How can I consolidate my debts

[Ellie]

Joe, This morning I contacted both Permanent TSB and BOI to see if I can get a loan from each to the total I need to consolidate. So fingers crossed! Thank you for that piece of advice as If I get both loans the total repayment actually works out a little cheaper than getting one loan for the 30000, if you get me! Thanks to everyone who has contributed to this thread so far, Your advice has been so helpful. Keep it coming!

 

[irishpancake]

Ellie, are you for real

You come on here and give a picture regarding 3 loans and 3 cc balances with crippling repayment schedules, which you apparently no longer can afford.

That's six instirutions you owe short-term debt to.

Going on your original post, it seemed that you were in a dire financial situation, which required drastic remedies.

You seemed intent on pursuing a solution which would involve entering into further debt, possibly over a longer period, to pay off the existing debt.

Then you blithely inform us that you have savings

Why have you not used these savings to reduce your debt mountain??

Credit card interest rates are usually in the 14%-19% range, sometimes higher.

Your savings are at best generating 4%-5%, possibly less.

Use the bloody savings, all of it, to at least reduce the amount you need to refinance.

When you have sorted out the debt problem, open a High Interest Regular Savings account with either Halifax, AIB, or some other institution, which are presently giving 7%.

 

[Joe Nonety]

Savings are important to have no matter what the debt. Having no money when you've an emergency like needing to go abroad for the funeral of a close friend/relative can be agonising. Also, let's say the debt is consolisated into a 5 year loan, you can't expect someone to have no life for 5 years (while they're in their prime) so the best way to pay for luxuries like holidays/shopping spree/someone's wedding is to save for it in advance as opposed to just putting it on the credit card and worry about paying it later which I suspect was the case before.
However return from savings should be maximised - up to 7.1% can be earned on regularly monthly savings these days.
Saving €500 a month would be pointless when having so much debt but something like €50-€150 would be enough for an emergency fund without being too high.

PS Halifax are also good for loans - 7.2% for €15,000.

 

[HotdogsFolks]

She lives with her folks though! I would assume that means she's somewhat "still being taken care of" so if there was an emergency they would probably want to help out.

The fact that she wants to take out more loans rather than use her savings makes me think her lack of financial skills are going to continue for some time...

 

[nelly]

She lives with her folks though! I would assume that means she's somewhat "still being taken care of" so if there was an emergency they would probably want to help out.

The fact that she wants to take out more loans rather than use her savings makes me think her lack of financial skills are going to continue for some time...

way harsh!!

But i do agree and think OP needs to understand debt builds, just because you are paying it off does not stop the interest rate kicking in. Savings are not making as much intrest as your debts intrest is building up - bottom line is any money you have should be used to get down the principle.

Also i suggest that you should get rid of this lump against your loan as you seem to be a cronic shopper (as its 30k debt on shopping not college loands etc ) and its only a temptation there that you can spend.

Its commendable that you want to have a nest egg there but its costing you money if I might put it like that.

Do your parents know you are in debt to the tune of €30k??

 

[ClubMan]

Savings are important to have no matter what the debt. Having no money when you've an emergency like needing to go abroad for the funeral of a close friend/relative can be agonising.

With no debts you could probably borrow for such emergencies. If the chosen option in this case is to keep the savings but borrow more to consolidate the debts then that, to me, is really crazy.

 

[Noor77]

I agree with Clubman. The OP should definitely forget about the savings at the moment. She should also seriously look at how she is managing to accumulate so much personal debt at such a young age. Her level of debt exceeds her annual income by €5k.

As she does not have a mortgage and probably does not pay the going rate in rent (due to the fact that she lives at home) the vast majority of her debt must be due to lifestyle spending. I disagree with the poster that said something along the lines of "you can't expect a person to live frugally in their prime" - this is exactly the kind of attitude that got the OP into debt in the first place. She has made the important step of admitting she is in difficulty, but there is no quick-fix solution to her problem and she will have to pare down her lifestyle expenditure if she is to make a committed attempt to getting herself out of her predicament.

 

[nelly]

you can't expect someone to have no life for 5 years (while they're in their prime)

just reading this now, no offence intended but i think this is rather a silly statement to be honest. People saving for deposits etc can and do accumulate 30k by the time they are 30 not think they are great for paying off loads accumulated by spending on "shopping" by the time they are 30. I speak from my experience - I wouldn't say i had no life while i was saving (and renting), just one with different priorities and it paid off and as i am 28, debt free but with a mortgage & husband am still in my prime, having missed out on nothing I can think of!

Ellie, i feel you need to sit down list your goals you want to achieve in life(homeownership?, qualification, nice car), the obstacles you need to overcome and make a realistic plan and time line as to how you are going to do it, (second jobs, night college). Its good you recognise enough is enough regarding your debt but i think you need face up to all of it and recognise that by saving cash you are slowing down your debt repayment.

*You need to be saving with Halifax in the account mentioned for year before you can get access to it (having accumulated the 7% intrest.)

 

[Noor77]

I actually can't believe that the OP was able to get so much credit. It's crazy. I earn €50k pa and her level of personal debt is equivalent, in relative terms, to my having €60k unsecured personal debt. It's bizarre

 

[HotdogsFolks]

I actually can't believe that the OP was able to get so much credit. It's crazy. I earn €50k pa and her level of personal debt is equivalent, in relative terms, to my having €60k unsecured personal debt. It's bizarre

I think it's worse. With 50k pa you take home about 3k a month, right? That means you can easily pay off (assuming you're renting) 1.5k per month.

When you earn 25k per year, you don't have quite as much excess money to pay off debt.

 

[Joe Nonety]

just reading this now, no offence intended but i think this is rather a silly statement to be honest.

Are you saying she should have no holidays until however long the debt takes to be paid off?

Also to Noor77 I didn't say "you can't expect a person to live frugally in their prime", I said you can't expect somebody to have no life for 5 years which is a big difference.
For someone with a big debt, a big enough expenditure like a holiday should be saved for in advance and not just thrown on a credit card or have a loan taken out.

With no debts you could probably borrow for such emergencies. If the chosen option in this case is to keep the savings but borrow more to consolidate the debts then that, to me, is really crazy.

But she does have debts and if there's some emergency she's surely better off by having instant access to saving funds like with AIB as opposed to having to organise the borrowing of more money.

 

[nelly]

Are you saying she should have no holidays until however long the debt takes to be paid off?

That depends on how badly she wants to pay off her debt now doesn't it! Personally i could not justify the €1 - €1.5 holiday if i had a €30 k debt mountain (thats the cost of the cheapest foreign holiday with the girls in your 20's), i know it wouldn't do me any good at all.

For someone with a big debt, a big enough expenditure like a holiday should be saved for in advance and not just thrown on a credit card or have a loan taken out.

Agreed.
It may seem harsh but the OP here is earning 24k paying back 600+ a month so how long does will she have to be saving to have a holiday with spends? i think it would be too much of a temptation to get out the credit or loan again, 'just this once'. If in her shoes i would advise her to take her holidays at home - a gang of mates collect the supervalue stamps and book a week in Ireland somewhere for example (€299 the lot) - friends who are also more than likely saving for their own goals or trying to pay back bills, until she has reached a particular goal say paid half of her bills back and then head off on holidays as a "reward".
She does not have to have " no life" but lets face it, earning 30k and having 30k debt is a lot different to earning 24k and having 30k debt and living without a holiday every second year is probably going to be the bottom line until she gets back on top of things.
(these were the holidays I used to go on while in college and just after, now it is so common to go on holidays after the LC and i just think a reality check is on order. Holidays can be spent at home, recharging batteries for free, especially when you don't have the money to spend)

 

[irishpancake]

Ellie, just so you are aware of the implications, the fear you expressed originally regarding not being able to sevice your current debt.

I havent missed repayments but I can see it happening in the future.

If you don't do something asap, and you do miss any payment, particularly CC debt, you will then have a black mark against you for the next 5 years with the ICB, and debate about whether to consolidate or refinance or whatever will be academic.

Not sure if your savings is SSIA or whatever, but you should seriously consider using them to avoid such a situation occuring.

You have received lots of advice here, as you asked for.

Thanks to everyone who has contributed to this thread so far, Your advice has been so helpful. Keep it coming!

You should now take some of it.

 

[Ellie]

I appreciate what you are saying but im with joe on this one. I want to have an emergency fund. As i said I will some of my savings to get it started but I wont use them all. And I take offence to some of the remarks that were made. Yes its my own fault for getting into this mess and I want more than ever to get it under control. I do not need people putting me down for it. I have made a mistake and am holding my hands up and doing somethin about it. Noone is perfect, and we all leanr from our mistakes

 

[HotdogsFolks]

I appreciate what you are saying but im with joe on this one. I want to have an emergency fund. As i said I will some of my savings to get it started but I wont use them all. And I take offence to some of the remarks that were made. Yes its my own fault for getting into this mess and I want more than ever to get it under control. I do not need people putting me down for it. I have made a mistake and am holding my hands up and doing somethin about it. Noone is perfect, and we all leanr from our mistakes

Obviously do whatever you want to do, but it does seem like you came here looking for someone to agree with your current strategy rather than seek new, helpful advice.

Only one person agrees with you, and everyone else disagrees.

If you don't do something asap, and you do miss any payment, particularly CC debt, you will then have a black mark against you for the next 5 years with the ICB,

I'm not sure if that's true. I pay my CC online (manually) and over the years I've forgotten to pay both my AIB and MBNA card. Yet my ICB report is spotless.

Loans on the other hand, they definitely affect your ICB report.

 

[gordongekko]

Ellie

Have you a car that you could trade down with and use the extra funds to reduce your debt?

 

[SidTheDweeb]

I appreciate what you are saying but im with joe on this one. I want to have an emergency fund. As i said I will some of my savings to get it started but I wont use them all. And I take offence to some of the remarks that were made. Yes its my own fault for getting into this mess and I want more than ever to get it under control. I do not need people putting me down for it. I have made a mistake and am holding my hands up and doing somethin about it. Noone is perfect, and we all leanr from our mistakes

I take offence to someone who comes on here bemoaning huge loans, implying that she may get a bad credit rating, and then belatedly informing the people here that she SAVES every month.

And on top of that you obviously have savings to fall back on!

I can't think of any possible emergency scenario that would override the good advice of using your savings to minimise your debt.

Sure if you paid off even one of your credit cards, surely the limit on that would be sufficient to cover any emergency, likewise with the other 2 credit cards!!!

 

[BillyNoMates]

Have you a car that you could trade down with and use the extra funds to reduce your debt?

I sugguested this to a (lady) friend of mine before who had money problems. I was shocked at what she said.
"Cars are like boyfriends you can change to a better one but you can't downsize!! "