Hi All,
I need advise, here is my situation: I have managed to pay offa family loan of $4,500.00 and pay down a p/loan from 12,000 to 7,000 since January this year (in total 9,500) which I am happy about, but heres my problem. While paying my loans, work got quite (Casual) I have other loans that I couldn't pay the full amount each month, so I contacted the company's and made an arrangement to pay the lowest amount possible for the month as I was experiencing hardship. Even though I have made this arrangement one of the credit card company's has put a default against my name, I have tried to consolidate my loans but no one will look at me now because of my default against my name, and if they would I have been told that the interest rate would be so high, that its not worth me doing. I thought that if I could consolidate at least I would be able to pay just one loan off.
I have been wanting to property investing for such a long time now, but it doesn't even look possible for me and especially now that I have this default against my name.
Any advise would be good
regards
Hi All
Is there no one out there, that can give advise on this matter.
regards
Have a read of this article and then post any questions or ideas you have here and I will discuss them with you.
Cheers,
Thanks for your reply mortgage hunter,
So let me see if I get this right, I pay the min amount on all my bills, the any money left over goes into the smallest debt until it is paid off, then so on and so on. What about general bills eg gas, sec, water, phone. I was thinking of putting them on direct debit each fortnight so I wouldn't have to worry about them as well? Also about my credit rating now that I have a bad rating what will happen with that how long till I can get that fixed?
Once again Thanks mortgage hunter
regards
This theory is called the snowball theory and it was in todays SMH money section. As you kill the smallest debt you have more to put towards the second smallest and so on.
it gives an early feeling of success and hence a psychological advantage. Useless if you don't cut up the credit cards.
Many experts suggest killing the highest interest debt first – this is valid too but I prefer the Snowball method.
Once you have everything under control and have repaid the debt that put the default on your CRA you should write to that company and respectfully request them to remove the default. They don't have to but often some will.
Otherwise you can just wait for it to expire. Even after a few years some lenders will overlook it if it is old and not for a large amount. Few LMI providers will so make sure you have a 20% deposit.
Well worth buying today's SMH as there is a great CRA article in it too.
Read it here:
http://www.smh.com.au/news/banking/big-brother-eyes-credit/2007/07/16/1184559700312.html
Pay the higher interest rate !
Why would this be a good idea you are asking yourself.
Because you are cleaning up your credit record and once the credit record is clean you can re-finance later on to a lower interest rate.Hi everyone,
He is an update on my finances,
4,500.00 personal loan (family) – gone
20,000.00 CBA (personal loan) – January this year (2007)- 12,000.00 still owing NOW – 3,400.00 owing (cant wait till its gone)
6,000.00 GE (personal loan) – paying min amount – next on the list to start paying off
5,800.00 GO mastercard – paying min amount – last on the list ( then fix my credit rating)Heres wishing everyone a Merry Christmas and a Happy and Safe New Year, May 2008 be the best year for everyone
regards
Doc Spock,
That's a great result!
As Simon said; paying the smallest loan off first, while paying the monthly minimum on the others is the way to go., and cut up the credit cards.
Then, when that first debt is cleared, you use the freed up cash to pay off the next smallest loan along with its minimum monthly payment. You continue to keep paying the monthly minimum on the other loans, and so on. Seems like you've got the idea.
But here's the thing; your money-management habits up until now are what have gotten you into this mess. Investing in proeprty with this sort of pattern is courting disaster.
Property investing requires very good money-management skills; you need to treat your investing like a business owner and keep accurate records and learn to minimise expenses.
You past history does not follow this pattern. Good to see you have cleared a lot of the debt now, but a change of habits is required.
I would be looking to clear all this debt, and then get down to only one credit card with a very small limit; say – $500, and learn to discipline yourself to paying the entire amount off each month. basically; if you can't afford to pay cash for it, you don't buy it.
This is tough in today's society of spend, spend, spend.
But think about this; 95% of the population are broke. They are in debt, don't invest in anything. This includes many high income earners as well. True.
5% of the population are the opposite; they watch their spending; they are not concerned with what the Jones are doing (going broke, but appearing rich) and regularly invest in something.
A good rule of thumb is to allocate AT LEAST 10% of your income to investing. Can you do this after the debt is cleared? It's not easy, but how bad do you want to get rich?
Here is what I currently advocate with great success. Divide your current minimum monthly payment into the amount owing. You will then be left with a number. Now put them all in order lowest to highest. Now find 5% on your total mothly payments combined (Read a book or two) and start dumping this 5%, including your normal monthly payment, onto the lowest numbered bill.
eg. CBA loan $12,000 divided by minimum montly payment eg $150 = 80
GE card $6000 divided by eg $120 = 50
Mastercard $5800 divided by eg $110 = 52Now put them in order lowest to highest:
GE Card
Mastercard
CBA loanNow add the 5% – $150 + $120 + $110 = 380 + 5% = $19
You will start by paying the extra $19 on the GE Card. eg $139. Once you have paid off the GE Card the $139 then goes on the Mastercard with the $110 normal payment.
Try this on a standard spreadsheet. You will be amazed by the money and time you will save.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
