Should I re finance

[indebtedgal]

Loan with AIB 2800 (not sure of rate, prob about 8.5%)
Loan with CU 11,138 (9.74%)
Overdrawn 1000 (free)
Mastercard 800

Outgoings for loans
AIB 25 per week
CC 20 per week
Credit Union 60 per week

Other stuff
40-50 per week to boyfriends mortage
40 bills (esb, phone, chorus etc)


(it looks worse than i thought it was)

I earn basic take home after tax of €400 but can and do earn €500/550 week with overtime. The extra I put towards my mastercard. I do accept I spend a lot of money foolishly on big lunches, cosmetics etc and am addressing this! (please no recriminations).

Bottom line is that I am paying 85 a week on my loans. (over approx 4 years)I have been offered a flexible loan with GE finance at 8.41%, my repayments would be over 5 years €75 per week, 15k. With this I was thinking of paying off CU, and AIB, clearing the CC and then using my overtime money to get rid of the overdraft (even though its not costing me anything, i'd prefer to not use it. However i am worried that its not the right thing to do and I'm just digging a bigger hole for myself. Any advise welcome (except the stuff about bringing my lunch to work, i know that )

 

[Sherman]

Do you have savings in the credit union? I know normally they insist you have something like 25% of the amount of your borrowings held with them in a savings account. As this has the highest interest rate (apart I assume from your credit card), it would make sense to pay off the credit union by shifting the debt somewhere else and use your savings to cut the debt there.

I would be slow to consolidate debts as you don't really seem to have a handle on managing your money/budgeting - although you admit you have a problem, which is a great start. Consolidating could only lull you into a false feeling that you're on top of your debt problem, which could lead you to starting to spend all over again.

I think in your case the 'Debt Snowball' concept might be useful - i.e. you throw all spare cash at the smallest debt first, making only minimum payments on the others, then when that's gone, you move onto the next smallest etc. I know that method is not the most financially sensible as it doesn't necessarily target the highest interest rates first, but for people who have difficulty controlling their money it may be useful as there is an element of 'instant gratification' there in seeing debts disappear.