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I have about 15 small loans ranging in between 4k-10k in local currency, with most being 4k or under. Besides this, I'm currently paying 56k in local currency for a house (I can't cancel/pause this one for next 4 months), around 11k rent, and 12k for long-term loans.

I make around 110k in a good month and around 90k in a bad month.

The problem is that due to snowball effect and really bad circumstances, I can't really pay them off at once while paying ridiculously high interest rates for each.

The usual thing that happens is that I pay them off - or at least half of them - and then something starts to happen mid-month like the illness of a relative, property damage (the infrastructure is really bad here), etc. and I need the money back.

How do I get rid of these small loans which are consuming the balance of my income? Is there an example of plan or strategy that I can follow to gradually pay them off?

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  • Did you tried to talk to your relatives if they could help, you seem to have quit a lot? maybe it is not so popular, to confess that you are broke but they might help you. – chris Sep 17 '18 at 18:20
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The loans are not the problem, they are the symptom. The problem is that you are spending more than you make and have no control over your own finances. Moving the debt helps with the immediate pain, but you haven't accomplished anything, you've just extended the debt to a longer payoff (extending the pain) or gotten it "out of sight, out of mind". My concern is that as soon as the debt is consolidated, you'll be extending the smaller loans again and double up the mess.

Get on a written budget, cut out spending you don't need (why are you paying for relative's medical bills when you are broke?) Save up a small emergency fund (just to stop the short-term borrowing) and get a plan to get the debt paid off QUICKLY. If consolidating reduces your interest significantly, that's fine, but don't extend it to several years. Get a plan to pay it off as soon as possible. Then, interest rate doesn't matter as much.

I don't mean to sounds harsh or unsympathetic, but I can speak from experience that getting spending under control (or increasing income) is the only way to solve debt problems.

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    This will be so unpopular, but it is right on. – Pete B. Sep 17 '18 at 14:06
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    Depending on the country you are in, sometimes the answer to "why are you paying your relative's medical bills?" is "because they need it and nobody else will". – DJClayworth Sep 17 '18 at 19:36
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Talk to your bank. They might be willing to help you restructure this debt by giving you a longer term loan to cover all of the small ones so you will have to pay only one bank and not get snowed under from a lot of high interest small loans.

Alternatively you could look into removing your assets and declaring bankruptcy. It depends on your local laws how feasible that option is. This is really bad for you if you want to take loans in the future but it might be a way to get you out of this mess.

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  • My first impression was also, better a painful break than endless agony (translated german proverb). Before declaring bankruptcy, he needed to sell his asset (his house/apartment + X). and rent a cheap one till he have have enough money maybe/probadly this is enough to get him in a more comfortable situation. But i think it is hard to suggest that, with so few knowledge about his situation. – chris Sep 17 '18 at 9:00
  • @chris Yeah I think I made it clear that he needs to remove his assets and that it might not be a good option based on his situation and local laws (there is no way for me to know what those are). I just wanted to mention it because a lot of people don't realize that personal bankruptcy is a possibility. I doubt that OP will go for a step like that without doing the proper research. – Ontamu Sep 17 '18 at 9:04
  • Well by law I need ~$36000 USD in debt to declare myself a bankrupt and will face a lot of problems beyond that, like 5 years of financial restrictions like loan ban, will probably lose all assets, etc. So I guess I'd better try to find a better deal from the bank to restructure the debt into something long-term – baldrs Sep 17 '18 at 11:37
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I would guess that really bad circumstances led to having 15 different loans (or 16 including your mortgage). Since you have so many different loans, this might get complicated so the best thing to do is to talk to your bank.

You could try to get a second mortgage to get lower interest rates. This might reduce your problem which is that you have a high debt for your income. I doubt that there is a strategy to eliminate it.

Are you paying extra money to pay these off when repaying them at the beginning of the month or are these dispo, credit card debts?

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