# Consolidating Debts?



## AdsByYahoo (10 Mar 2009)

Hi,

I'm a 21 year old in Galway.. Graduated last year and work as an accountant on 28.5k per annum which works out round 2050 net a month plus overtime. 
I basically fell into the debt trap, so annoying looking back but that's life..


Currently, my debt situation is..

2500 loan in aib, 240 a month over 1 years. 1600 left to pay
2000 loan in aib, 70 a month over 3 years. 1870 left to pay
1700 overdraft in ulsterbank, standing order of 250 a month into this
600 overdraft in aib where salary is paid to.. -600 is my "zero" balance every month.

5770 euro of debt and 560 towards it each month currently.. i want to pay around 650 a month so that's an extra 90 to put somewhere.

what should i do? 
should i extend one of the loans by 600 and cancel the overdraft on my current account?
maybe increase the payments on the 3 year loan? i don't really mind the idea of paying 70 for 3 years to be honest.. or should i definately get rid of it sooner?

another query, if and when i get rid of most of this debt (hoping before christmas), is it stupid of me to be thinking i'd like to then get a 15k car loan over 5 years.. repayments would be roughly 300 a month plus another 300 on insurance, tax, petrol etc. i currently pay about 350 towards my car a month.. car has no residual value.

is a 5 year loan for a car foolish? anyways, thanks for reading.. my financial situation is bugging me so any advice would be appreciated.


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## NorthDrum (11 Mar 2009)

In overdrafts and loans total is €6200 - with halifax over 12 months that would be currently €507.89 per month. 

Overdrafts can be far more expensive then personal loans (especially short term). But its a good habit to leaving your overdraft for once off costs or better still not having them and saving for any unforeseen expenses.

Buying a car is a personal decision. *Really depends on what your long term goals are*. If you are living at home and this is what you really want (and can afford after paying off existing debt) then I wouldnt be totally against this idea. 

Preferably I would advise some sort of regular savings (Generally I think everybody should save at least something whenever they can).


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## AdsByYahoo (11 Mar 2009)

I completely agree with the flexibility associated with overdraft.. last month i had a few expenditures with driving lessons etc. where I was thankful of being able to dip back into it.

I'm renting by the way, 400 a month plus bills so I've no money to put into savings as of yet..

Putting more thought into extending one of the loans, cancelling the overdraft on my current account and increasing that loan's repayments by 90 a month.. could be wisest option?


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## kippy (11 Mar 2009)

Okay,
Why are you thinking of getting a 15k car loan? Surely you should get a loan for as little as possible when buying a car. You dont need a 15k car.
You can get a 2000-2003 ford focus for about 3-5k. Even that may be a bit high. 
Probably worth your while to put all the larger depts into one which has a low interest rate as advised.

I think you should be able to manage to do all this and see the wood from the trees. You are familiar with figures working as an accountant.
I would seriously stress the need NOT to get into big debt to buy a car however and a five year loan is extremely foolish. I've been there myself and copped on a lot since then.
Last car was a 7 year old car, cost me 4k which I had saved up.

Kippy


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## AdsByYahoo (11 Mar 2009)

well that was sort of an aside point.. wouldn't be seriously looking at a car till christmas if the current one gets through nct.

would i be able to get a credit union loan of maybe 4k without having saving lodged or is that impossible? havn't touch my credit union in years


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## kippy (11 Mar 2009)

AdsByYahoo said:


> well that was sort of an aside point.. wouldn't be seriously looking at a car till christmas if the current one gets through nct.
> 
> would i be able to get a credit union loan of maybe 4k without having saving lodged or is that impossible? havn't touch my credit union in years


I still wouldnt advocate anyone getting into a 5 year loan of 15k for a car.....it doesnt make any sense in many different areas.

If you have a credit union account at all, you can put money into it and they will give you at least 3 times that amount as a loan. If you recently opened an account I think there may be a three month waiting period before you can get a loan.
They all differ in policies so just go talk to someone at the desk in the one you are a member off, they are generally very helpful.
Kippy


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## AdsByYahoo (11 Mar 2009)

hmm.. my home branch is a 4 hour drive away so i'll probably leave out the option of credit union.


as far as a 15k loan for a car, why would you say it doesn't make sense? yes all anyone needs is a car from A to B but then there's people who love cars..


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## pc7 (11 Mar 2009)

People may love cars, you are 21 how much will your insurance be? You will have to factor in tax, petrol and running expenses. Why would you want to be in debt for 5 years for a car, when a car for 3-4 grand would work? You have already accumulated personal debt of almost 25% of your annual gross wage.  
I think address the personal debts, start saving and buy the car outright, if you've managed up until now without a car getting into debt for one isn't the greatest idea. Easy credit options are part of the reason so many on this board and the country are in trouble.  I saved for my car, bought it outright its now my asset, this was after learning my lesson on the aib phone a loan, I got myself in a right old pickle! Please just learn to budget and buy what you can afford.


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## AdsByYahoo (11 Mar 2009)

i don't mean to be rude but please read the thread pc7.. your points are perfectly valid but i've already stated that i drive a car and i've already factored in the price of insurance and tax etc.

i knew i shouldn't have mentioned the car cause it's not really an issue for 8-9 months.


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## Pope John 11 (12 Mar 2009)

AdsByYahoo said:


> .........Graduated last year and work as an accountant.........


 
As an accountant, can you sit down & do the sums, surely after 3-4yrs of college working with figures, is it not possible for you to do the sums?



AdsByYahoo said:


> .........is it stupid of me to be thinking i'd like to then get a 15k car loan over 5 years........


 
Yes



AdsByYahoo said:


> .........i currently pay about 350 towards my car a month.. car has no residual value.........


 
Car with no residual value, but gets u from A to B, hold onto it!



AdsByYahoo said:


> .........is a 5 year loan for a car foolish?.........


 
Yes



AdsByYahoo said:


> what should i do?


 
Pay off all your loans first


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## Flax (13 Mar 2009)

Your debt situation (nevermind your accounting qualification!) has obviously taught you nothing if you are looking at taking on another 15k of debt to add to your existing 6k of debt.

Seriously man, 21k of debt at 21 years of age? That's insane.

You need to sit down and sort out your thinking.


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## Bonafide (13 Mar 2009)

I am going to make an effort here because you are young and understanding this now may save you a life of debt. Its not too late. Here are a couple of options for you;

*Option 1*
Take responsibility - you tool out the loans - now repay them. Take it on the chin for the year and consider it a good lesson learned about borrowing. Pick the loan with the highest interest rate and clear that first and then work onto the other loans –e.g. 


Pay the additional 90 you have to spare off the AIB 2.5k loan with the balance of 1.6k (new repayt 330 p/m)
You should have that loan cleared in 5 months.
Then take that 330 p/m and add it to the Ulster Bank O/d payment of 250 p/m, which you should then clear in month 6 (new repayt 580).
Then take the 580 p/m from the now repaid Ulster bank overdraft and add it to the 70 pm you are paying on the AIB 2k loan (new repayt 650 p/m).
You should have this cleared by month 8-9 so then direct the 650 p/m against your AIB overdraft for one month to clear that and start saving by month 11.
You could save almost 8k in one further year towards the newer car you want and have no debt!
 
*Option 2*


Go to AIB (as 3 of your loans are already with them). Explain your situation and get a new loan of 5,770 loan to pay off all the individual loans (Approx. 7.75% AIB???).
*PAY OFF ALL THE LOANS!!!!* - I can't stress this enough. Some people in your position get relieved when the consolidation comes through and don’t get rid of the O/d and then return to the spending habits that got them in trouble in the first place.
*Get rid of the overdrafts on the bank accounts!!!*
Pay the new loan over 9/10 mths (approx €650 p/m)
As soon as this is paid set up a standing order for €660 p/m to a savings account and save for your car change.


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## AdsByYahoo (13 Mar 2009)

bonafide, thanks for a brilliant post.. 

i like the sound of option 1 and am going to setup the standing order to throw in that 90euro to the 2.5k loan. 

really cutting down on food spending lately, used to be 20 a day on a full dinner and takeaway.. now i'm getting away with a 3.50 sandwich each day and 10 euro covers 3 evening dinners. probably heathier too 

working out my budget for next month here and i'll try my best to stick to it..

salary 2050
- rent/bills 450
- food/drinking 500
- petrol 70
- phone 25
- aib (a) 330
- aib (b) 70
- ulster 250

=355.


then I have 350euro for unplanned..? seems like alot unless i'm missing something.. obviously i'll put whatever is left from the 350 into debt once i get paid again and then start over again. could end up putting maybe 850+ into debt next month if i be careful.

that would make me realise how ridiculous my spending has been...... where does it go like.!


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## Pope John 11 (14 Mar 2009)

AdsByYahoo said:


> really cutting down on food spending lately, used to be 20 a day on a full dinner and takeaway.. now i'm getting away with a 3.50 sandwich each day


 
Thats €17/week. Why not do better?
Sliced pan,cost €1.50, will do for the week = €0.30/day
Add grated cheese,tomato,cucumber,canned tuna = €1.25/day
Fruit - An apple,orange & banana = €1/day
Total approx. = €2.55

You should have a surplus of some fruit/bread for the weekend snacks.





AdsByYahoo said:


> and 10 euro covers 3 evening dinners. probably heathier too


 
Yes



AdsByYahoo said:


> that would make me realise how ridiculous my spending has been...... where does it go like.!


 
Your answer is below



AdsByYahoo said:


> - food/drinking 500


 
€150/month on food for one person is ample enough
€100/month on drink = €25 on 24 500ml cans of beer,LIDL,meet in mates house & €75 pub beer = 6 nights out per month
€250/month additional money to pay off your loans


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## AdsByYahoo (14 Mar 2009)

Pope John 11 said:


> Thats €17/week. Why not do better?
> Sliced pan,cost €1.50, will do for the week = €0.30/day
> Add grated cheese,tomato,cucumber,canned tuna = €1.25/day
> Fruit - An apple,orange & banana = €1/day
> ...


 
I'll put some thought into this maybe week on/week off.. I already say "no" to going to the restaurant with most of that lads in the office each lunch and usually head ta buy a sandwich with one or two people. For the saving I'd make, I don't know if it'd be worth saying "no" to everyone at lunch.. Purely from a social point of view. I'll see. 

If I do decide ta make my own lunch in work, there's a toastie-maker in the canteen so a 3euro tub of wafer ham could get me 3 days lunch at work aswell.. bread, fruit etc. are provided for free anyway. or even microwavable dinners for something different.. they're pretty cheap in lidl.
For evening dinner, I'm sticking to breaded chicken with pasta alot of the time.. good energy for gym, cheap and really nice with a good sauce.

I've stopped buying cans of coke and sweets constantly aswell, used to buy 2 cans a day.. over 60euro a month?! 
mi wadi does the job just as good, is way cheaper and isn't as unhealthy.




Pope John 11 said:


> €150/month on food for one person is ample enough
> €100/month on drink = €25 on 24 500ml cans of beer,LIDL,meet in mates house & €75 pub beer = 6 nights out per month
> €250/month additional money to pay off your loans



i generally drink cheap cans in the house before i go out, perlenbacher from lidl or dutch gold.. nights out with college friends are cheap cause they're not spending money either so we go places that are free.

it's the night's out with workmates that are the killer on finances.. the guys i'd go out with from are all on 40k+ anyway and trying to keep up with that when your 21 is tough. rounds get very expensive so i'm keeping these nights to a minimum..


sorry for rambling here, just thinking out loud.. can't think of many other ways to spend less money, i don't smoke, drink coffee or buy loads of clothes.. just dunnes hoodies and the odd pair of jeans. and i don't buy magazines, dvds or spend too much on toiletries.
i think 70euro is reasonable on petrol. i use it alot cause i've already spent so much money on insurance and tax..


i have a seperate bank of ireland current account so i'm thinking i could try cutting food/drink down further to 350-400.. transfer that much into it at the start of the month and that be my new day to day budget. could work really well..

got rejected an aib "click" credit card there during the week which is probably a good thing.. wanted it for buying flights and that in the future. definately a good thing actually that i didn't get it..



anyways, thanks for the helpful posts people.. really making me think hard about improving my finances.


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