

What do ye reckon?

What's my best way out?

I want to get the car in January and it is a necessity at this stage as I will no longer have lifts to work,etc. by this time.

Thanks for any any advice.


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## shoppergal (1 Dec 2009)

Hiya Finfix,

If it was me I'd try and find any way to avoid spending 4.5k on a car at the moment until you clear off some of what you owe. Is there any way you could use public transport, get an alternative lift from January?

If you're really determined to get another loan I'd say the CU is your best bet. You've been paying off a loan at a rate of 400 a month so they'll see you have a good record with them.

If it was me in your situation I'd start throwing the 400 a month you've been paying to the credit union,  at the credit cards. If your clearing 2k a month and rent is only approx 400 could you pay more off your debts? Even if you paid 500 a month off you could have the two cards cleared by the end of next year(presuming a 0% interest rate which is probably un-realistic unless you can do a balance transfer). So, debt paid off by end 2010, start 2011 keep saving the 500 a month and after 5 months you'd have 2500, add that to the 1k you currently have and spend 3.5k on a car and not owe a penny. 

I know that's a completely over-simplified approach and you'd need to take into account interest and other things but personally I think you'd be mad to almost double your debt when you've just finished paying off loads. 

Best of luck however you decide to progress


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## UFC (4 Dec 2009)

Do you actually need a car?

I am 31 and do not own a car. I use public transport / choose to rent close to my employment.

I think you should avoid consolidating your debts. Consolidation nearly always results in more debt when the CC starts being used again.


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## finfix (5 Dec 2009)

Thanks so much to both of you for your advice and ideas, has been a fantastic help. 

Firstly, I would love to follow something along the lines of the plan that ShopperGal has set out, waiting until 2011 to buy car, whilst being debt-free, but I do need to get a car and I have done without one for nearly 4 months now and I'm afraid that 4 months is as much of a sacrifice as I can manage with regards the car sadly. The goods news though is that the kind of car I have my eye on should be down to 4k by late January, perhaps even a wee bit less and I'm prepared to sit it out a few weeks into the New Year.

Also I am taking advice from UFC in relation to not consolidating the credit cards along with the car loan. I'm really aware of my cc debt now and I may do a transfer for the smaller one with 2.5k on it, if I can, to another 0% interest rate, cut up and close the old one obviously, and pay it off as fast as possible (assuming I can do this).

I have good credit rating in that I have never missed payments, etc. so I'm going to try my bank for a graduate loan of 4k for the car as it is lower rate than credit union and if no luck with them, go back to my credit union, who I have a feeling will prob be my best chance really, given that I have the savings to back it up again.. and my payments on this will be 200 per month with the other 200 going direct to paying off one of the credit cards. I will be using another 200 from my earnings to pay off the other credit card (the 4k one)

What ye think?


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## PGD1 (5 Dec 2009)

you do not need to spend 4k on a car. You can easily pick something reliable up for half that, or less.

I have frequently bought cars for approx 1k and spent a couple of hundred seeing to anything annoying and they have lasted for 2-3 years without any further issues.


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## finfix (5 Dec 2009)

You prob know more about cars than me then! I am going a bit further this time as I will be keeping this car long term. The last car I had was 950 euro, vw polo, and yeah I got some repairs done, got it through NCT, and got 2 and a half years out of it.
This time I want to keep it longer and then sell it on for a grand or two... I will get at least 1k of that back in 3/4 years.


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## JustCurious (6 Dec 2009)

Hi finfix.

You have lived very frugally for 12 months and managed to pay off 6k so firstly well done for that!  Secondly the impression you're giving is that you're looking for permission from us to buy a car that would put you, essentially, back at square one.  If you want to go down that road that's fine but definitely look at cheaper cars.  What model & year car are you looking at?  Some makes of cars go for years with no problems but a car also brings in its own expenses of tax and insurance.  Would your insurance be expensive?  Do you have a large NCB?  When was the last time you took out own-name car insurance? 

If you can get approval for the graduate loan you'd be a fool to ignore it.  Apply for it online and you will save another percentage point on the interest.

Best of luck with whatever decision you make.


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## anon1 (16 Dec 2009)

Check out the motors section on boards.ie, I think they go into banger econonics


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## ali (16 Dec 2009)

I know it's not always a popular oppinion in these frugal days but I'd say go ahead and buy the car. 4.5k is not a fortune - you are on good money and you have to have a life even in recession. Transfer the credit card debt to a 0% card (up to 12 months depending on card).Set up a direct debit to the card, as high as you comfortably can. Then armed with this agreement and your savings of €1,000 approach your bank for a loan. 

I understand the benefits of being debt free but debt and loans have a purpose. To enable us to buy things and live. I would counsel caution if you were buying a flash car for 30k but your income is reasonable and your outgoings are quite small. Also you have demonstrated the ability to get a handle on your financial situation with clearing earlier debts and the decision to avoid credit cards.

A


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## canicemcavoy (16 Dec 2009)

"Transfer the credit card debt to a 0% card (up to 12 months depending on card)."

Yeah, because the best advice for someone who got in credit card debt in the first place is... get another credit card.


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## ali (16 Dec 2009)

canicemcavoy said:


> "Transfer the credit card debt to a 0% card (up to 12 months depending on card)."
> 
> Yeah, because the best advice for someone who got in credit card debt in the first place is... get another credit card.


 
Transferring debt to a 0% credit card and reducing the debt by repaying as much as possible with a direct debit is the most efficient and cost effective way of removing the debt (far cheaper than taking out a loan)bearing in mind the OP has already decided not to use credit cards for any further purchases . Also as he is transferring the debt the original card will be closed and he won't have "another credit card" he will still only have one. This one however won't be accrueing interest for a fixed period.


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## canicemcavoy (16 Dec 2009)

ali said:


> Transferring debt to a 0% credit card and reducing the debt by repaying as much as possible with a direct debit is the most efficient and cost effective way of removing the debt (far cheaper than taking out a loan)bearing in mind the *OP has already decided not to use credit cards for any further purchases*.


 
It's one thing to decide not to do it. It's another entirely to follow that course of action. I shudder to think how many people have suffered and even committed suicide because they through they could be clever at juggling credit card debt. If your credit cards are getting you into into debt in such a way, I've found that the best thing is cold turkey.


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## ali (16 Dec 2009)

canicemcavoy said:


> It's one thing to decide not to do it. It's another entirely to follow that course of action. I shudder to think how many people have suffered and even committed suicide because they through they could be clever at juggling credit card debt. If your credit cards are getting you into into debt in such a way, I've found that the best thing is cold turkey.


 
I agree but as I said the OP showed a determination to sort out his financial obligations with his earlier savings and clearing of debt and he has stated he wont be using the cards again. Going cold turkey and transferring to a 0% card are not mutually exclusive. I have personally cleared almost 30k on credit cards from using the balance transfer method and avoiding using the cards. People come on for advice . You can only give it based on the information they give. It's not fair to assume people shouldn't be left in charge of a card if they have accumulated a previous (relatively small) debt.


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## so-crates (17 Dec 2009)

ali said:


> ... This one however won't be accrueing interest for a fixed period.


 
Just to point out the zero interest normally applies only to the balance transferred not to future purchases. While the transfer can help it can be difficult to not use the card at all. I am pretty certain that in the UK, payments come off the balance transfer first so your new purchases continue accruing interest until you pay off the balance. I believe the same would apply here. Not to disagree that it is cost-effective but it is a potential debt-trap too.


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## finfix (21 Dec 2009)

Well just to post up the update... sadly after producing letter from my employer confirming income, etc. the graduate loan has been declined from my bank on the grounds that I am just working 2 months (was studying before that).

Also my 0% interest rate cc applicatin.. sadly, this too has been declined.

I am off to credit union.

Banks of Ireland, what a load of baloney. Working... loan over 2years... perfect track record..


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## PaddyW (14 Jan 2010)

Would you consider buying a toyota corolla? I see one example of a 96 on carzonefor 895. These are reliable cars, my dad bought a 91 in 2005 and had it for 4 years, one or two minor issues, but less than €200 in repairs total. Might be worth considering these?


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