Debt Consolidation - Last Resort

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  the cheeky dropbear on 06/12/2016 - 16:14

  +3

  http://www.doingittough.info/Home

  • 

    [Deactivated] on 06/12/2016 - 16:30

    Thank you mate.

  • 

    Diji1 on 06/12/2016 - 18:46

    +1

    Doing It Tough - bought to you by The Australian Bankers Association.

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  [Deactivated] on 06/12/2016 - 16:23

  How much do you earn?

  Better stock up on noodles.

  • 

    [Deactivated] on 06/12/2016 - 16:30

    After tax, $1950 a fortnight.

    • 

      [Deactivated] on 06/12/2016 - 16:46

      What are you bare minimum expenses?
      Transport for work, rent, food, etc.

    • 

      Seraphin7 on 07/12/2016 - 10:15

      +2

      In all honesty this simply comes down to how much you want to pay off this debt (as opposed to continue consuming on your lifestyle). Basically $50k a year after tax vs. a $26k debt is not actually that bad a situation IF you are prepared to make the relevant sacrifices.

      I would have thought that at 23 all of your largest expenses essentially are lifestyle based, or at least have a significant lifestyle component.

      For example, here is what a 23 year old might be spending their $1,950 a fortnight on … rent, household bills, etc. $800, social activities $400, clothing, etc. $400, supermarket $200, travel and ancillaries $150.

      Alternatively, you could look for a spend profile like this … rent, household bills, etc. $700, social activities $200, clothing, etc. $100, supermarket $200, travel and ancillaries $100 … DEBT REDUCTION $650.

      Now I've probably missed a whole heap of things in the above, but I think you get the idea that there are probably significant savings that can be made to your fortnightly budget that could allow you to tackle the debt aggressively.

• 

  Master Bates on 06/12/2016 - 16:27

  +2

  Buy his new book and have a good read: The Barefoot Investor

  • 

    [Deactivated] on 06/12/2016 - 16:30

    Thank you

• 

  [Deactivated] on 06/12/2016 - 16:35

  +4

  Put it on a credit card and do a 0% interest balance transfer

  also stop being dumb

• 

  rambutann on 06/12/2016 - 16:37

  +10

  Yes consolidate it into one lump sum.

  To be honest you're not that deep in debt and it would easily be paid off within a year if you are on a 'decent wage'. In my first job I saved about $22k and I made about $35k that financial year (living out of home - I have a motorcycle instead of a car). You just can't eat out unless its less than $6 a meal, never snack, try to aim for $3 or less per meal you eat at home, reduce car expenditure somehow (whether it be by car pooling, third party insurance, getting rid of your car if you have one?), setting goals on expenditure as opposed to just spending (I used to budget $100 a week for food/random stuff which was fairly easy to do), if you have an expensive phone plan get rid of it if you can, don't buy new clothes unless they're from Kmart, the list goes on.

  Essentially you need to focus on paying the loan off as opposed to thinking of it as a 'o ye just $270 a week for 5 years easy peasy' nobody wants to constantly have bad debt for 5 years.. Especially when it can easily be paid off. Consolidating it may be one of the best ways to lower your interest repayments and bash that loan out of your life.

  If you really are as bad at saving as you say you are I would sit your parents down and have this discussion with them. I doubt they'd just let you go off and struggle to repay that debit over letting you stay in the house with low/no rent. Its not like you're asking for the money to repay those debts.

  • 

    [Deactivated] on 06/12/2016 - 16:45

    I really like your advice. I appreciate it mate.

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  [Deactivated] on 06/12/2016 - 16:38

  +2

  $26k is getting on the big side, but HECS debts are getting that way and I spend a large portion of that amount on land tax and council fees each year…at least you will have something to show for it :p You are probably going to learn a lesson about excess at some point in your life, the earlier the better. Budget your Friday nights, sell things you don't use. Have a frugal year and you can knock it off in one or two years. $26k is both a large debt, but also a cheap lesson. I lost half that amount just buying and selling a fast car and getting that phase out of my system at that age.

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  mrsi on 06/12/2016 - 16:38

  +2

  Set a budget of minimun spending less rent and utilities.
  Take it out in cash each week. Once it's gone it's gone, bad luck. It will help you only buy what you need.
  Everything else to the loan. Get rid of it asap

• 

  nivag01 on 06/12/2016 - 16:39

  do you own any property? is you car financed at all? what is it worth?

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  Jules_d1 on 06/12/2016 - 16:47

  +2

  Please get the book the Total Money Makeover by Dave Ramsay. Hell, download the audiobook or PDF but start NOW. He has what he calls are the baby steps which are easy to follow and will get you out of debt and building wealth.

  Having multiple debts isnt your problem, your HABITS are you problems. Consolidating your debt won't fix your habits.

  Please please please get that book. Can't recommend it enough.

  • 

    Succulent Synth on 06/12/2016 - 17:46

    +1

    I have heard this recommended a few times but was not sure if it would be relevant to Australians.

    • 

      Jules_d1 on 06/12/2016 - 21:09

      +1

      yep very applicable. yes some things talk about saving for kids tuition fees etc but its very worthy of a read. Worked wonders for us.

• 

  Adz81 on 06/12/2016 - 16:55

  +2

  I used Citibank when I did something similar a couple of years back. Got a rate of 10.99% for 3 years which was much better than my c/card rates (19ish %) on $20k. I paid all of the debts down, and paid a little extra/week to pay it off early and closed the account 6 months early. Best decision I've made. If you're already making those payments, could you maintain them and pay down a refinanced loan quicker?

  Stick with it and good luck! Getting yourself out of debt is excellent :D

  • 

    apptrack on 06/12/2016 - 17:23

    +2

    Best feeling not being in debt.

• 

  apptrack on 06/12/2016 - 17:23

  +3

  I was in the same boat mate, I transferred half to a no interest balance transfer credit card, chopped up the card and paid it off.

  Second half I consolidated into a personal loan and made sure there weren;t any early repayment or exit fees.

  All the best :).

  Do not apply for too many, otherwise your credit rating will go into the shitter

• 

  garetz on 06/12/2016 - 18:27

  +1

  Look at all your stuff, sell what isnt necessary, put everything you get back into the personal loan debt, then consolidate. Also you can look at getting a 0% balance transfer credit card where you can transfer the credit card debt too. Never consolidate credit card debt to a loan, as you always have these balance transfers as an option. The 2 personal loans consolidate, and pay off first.

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  MITM on 06/12/2016 - 18:50

  +4

  Don't use one of those debt consolidation agreements agencies. (My Budget) That'll put a black mark on your CR.

  • 

    banzini on 06/12/2016 - 19:07

    agree, avoid them at all costs IMO

  • 

    Big Trev on 07/12/2016 - 07:56

    Useful to know, I didn't realise this.

  • 

    alxr0101 on 07/12/2016 - 09:13

    debt consolidation agencies also charge a hefty fee which gets added onto the total amount for repayment.

  • 

    pjcook on 07/12/2016 - 10:14

    Debt consolidation agreements are a complete ripoff. The Agency takes a huge cut of the agreed repayment, and it can be deemed an act of Bankruptcy which is the same as declaring yourself bankrupt so you may as well have done that in the first place. Do not ever approach these sharks.

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  banzini on 06/12/2016 - 19:15

  +1

  "I am considering taking a single loan out to pay off my debt,"

  This may add another 5-6k on top of what you already owe over the life of the loan (5 years?). I would avoid this as it will only keep the issue around for more years than required - and in your situation, 26k could be blown away easily if you stay focussed.

  Step 1.

  Transfer the balance of the highest amount owed to another CC card (Citibank has some good deals), if not shop around for a 12 or 24 months free interest period. Look at piling a couple of loans/cards onto this balance transfer. Then make this the least priority and attack this one last. Just pay the minimum owed on this.

  Step 2.
  Make an excel spreadsheet, list each individual debt and focus on paying off the card/loan you owe the LEAST amount first, don't worry about interest rates at this stage (attack it) - which will give you an incentive to attack the others once you killed the first one off. When you can see you can knock over something it gives you confidence to keep striding.

  When you have paid off the 26k it will give you an incentive for the rest of your life knowing you can do it and nothing is impossible, turn the thinking of the situation on its head, see it as a positive and a valuable lesson moving forward.

  Take it day by day and focus.

  Good luck.

• 

  Big Trev on 07/12/2016 - 07:59

  +2

  This may be worth looking at too, to track your spending and budget. https://www.youneedabudget.com/

  I'd definitely look at consolidating. You'll need to be disciplined though. Also, suggest you have a look at your credit report and see what shape you're in, as this will impact your ability to get a loan: http://www.mycreditfile.com.au/products-services/my-credit-f… Don't pay for it, they're available for free (you just have to wait a week or so).

  All the best with it.

  • 

    grizzle on 07/12/2016 - 11:03

    +1

    Pocketbook is another spend tracking app that might be useful. It's free, you can link it to your bank account and can set it to notify you once you exceed a weekly spend.

    It's good to be able to see and categorise your spending over time. It can be surprising to see how much you spend on certain things (e.g. food, clothing) and might make you think more carefully about it in the future.

• 

  srhardy on 07/12/2016 - 08:45

  +1

  Get out of debt its like loosing weight, once you start the faster you wan to do it. Weight, id give myself a $2 to get a meal out (insane right) but with some clever thought i could get a roll 40c, slice of cheese and meat (deli $50c) and i still had money to roll with! One I lost weight, everything else i could have put on was also more weight id need to loose. So back to debt, aim to be debt free by the end of 2017, you CAN DO IT, and DO IT HARD by going without, canceling netflix, lowering your mobile plan or even prepaying it (see vaya have $22/12m 8gb if you prepay it) and take an axe every day to spending.

  THE UPSIDE IS… I not only garantee you will be debt free but you will have savings to boot before xmas…. Best feeling ever!

• 

  jhmtaylor on 07/12/2016 - 10:43

  +1

  I suggest you get a second job so that you crowd out the time when you are likely to spend. A bonus is that you will pay off the debt faster.

• 

  backpaqer on 07/12/2016 - 11:52

  +1

  depending how big each loan/card is…are there any loan fees or just the interest charges and are they the best interest charges you can get? I'd start off with a 0% balance transfer of the cards onto a new card and leave that amount there for the whole time it is free. Focus on paying down the most expensive loan and clearing that out…or if the rates are the same…clear away one entire loan if possible while paying minimal on the remaining debt. Once the credit card 0% balance transfer is about to run out…consolidate and continue to pay the rate you were paying to service all the loans combined - should be paid off in no time.

• 

  tsunamisurfer on 07/12/2016 - 12:01

  +1

  OP..

  I think its great that you have recognised that you have na issue and seem to be prepared to take the necessary steps not just fix the debt but the traits that contibuted to the debt.

  I've seen many calls for help, including here, where people call out Helo me…"I'm in debt $Nnk LEL". Most only want to see the debt fixed but not the hard part, the one in the mirror.

  There has been much helpful advice so far, I hope you recover from this and learn from this episode.

• 

  [Deactivated] on 07/12/2016 - 12:14

  +3

  To all of you!!

  I appreciate all the time and effort you lot have gone through to give me sound advice. I am weighing up my options and i have come to this.

  Sell my car. I can get $9,000 - $10,000 for it.
  Now that i will have savings behind me i can begin to smash my credit card debt first.
  I will do a balance transfer and pay off $400-$500 monthly (plus any extra money i can throw at it).
  I'll consolidate both my loans and target that once I've paid off my CC.
  The reason i'd like to get rid of my credit card debt first is that i have recognized i do have a problem with spending and having a CC with a large limit is temptation at it's fullest.

  I have pin-pointed my expenses that are consuming and i will begin to get the train to work rather than driving. ($170 a fortnight for train (including petrol to the station), as apposed to $350 fortnight driving). Making lunch at home x4 a week, Friday will be the day i eat out at work. (Currently averaging $20 a day for food/coffee).

  I believe working in a corporate environment with so much wealth and materialistic things around me has contributed to my habits. To try maintain an image of some sort. I'm not cool with that anymore, it isn't who i am. Now that I've had all nice things, i can see it doesn't make me feel anymore fulfilled in life.

  Once again, thank you all so much. I actually feel a lot better knowing how to combat this. Any suggestions to my plan is welcomed.

  • 

    coolhead on 07/12/2016 - 12:27

    +1

    lesson well learnt buddy and that too early in life.. hope you stick to it.
    all the best..
    Heres a simialr story in today's paper: http://www.theage.com.au/money/borrowing/consumer-credit-the…

    maybe you get some takeaways from here..

  • 

    Fexofenadine on 07/12/2016 - 12:41

    +1

    Good luck mate. You've taken the first step which is the most important, and are showing heaps more maturity regarding the lack of importance of material shows of wealth which plenty more people years older than you don't have. Don't be afraid of not being 'cool'!

    You might also like to have visual cues - like making a chart which tracks your debt downwards which you update at the end of every day or week - to keep encouraging you to continue.

    (Just out of interest - how are you going to get to the station once you sell your car? You quote 'petrol expenses' - is it a moped or similar?)

    • 

      [Deactivated] on 07/12/2016 - 13:02

      Thank you Fexofenadine. I appreciate it. Taken me a few years to realise how completely pointless having fancy things are.

      I like your idea of visuals cues, i have a whiteboard in my room, i'll definitely map it out.

      In regards to the car situation, I am going to buy a cheap run-around car.

      • 

        danyool on 07/12/2016 - 14:16

        @shirtfront - Tony Abbott - is that you? :)

        I'm in two minds of selling your current car to get a 'cheap' car. Obviously things could go wrong with your current car - but depending how old it is, it might be more reliable than getting a new 'cheap' car, which are usually older which means it may be more likely to need some expensive repairs down the track. 'Cheap' cars also need rego and CTP too, which can add up.

        If you want to sell it to reduce debt, I'd consider if you really need to replace it at this stage. Could you do without? Is getting a Bus/bike/walking to the station an option?

        If you do get a 'cheap' car, don't forget Third Party Property insurance (in additional to Compulsory third party) - costs about $350 per year, but covers damage if you happen to run into any other vehicle - which if you don't have insurance, you're then up for their repairs which could be $1000's (or tens of thousands if you happen to write their car off)

      • 

        [Deactivated] on 07/12/2016 - 14:39

        +1

        @danyool:

        Currently, i have a 2007 Volkswagen Golf GTI. Which has been nothing but a pain.
        Prior to getting this car, i had a 1993 Mercedes E220 which has undoubtly been the most reliable car i've ever had. Repairs were the same cost of any other car.

        I do need a car. Sometimes i'll have to drive into work, i have a partner that doesn't drive, nephew's and niece that like to go on drives.

        I believe i'll be able to find a reliable, cheap run around for under 5k. Probably less as i've done in the past.
        Much regret selling my previous cars.. as soon as i paid decent money for a "decent" car, i had problems lol.

      • 

        Herbert1955 on 10/12/2016 - 11:07

        Unless you have a car loan, don't sell your car. You won't get much for it and you still have to get another car. Waste of time and money

  • 

    apptrack on 07/12/2016 - 17:33

    +1

    Also if you can't be bothered cooking, you can get ready made meals which are actually healthy ish from woolies. $3.50 each and taste good :)

  • 

    ozbjunkie on 07/12/2016 - 19:30

    I'm late to this party but I just wanted to say you're a champion for recognising it's not an income problem it's an 'outcome' problem, and that shiny things don't mean anything if they trap you in debt.

    Your debt seems like an early lesson you're learning lots from, and actually not as expensive a lesson as it could be if learned later on.

    Well done.

• 

  MITM on 07/12/2016 - 12:59

  +1

  Great plan - print it out and stick it to your bathroom mirror and read each day while you brush your teeth.

  There are places around where you can buy a box of food and stuffs for next to nothing.
  Don't be too proud to take up this community offer every now and again. It will help stock your cupboards while you drive down your bills in the knowledge that you will pay it back somehow in the future. That is what community is about.

  I reckon you'll be financially independent somewhere in your 40's

  • 

    [Deactivated] on 07/12/2016 - 13:04

    I've never heard of that before, thanks for the suggestion - i'll definitely be looking into that.

    It's funny you say that.. i've had numerous people tell me that and i've even had a dream that i was financially independent later on in life.

• 

  windrc on 07/12/2016 - 13:24

  +1

  Unsubscribe from ozbargain

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  [Deactivated] on 07/12/2016 - 16:40

  "(Currently averaging $20 a day for food/coffee)."

  I think $2.50-$4 is possible for a grown man. I think you can eat well for $7 a day if well planned.

• 

  Camembert on 07/12/2016 - 20:13

  +1

  When I was younger I got into credit card debt, which got worse when I left full time work for full time study (and casual work). I struggled paying off the credit card debt and found the only way to get on top of it all was to consolidate my debt into a personal loan and cancel my credit cards. Balance transfers etc. may have saved me money, but I found that mentally it was much better for me to have the one loan and no credit cards. It helped me avoid falling back into bad habits.

  I eventually paid the loan off (early, with extra repayments) and learned a valuable lesson about living within my means and managing my money properly. I didn't get another credit card for quite a while, until I trusted myself to pay it off in full every month :)

  You've got the right attitude and will get there. The day you pay it all off you'll feel proud of the lessons learned and the progress you've made. Good luck!

• 

  Herbert1955 on 10/12/2016 - 10:59

  I think that you know what you have done was out of control. You don't need to sell your car but do a budget and set aside a small amount each week for yourself - save it if you want. You are young so still need to do young things as this will take awhile to pay off. You cannot go 2 years without going out. Can I recommend you put your credit card in the freezer in a cup of frozen water so you can not access it. Get a debit card and allow yourself so much per week in an account. Put your other money for bills etc gas electric rent in another account - so don't use it - only for Bills. You can still go out but drink water and don't eat out - cook something at home. Tell people that you have a huge debt so you can't spend - if they ask why. Do a budget and try and pay at least $500 a week to pay it off. Some banks offer interest free cards for say 18 months. Make an appointment with a bank and see if you can get interest free card and transfer everything and payoff asap. Do not use cards or else you'll end up even worse off. Do not take out another loan. Just pay the lot off and start again

• 

  jhmtaylor on 11/12/2016 - 08:53

  Selling your car will do two things. Obviously raise the $9k+ but also cut your expenses. It costs a lot to run a car. The proviso being that you have access to public transport.

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  Oofy Doofy on 11/12/2016 - 13:40

  Don't get a debt consolidation loan through any sort of mob like 'MyBudget' or similar etc. I'm sure you've got it sorted.

  Have a read through these…

  http://www.mrmoneymustache.com/

  http://earlyretirementextreme.com/

  Just examples.

• 

  danyool on 31/01/2017 - 17:26

  [@shirtfront]

  New year. How's the debt situation? Getting things under control?