# Should i consolidate?



## Niamhy F (3 Dec 2008)

*Age*
23

*Employment*
Banking Sector


*Gross Income*
€28,350


*Property*
renting - €650 per month

*Savings*
Nothing right now

*Pension:* yes

*Spender or Saver:* Spender

*My Question/s:*

I currently have a loan for €16,000, credit card with balance of €2500, second credit card with €2000 and an overdraft of €500. I was thinking about applying for a loan of €5000 to clear the two credit cards and O/D. I'm currently able to make the minimum payments each month but they are crippling me and have very little else money left after credit cards. 

Should i apply for the loan and close both credit cards? that way I will have more money each month and will have both my loans paid of in four years? Any advice appreciated thanks!


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## CGorman (3 Dec 2008)

Ok firstly you're earning a good salary and paying what is relatively reasonable rent (assuming your in Dublin) - so something is going wrong somewhere.

You seem to spend way more than you can afford to. After tax and rent you have cashflow of about €1,500! If you can get a reconsolidation loan at a good interest rate, then obviously take it. However that is the minor issue here, you have to figure out where your money is going as it won't be long before you end up back at square one. Heres my two cents:

> Get loan, clear CC's
> NEVER GET A CC again - you are obviously not able to manage them
> After refinancing, you should set a target to save a few hundred each month. You should say, €650 for rent, €xxx for savings, €xxx to repay loan and the balance to live on
> Until you have refinanced, cut up cards, and saved at least €2,000, I think you should ban yourselve from holidays, shopping sprees etc.

You are working in a sector that is under extreme pressure. Your job security is questionable and you have a bad financial history - so that all says it's time to learn to discipline yourself and cut back.

It would be useful if you'd post a list of your monthly outgoings.

I don't mean to be harsh, but i'd rather you hate me for giving you good advice, than for you to like me for giving you bad advice.

Best of luck


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## Niamhy F (3 Dec 2008)

Thanks for the response. My budget is below for each month is below. I transfer €900 to a joint account to cover rent, esb, gas, food and magnet TV & internet. 

*Incomings*
€ 2,046​ 



*Outgoings*



Joint Account
€ 900.00​Loan
€ 395.00​Meteor
€ 58.60​PTSB Visa
€ 507.00​AA road Watch
€ 15.00​Insurance
€ 53.00​Halifax Card
€ 80.00​ 

Total
€ 2,008.60​ 

*income*
€ 2,046​ 

*Disposable income*
*€ 37.09*​

I did have a problem before with controlling my spending and have recently gotten it in order so once I pay of the credit cards I will be closing them and not getting another one. I have been working from a budget for the last six months and trying to reduce the credit cards but with Christmas etc it is getting harder. 

I appreciate your advice and see that you are giving some home truths but I don’t have a bad credit rating. I have never missed a minimum payment or a monthly payment on a loan. Before considering applying for a loan I checked my ICB to ensure that everything is in order.  The plan is to start saving as soon as I am able to free up the money going to credit cards. 

Thanks again for the response.


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## michaelm (3 Dec 2008)

Niamhy F said:


> Should i apply for the loan and close both credit cards? that way I will have more money each month and will have both my loans paid of in four years? Any advice appreciated thanks!


If I was in your situation  . . I wouldn't get a loan.  I'd be ambitious in tackling the debt. I would draw up a financial plan for 2009 which saw me cut my spending by €400/month.  I would clear the overdraft in January 2009 and clear the credit cards over the rest of the year . . maybe I'd look to do a credit transfer of both to a new UB card with 9 months interest free . . I'd keep the card thereafter, just wouldn't use it.  In 2010 I'd ramp up payments on the other loan.


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## Niamhy F (3 Dec 2008)

Thanks Michael, going to sit down and do another budget for January and see where i can afford to cut and pay to credit cards and overdraft before applying for another loan. 

thanks again


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## mell61 (3 Dec 2008)

I'm assuming the 'insurance' is for a car?   If it is, check your policy, as many policies now include breakdown cover automatically, so your AA may well be redundant.    That could be another €15 a month.
Re the Rent, can you move, or renegotiate?  Rents are dropping now, see if you can benefit from it... if you can drop €50 a months, thats freed up to put into your repayments.

The mobile phone bill looks pretty high, maybe its time for you to revisit the plan you are on, assuming you are not still under contract, you shoudl check out www.callcosts.ie.  Take your last 3-4 bills and compare what meteor charge with the other people in the market.   
I'd also suggest cutting back on the calls, basically you are spending €2 a day to talk - how many are essential calls, and how many are just blah-blah-blah while you walk / drive along (be honest, how many are 'where are you' calls as you are out and about)!    I'm not sure about meteor, but O2 and vodafone have 300 free texts a month online to subscribers, so if its all texts check if there is a free alternative.
Have you considered a part time job, be it bar work / retail / babysitting... get a few extra quid in and pay it directly off your debts.  Its not pleasant to be double jobbing it, but a year or so and you will be in a better position.

Best of luck.


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## Bob_tg (3 Dec 2008)

mell61 said:


> The mobile phone bill looks pretty high, maybe its time for you to revisit the plan you are on, assuming you are not still under contract, you shoudl check out www.callcosts.ie.  Take your last 3-4 bills and compare what meteor charge with the other people in the market.
> I'd also suggest cutting back on the calls, basically you are spending €2 a day to talk - how many are essential calls, and how many are just blah-blah-blah while you walk / drive along (be honest, how many are 'where are you' calls as you are out and about)!    I'm not sure about meteor, but O2 and vodafone have 300 free texts a month online to subscribers, so if its all texts check if there is a free alternative.



I agree that there is a problem with the mobile phone costs...but the answer is not to compare it to others based on your current patterns.  First of all change your patterns!  You need to move from Bill Pay to Pre Pay and then allocate yourself a budget of something like 30-50euro a month for the moment.  Once you get your costs down to that level, maybe then compare to other operators...but you'll only make marginal savings by switching from one to the other.

You do really need to agressively tackle the debt.  The points have been made already about getting rid of the credit cards and consolidating the loans.

The other point as mell61 points out is to consider part time work.  It's going to take a while to pay back all the debts, so adding to your income will help.  Also, see if there's anything you can sell (is your car worth anything??)

Finally...one other possibility: rents are dropping.  You may be able to negotiate a reduction with your landlord.


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## Bronte (4 Dec 2008)

Niamhy F said:


> I did have a problem before with controlling my spending and have recently gotten it in order so once I pay of the credit cards I will be closing them and not getting another one.


  As you had a problem before how do you know you will not do the same again, adding the 5K to your 16K, then start with the credit cards again.  Is this where the 16K loan comes from.  What have you got of value that equals the amount of your loan.  I agree with the consolidation if you are sure you will not go deeper into debt.  Another idea would be to switch to a 0% interest rate card for few months to try and tackle this debt and reduce your credit card limits as you pay down the debt.   21K debt currently on an income of 28K is excessive unless you have something to show for it.


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## Rigoletto (4 Dec 2008)

michaelm said:


> If I was in your situation . . I wouldn't get a loan. I'd be ambitious in tackling the debt. I would draw up a financial plan for 2009 which saw me cut my spending by €400/month. I would clear the overdraft in January 2009 and clear the credit cards over the rest of the year . . maybe I'd look to do a credit transfer of both to a new UB card with 9 months interest free . . I'd keep the card there after, just wouldn't use it. In 2010 I'd ramp up payments on the other loan.


 
this would be my thinking exactly.


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## Niamhy F (4 Dec 2008)

The 16k Loan is a car loan. I need the car so I can't sell it. A condition of the loan as its consolidation would to be close both credit cards. I have decided against it as i'm going pay as much to credit cards as possible and get the limit reduced each month. As suggested i have done a financial buget for 2009 and have no holidays planned or big events to ensure i clear this debt.

I know that 21k debt is excessive (even with car) when i'm on 28k and thats why i'm trying to sort it out and get hold of it. 

Thansk for all advice.


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## Rigoletto (4 Dec 2008)

Niamhy F said:


> The 16k Loan is a car loan. I need the car so I can't sell it. A condition of the loan as its consolidation would to be close both credit cards. I have decided against it as i'm going pay as much to credit cards as possible and get the limit reduced each month. As suggested i have done a financial buget for 2009 and have no holidays planned or big events to ensure i clear this debt.
> 
> I know that 21k debt is excessive (even with car) when i'm on 28k and thats why i'm trying to sort it out and get hold of it.
> 
> Thansk for all advice.


 
the best of luck to you. its will be tough but really stick with it.


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## CGorman (4 Dec 2008)

Niamhy F said:


> The 16k Loan is a car loan. I need the car so I can't sell it.



Err.. you might need a car, but do you really need a 16k one? Could you not drive a more modest second hand car in the €3k - €6k bracket? You can get good second hand cars like the Audi A4 or Toyota Avensis for this sort of price. Trading down could free up a good chunk of money, althought you may take a hit as prices have fallen.


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## PaddyW (6 Dec 2008)

Downgrade the car, go on meteor pay as you go, twenty euro a month gets you free texts and calls to all other meteor phones, plus you get 300 free texts online to send to any other networks.


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## Pope John 11 (6 Dec 2008)

Niamhy F said:


> I know that 21k debt is excessive (even with car) when i'm on 28k and thats why i'm trying to sort it out and get hold of it.


 
You don't have any money matters....just a bit silly buying a €21,000 car on your salary.....as per the previous poster downgrade your car to something in the €3000-€7500 range. You will take a hit on your car....but so have all 2nd hand cars.

My car up to 3 months ago was only a 96 polo, worth €500-€1500max & my salary was much greater than yours at that stage.....think about it.

If the car is an accessory to show your wealth to your friends...then take a get real pill....& start getting back to reality.

To answer your question...no you should not consolidate...sell your car.

Thread closed


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