Debt Consolidation

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#1938165 13-Jan-2018 15:34

Hes gonna need a plan to start spending less.

Figuring out what are the highest interest loans and closing them off first will help his credit score as well.

Stop inquiring about finance. Its ridiculous but yes its a wise idea.

I think a lot of young people don't really have a financial plan to get out of debt or to start saving. If he creates a plan, sticks to it the reward will be the life will start to become easier from a financial perspective. He may be lucky and be able to find a lender that will take on the risk as well, but id get rid of a few of the really bad ones first. And work on from there. Closing them off should be a priority.

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#1938203 13-Jan-2018 17:28

networkn:
He isn't late on the car payments, he loves the car, and I could imagine him being extremely resistant to giving it up;

Perhaps that's the lesson needed? Give up the car he loves, knock off a good chunk of the debt and try work his way out of it.
A million times better than getting the car repo'd.

networkn

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#1938212 13-Jan-2018 17:54

mudguard:
networkn:

He isn't late on the car payments, he loves the car, and I could imagine him being extremely resistant to giving it up;

Perhaps that's the lesson needed? Give up the car he loves, knock off a good chunk of the debt and try work his way out of it.
A million times better than getting the car repo'd.

Sure, I am not sure I disagree, but at the end of the day, I can only present the options. He has been very clear it's the last option and he will continue to fight it out if that's the choice.

At this stage it's not a battle I can win, so we will look at other options for the time being.

Batman

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#1938213 13-Jan-2018 17:54

mudguard:
networkn:

He isn't late on the car payments, he loves the car, and I could imagine him being extremely resistant to giving it up;

Perhaps that's the lesson needed? Give up the car he loves, knock off a good chunk of the debt and try work his way out of it.
A million times better than getting the car repo'd.

You don't learn anything unless you lose something. Make him give up the car. Otherwise you can't ensure they learn anything.

networkn

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#1938220 13-Jan-2018 18:04

Batman:

mudguard:
networkn:

He isn't late on the car payments, he loves the car, and I could imagine him being extremely resistant to giving it up;

Perhaps that's the lesson needed? Give up the car he loves, knock off a good chunk of the debt and try work his way out of it.
A million times better than getting the car repo'd.

You don't learn anything unless you lose something. Make him give up the car. Otherwise you can't ensure they learn anything.

I can't "make" him give up anything.

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#1938234 13-Jan-2018 18:39

That is true.

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#1938267 13-Jan-2018 19:31

Is moving away from Auckland a possibility? I have no idea what his personal circumstances are, so really just thinking out loud here ...

If he is renting in Auckland while working a lowish paying job, then he might be better off living in smaller centre - similar income but lower costs (rent, insurance, commuting costs etc).

Mike

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#1938544 14-Jan-2018 11:52

darylblake:

Hes gonna need a plan to start spending less.

Figuring out what are the highest interest loans and closing them off first will help his credit score as well.

Stop inquiring about finance. Its ridiculous but yes its a wise idea.

I think a lot of young people don't really have a financial plan to get out of debt or to start saving. If he creates a plan, sticks to it the reward will be the life will start to become easier from a financial perspective. He may be lucky and be able to find a lender that will take on the risk as well, but id get rid of a few of the really bad ones first. And work on from there. Closing them off should be a priority.

High interest or ok interest isnt the issue, its cashflow. Target the debts that will be paid off sooner, that makes that payment extra cashflow in time

darylblake

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#1938655 14-Jan-2018 16:10

tdgeek:

darylblake:

Hes gonna need a plan to start spending less.

Figuring out what are the highest interest loans and closing them off first will help his credit score as well.

Stop inquiring about finance. Its ridiculous but yes its a wise idea.

I think a lot of young people don't really have a financial plan to get out of debt or to start saving. If he creates a plan, sticks to it the reward will be the life will start to become easier from a financial perspective. He may be lucky and be able to find a lender that will take on the risk as well, but id get rid of a few of the really bad ones first. And work on from there. Closing them off should be a priority.

High interest or ok interest isnt the issue, its cashflow. Target the debts that will be paid off sooner, that makes that payment extra cashflow in time

Yes i agree. However as he starts to close of loans, less cash each week will be going into debt repayment. Sometimes a consolidation loan has an adverse effect. People all of a sudden think they can take on more debt.

JimmyH

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#1938713 14-Jan-2018 18:40

Based on what you have described so far, if I was a financial institution then I wouldn't touch lending him more money with the proverbial 40 foot pole. Whether by way of debt consolidation or otherwise. Your description gives me a picture of someone who borrows money all over the place, maxes out his credit cards, and other than repeated attempts to get credit to refinance the loans doesn't seem inclined to face up to his situation or the consequences. I think you are making the right call not to give/loan him the money or go guarantor for him - as I doubt that will fix what I suspect is a serious underlying problem. It pretty much sounds like he hasn't properly grown up yet.

For what it's worth, I think that he needs to see an independent budget advisor who can sit down with him, go through his income and financial position, as advise him whether it's possible to manage his way out of it or declare bankruptcy. If there is a path out of it, they need to work out a plan for him and he has to understand the consequences of not sticking to it. The reality is that a proper budget advisor will have more credibility, with him and with his creditors if he needs to negotiate, that you will. Plus, it's likely that they will be less emotionally involved and able to talk tough to him than a family member.

He needs a plan, and he needs to stick to that plan. It may involve hard choices (such as getting rid of the car, giving up his weekends to work a second part-time job, and cashing out any Kiwisaver balances under the hardship provisions) but that's life. If, and only after, he has demonstrated that he understands his situation and is prepared to stick to a demanding plan would I suggest helping him yourself.

I have helped someone in debt before. Not only did it turn a bit ugly, but by bailing them out the problem didn't go away. Because they had avoided any consequences, they went ahead and got back in the same pickle a few years later.

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#1938738 14-Jan-2018 20:11

My suggestion is he joins a credit union such as NZCU

They love debt consolidation and are happy to talk about things like

- putting an alert/lock on his credit report so he cant take out any more loans

- making him pay $10 a week into a savings account until the loan is paid off so he has a reward at the end (i always just use that balance as my final payment to pay it off a few weeks early)

- His PAYE paid direct into the NZCU bank account

Interest rates are also typically between 10-20% rather than 20%+ as they would be with a finance company or harmoney.

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#1938764 14-Jan-2018 21:14

raytaylor:

My suggestion is he joins a credit union such as NZCU

They love debt consolidation and are happy to talk about things like

- putting an alert/lock on his credit report so he cant take out any more loans

- making him pay $10 a week into a savings account until the loan is paid off so he has a reward at the end (i always just use that balance as my final payment to pay it off a few weeks early)

- His PAYE paid direct into the NZCU bank account

Interest rates are also typically between 10-20% rather than 20%+ as they would be with a finance company or harmoney.

Having no emotional ties with the subject, I am fully with JimmyH.

Throwing easy solutions like a debt consolidation plan is not going to cure the problem, if anything, it shows the subject an easy fix to a seemingly "small" problem.

There needs to be some growing up, but as the OP said, he can't "make" the subject do anything.

So I don't know what the solution is. Give the quick fix or insist on making a sacrifice to learn something.

blakamin

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#1938792 14-Jan-2018 21:37

I'm gunna play the a-hole here.

Did he ask for help? Or did he expect a hand-out?

If not, (or if so).... let him deal with it... He got himself into debt, let him sort it himself.

He's young, life is sh*te, let him get on with it.

tdgeek

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#1938834 15-Jan-2018 07:26

darylblake:

tdgeek:

darylblake:

Hes gonna need a plan to start spending less.

Figuring out what are the highest interest loans and closing them off first will help his credit score as well.

Stop inquiring about finance. Its ridiculous but yes its a wise idea.

I think a lot of young people don't really have a financial plan to get out of debt or to start saving. If he creates a plan, sticks to it the reward will be the life will start to become easier from a financial perspective. He may be lucky and be able to find a lender that will take on the risk as well, but id get rid of a few of the really bad ones first. And work on from there. Closing them off should be a priority.

High interest or ok interest isnt the issue, its cashflow. Target the debts that will be paid off sooner, that makes that payment extra cashflow in time

Yes i agree. However as he starts to close of loans, less cash each week will be going into debt repayment. Sometimes a consolidation loan has an adverse effect. People all of a sudden think they can take on more debt.

And it drags out time. To make a loan easier its a longer term thanwhat the current debts are. As to the latter point, "cool as I can afford to borrow again" I would be picking up my 30 Second Briefcase and "walk away"

tdgeek

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#1938836 15-Jan-2018 07:30

JimmyH:

Based on what you have described so far, if I was a financial institution then I wouldn't touch lending him more money with the proverbial 40 foot pole. Whether by way of debt consolidation or otherwise. Your description gives me a picture of someone who borrows money all over the place, maxes out his credit cards, and other than repeated attempts to get credit to refinance the loans doesn't seem inclined to face up to his situation or the consequences. I think you are making the right call not to give/loan him the money or go guarantor for him - as I doubt that will fix what I suspect is a serious underlying problem. It pretty much sounds like he hasn't properly grown up yet.

For what it's worth, I think that he needs to see an independent budget advisor who can sit down with him, go through his income and financial position, as advise him whether it's possible to manage his way out of it or declare bankruptcy. If there is a path out of it, they need to work out a plan for him and he has to understand the consequences of not sticking to it. The reality is that a proper budget advisor will have more credibility, with him and with his creditors if he needs to negotiate, that you will. Plus, it's likely that they will be less emotionally involved and able to talk tough to him than a family member.

He needs a plan, and he needs to stick to that plan. It may involve hard choices (such as getting rid of the car, giving up his weekends to work a second part-time job, and cashing out any Kiwisaver balances under the hardship provisions) but that's life. If, and only after, he has demonstrated that he understands his situation and is prepared to stick to a demanding plan would I suggest helping him yourself.

I have helped someone in debt before. Not only did it turn a bit ugly, but by bailing them out the problem didn't go away. Because they had avoided any consequences, they went ahead and got back in the same pickle a few years later.

I could not agree more. With Uncle Bank handy, he is insulated. Maybe he feels Uncle Bank will eventually cave in. He probably feels he will commit to getting this sorted, but not too much...therein lies the problem

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