Debt Consolidation?
Replies
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Stop paying on those two credit cards for 6 months or so, find stuff you can sell of and get your self 5-7 thousand dollars cash. Then call your credit card companies direct and say listen, I have 3,900 dollars here and we can settle this debt right now and I bet they will take it. Do the same with the other company as well. Your credit score will take a hit for a year or so but it would probably drop less that 80 points. I did this 3 years ago with 7,800 dollars in credit debt, I paid 3,300 to one and 2,000 to the other. My credit score is around 730 today. Its not the traditional way to do it, but it beats taking 5 years to pay it off with all that intrest.
Whatever you do though, do not go through a debt consolidation company.
Dumbest and worst advice EVER.
My credit score is 730 and I was just offered a 280,000 dollar home loan? You?
Congrats to you.
Still, dumbest and worse advice EVER.
Yeah. Thought so.
Thought what?
I don't give a *kitten* about your credit score or that you got a loan approved on a house. Big deal.
My credit score is 680 or so. I own a house. What does that matter?
You're advice is to just basically run from the debt. You got lucky, most people avoiding debt for 6 months and getting turned over to a debt collector would KILL their credit. But hey, you got away with running from your debt, cool!
Just know, that when you get that 280k house, if you don't make a payment on it for 6 months, you don't just get to pay them 140k and keep the house, they TAKE IT AWAY.
Credit scores are meaningless unless you are trying to borrow money- if you have a bank full of cash, your score could be zero and you would still be far better off than someone with a 780 and the ability to borrow $400,000 for a home. The score simply shows your ability to pay off debt based upon previous payment history, debt to income and available unsecured credit. They are not a representation of net worth. I know several people with scores over 800 that are barely scrapping by because they borrow for everything. If they lose their jobs, they are screwed.
Credit scores are far from meaningless because many employers require good credit in order to even be hired by them. In my job I would get canned if I went delinquent on debts without good reason or tried to hide it or anything.
As for the guy who said stop paying and try to settle, that is BAD ADVICE. You are more likely to end up with credit problems than you are to end up better off, as long as you have the means to continue paying down the debt. I don't think its as much a moral issue (whether to pay your credit card or not) as it is a business decision. Businesses get in over their heads and end up defaulting on debts and the same applies to individuals. But you gotta make the best decision for your financial future and don't let people on a message board tell you that you have a moral obligation to your debts. The credit card company doesn't care about you and will screw you over in a heart beat, so don't treat this any more than business. With that being said, I'm glad though that there is repercussions to defaulting on debt, otherwise nobody would pay their debts. But sometimes there's a time where abandoning it is the only logical option left.0 -
While I believe you should pay off your debts as agreed, I also believe that the revolving credit industry is overly predatory and sneaky in trying to make it as hard as possible to get out from under their thumb, particularly in regard to young folks who are trying to get started. The shenanigans they pull no longer really affect me since I pay off my credit card immediately every time I use it, but when I was getting started a couple of decades ago, I had the same student loan and credit card debt troubles.
Sounds like you are not in arrears and don't have a impossible amount of debt to pay off. Your interest rate isn't near as onerous as some I've seen though. The balance transfer idea to a card with 0 percent interest for a period is one I'd consider. The credit card companies seem eager right now to make these offers.
This is a good website to browse for credit cards, you can select what you are looking for, i.e. balance transfer, no fee, etc. You would just have to keep up with it and remember to make another hop when the interest free period ran out.
http://www.bankrate.com/credit-cards.aspx
I'm a big fan of the clark howard show, and his website. He has a lot of resources on the website. I don't know if there are options for getting the interest rate on your student loan lowered but there might be as that sure seems like a high interest rate. You can call his hotline and speak to one of his staff for advice about anything financial. (you could call him on his radio show too if you wanted LOL)..
http://www.clarkhoward.com
You've already been told to ignore those debt consolidation ads on TV, they are scams.
however there is help available that is legit via:
National Foundation for Credit Counsling at NFCC.org or call 800-388-2227. I do not know though if this is more for people who are already behind in their payments, considering bankruptcy etc. I think they would be able to advise you if there are options particularly for your student loan.
Good luck to you. Really, getting out of debt is more about really tightening up your spending and sending every extra dollar to the debt. Once your debt is gone consider putting the money you're no longer paying toward debt into an emergency fund so that when you have an unexpected expense you don't have to whip out the credit card. Take care :flowerforyou:0 -
I'm a financial advisor. My credit score is 810. We own 2 homes with a total worth of over $500,000. That's well below what we were actually approved for. Our net worth puts us as 1%ers. And I agree completely that it is the dumbest and worst advice ever.Stop paying on those two credit cards for 6 months or so, find stuff you can sell of and get your self 5-7 thousand dollars cash. Then call your credit card companies direct and say listen, I have 3,900 dollars here and we can settle this debt right now and I bet they will take it. Do the same with the other company as well. Your credit score will take a hit for a year or so but it would probably drop less that 80 points. I did this 3 years ago with 7,800 dollars in credit debt, I paid 3,300 to one and 2,000 to the other. My credit score is around 730 today. Its not the traditional way to do it, but it beats taking 5 years to pay it off with all that intrest.
Whatever you do though, do not go through a debt consolidation company.
Dumbest and worst advice EVER.
My credit score is 730 and I was just offered a 280,000 dollar home loan? You?
Congrats to you.
Still, dumbest and worse advice EVER.
Yeah. Thought so.0 -
Go to DaveRamsey.com. In two years we have paid off tens of thoudsands and saved thousands in interest payments.0
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The bank didn't see you as a "bad *kitten*" they saw you as a deadbeat. They did it because they knew that was probably the only way to get money from a deadbeat, they wrote off the difference, and when enough deadbeats do that they increase the fees and interest rates for the responsible customers so they win all the way around.
I didnt run from my debt, I sold my two vehicles and got my money together and made an offer to the the credit card companies, and they accepted...with no heistation!! Now why would they do something like that? Because they know that i'm bad *kitten* and did what I had to do to be come debt free. Plus, all the extra money that I didnt pay on was taxed to the tune of over 1,100 dollars, so I didnt really take too much from them anyway. I love what I did and i'd do it again if I had to.
You also didn't pay over $1100 in tax on that money. You said earlier that you had $7800 in credit debt, paid 3,300 to one and 2,000 to the other. That leaves a total balance that you abandoned of $1900. There is absolutely no way you paid an $1100 tax bill on a $1900 debt write off.0 -
13% is pretty standard for credit cards now. After 2008, most card companies tried to "renegotiate" even A+++ customers' interest rates by saying their rate would rise to 13-17% if they continued to use their cards.
The only way to avoid the higher rates was to cease using your credit line (which I did and am lucky to be able to pay the balance at 6.9% interest).
It is still very possible to pay the card balance at 13%. Treat it like a car payment by using an online calculator to determine how much you will have to pay monthly to pay it off in a certain amount of time.
For example, if you have $10,000 debt at 13% interest, you would need to pay $336.94 per month to be debt free in 36 months.
Here's a good calculator: http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx0 -
Credit scores are far from meaningless because many employers require good credit in order to even be hired by them. In my job I would get canned if I went delinquent on debts without good reason or tried to hide it or anything.
Not to split hairs, but yes, credit scores are meaningless. Having good credit to an employer means you aren't late / pay on time (in other words, honor your commitments). The credit score is a combination of good payment history and how much unsecured credit you have available to run up more debt. Employers do not look at the number (credit score) they look at your payment history. I too have a job that requires that I have no judgements against me (unpaid, delinquent debt recognized by the courts). They also look to make sure I am not falling behind on my payments and that I don't have more debt than my income could reasonably support. They do not care if my score is 700 or 800 as long as I am paying my bills and won't be tempted to sell secrets to the bad guys.0 -
Credit scores are far from meaningless because many employers require good credit in order to even be hired by them. In my job I would get canned if I went delinquent on debts without good reason or tried to hide it or anything.
Not to split hairs, but yes, credit scores are meaningless. Having good credit to an employer means you aren't late / pay on time (in other words, honor your commitments). The credit score is a combination of good payment history and how much unsecured credit you have available to run up more debt. Employers do not look at the number (credit score) they look at your payment history. I too have a job that requires that I have no judgements against me (unpaid, delinquent debt recognized by the courts). They also look to make sure I am not falling behind on my payments and that I don't have more debt than my income could reasonably support. They do not care if my score is 700 or 800 as long as I am paying my bills and won't be tempted to sell secrets to the bad guys.
Yeah but how low can someone's credit score get if they've never missed a payment? I doubt you can have a low credit score without some type of delinquent debt.0 -
I wouldn't worry too much about the student loan. See what expenses you can cut then pay the minimum on everything except the debt with the highest interest rate. Put all the extra cash on that debt. After doing this for awhile call the credit card company and ask for a lower rate.
It is really hard to borrow your way out of debt. Most people end up further behind.0 -
I had about 10,000 in debt (irresponsible with credit cards-mine is my fault) I was able to get a consolidation loan for about $6000 of that because that was what my Jeep was worth and they held that as collateral. Mine was done as an auto loan because I put my car up instead of a personal loan, but the problem is my interest was 12% so not much better then what you are paying, however at the time my credit score was a 570 so maybe you could find a bank that would loan at a lower rate on at least your credit card debt and you could put your vehicle up if you have one. I was not able to find a bank that would help, but when I went to the credit union they did help. Banks and credit unions have different rules so maybe try that out.0
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There we go - screw personal responsibility! Let all of the paying people in the land make up for you lack of self-control. Do the right thing, work a second job, get more hours, stop spending - and PAY YOUR DEBT THAT YOU INCURRED. Funny this comes up on a weight loss sight. Similar issue pours into so many people's bellies - eat all we want, but don't want to pay the price to get skinny. Everyone wants it fast and easy.
And I know life is tough...suck it up. I've run 2 failed businesses, and started two more since. I was broke after the market fell apart. Guess what, I did whatever it took and I'm still paying back those debts. Why? Because it's money I owe. Have some pride and set an example. And we wonder why the country's in decline.Stop paying on those two credit cards for 6 months or so, find stuff you can sell of and get your self 5-7 thousand dollars cash. Then call your credit card companies direct and say listen, I have 3,900 dollars here and we can settle this debt right now and I bet they will take it. Do the same with the other company as well. Your credit score will take a hit for a year or so but it would probably drop less that 80 points. I did this 3 years ago with 7,800 dollars in credit debt, I paid 3,300 to one and 2,000 to the other. My credit score is around 730 today. Its not the traditional way to do it, but it beats taking 5 years to pay it off with all that intrest.
Whatever you do though, do not go through a debt consolidation company.
The money I OWE huh? So when i'm, lets say 20 hours late on a payment on a credit card with 11% intrest and pay it, but then turn around and get a late fee, incresed minimum payment to double and intrest rate hike to 29% for a year!...is that money I OWE? LOL, take your self righteous BS somewhere else, if you think i'm going to feel sorry for a credit card company you've got another thing coming. Credit card compaines are bigger crooks than politicians.
you OWE it becuase when you agreed to the card you AGREED to their terms and conditions....if you don't like their terms and conditions DON'T GET THE CARD, DONT rack up the debt and then "settle" out of it....so that is why I feel you "owe" the debt!0 -
Don't borrow money to pay off debt. You're just creating more debt. Here is a very oversimplified idea:
1. Stop spending money on anything you don't absolutely need.
2. Create an Excel spread sheet with all your debt and monthly payments on it.
3. Sort by monies owed. Least to most.
4. Apply all your monies to the "least amount owed" amd make minimum payments on the rest.
5. When one bill is paid off, start applying the extra monies to the next least amount owed, until it's paid off.
6. Take the monies from the two paid off bills and add to number 3, and on and on.....
As you pay off each debt, destroy that credit card or eliminate that account. Start paying cash for everything.
The hard part is sticking to it and identifying what is a neccessity and what is a luxury. Just because a great pair of red heels is half off and you really want them doesn't make them a neccessity.
Yes, financial people always say to pay off the highest interest. But, speaking from experience, that doesn't work for me. What works for me is to hit the smaller goals first. If I can first pay off that small one, then I can use that money and pay off the next, and so on. I love that method better than just trying to pay off the biggest interest.
It's not all about what is the cheapest thing to do. Sometimes, its really about what actually works.0 -
Don't borrow money to pay off debt. You're just creating more debt. Here is a very oversimplified idea:
1. Stop spending money on anything you don't absolutely need.
2. Create an Excel spread sheet with all your debt and monthly payments on it.
3. Sort by monies owed. Least to most.
4. Apply all your monies to the "least amount owed" amd make minimum payments on the rest.
5. When one bill is paid off, start applying the extra monies to the next least amount owed, until it's paid off.
6. Take the monies from the two paid off bills and add to number 3, and on and on.....
As you pay off each debt, destroy that credit card or eliminate that account. Start paying cash for everything.
The hard part is sticking to it and identifying what is a neccessity and what is a luxury. Just because a great pair of red heels is half off and you really want them doesn't make them a neccessity.
Yes, financial people always say to pay off the highest interest. But, speaking from experience, that doesn't work for me. What works for me is to hit the smaller goals first. If I can first pay off that small one, then I can use that money and pay off the next, and so on. I love that method better than just trying to pay off the biggest interest.
It's not all about what is the cheapest thing to do. Sometimes, its really about what actually works.
If you look at the big picture, you will end up financially better off by paying the higher interest debts first, assuming you also factor in deductible interest as well.
But I think the mental / behavioral components of it are important as well, and paying off those smaller loans early can help keep someone on track. Same applies to over-paying on taxes. Experts say don't give the government an interest-free loan, but if it keeps you from spending the money on crap because you are impulsive, then maybe its better that way.0 -
The money I OWE huh? So when i'm, lets say 20 hours late on a payment on a credit card with 11% intrest and pay it, but then turn around and get a late fee, incresed minimum payment to double and intrest rate hike to 29% for a year!...is that money I OWE? LOL, take your self righteous BS somewhere else, if you think i'm going to feel sorry for a credit card company you've got another thing coming. Credit card compaines are bigger crooks than politicians.
Well, you did agree to the terms before they gave you the money. You just changed your money after you had it all spent. It happens. Lotteries and credit cards rates and fees are actually taxes on people that are bad at math. Clean and simple.0 -
Yeah but how low can someone's credit score get if they've never missed a payment? I doubt you can have a low credit score without some type of delinquent debt.
Actually, if you carry no debt for a couple of years or so, your credit score will start to drop. Pay cash for all of it, and your credit score will eventually be zero.
There is nothing better than being debt free, but that takes an enormous amount of self control and financial fortitude.
I hate car payments...won't even buy a car until I have all the cash in place. I never buy a new car either...that's a real suckers game.0 -
In no way is this legal advise, b/c Im not an attorney, but depending on what state you live in (Florida is the best) you might consider filing for bankruptcy. I don't think you can do so on the student loans, but you should be fine on the credit card debt. Credit card companies won't work with you unless you are major behind on payments. It's a vicious cycle. I am debt free and I hope you can free yourself from it. I wouldn't recommend this if you are trying to keep a high credit score, to some it doesn't matter. Pay cash for everything, if you cant afford it, you don't need it, thats what I live by. Good luck girl.0
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Dave Ramsey Rocks as far as budgeting and living debt free. Order his books thryu Amazon..get them cheaper there.
They have worked wonders for me.
Blessings,
Nic0 -
I don't think you can consolidate those together. You can call the credit card company and ask them to lower your interest rate. That will help some. The best thing is to buckle down and just pay it off. I over trusted someone in college enough to put him on my credit card (we were engaged) and he charged thousands on my credit card in one single month. I was left to pay it off. UGH. It did take me years, but I did it and NOW my credit score is well over 800. Don't miss any payments, don't give up, don't add to the debt and you WILL pay it off. And when you do it will feel SOOOOO good.0
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Do you have an auto that you own free and clear? Interest rates on autos are super low right now. If you have one with equity and it is not too old you could take a loan out against it. Just remember you need to have full coverage insurance on it. I worked at a credit union for 4.5 years and convinced people into using equity in their auto to pay down credit card debt instead of taking out a personal loan or another credit card to consolidate because the interest rates are sooo much higher. I myself did this and I had about $6500 in equity in my auto (& received a 2.49% int rate) and used about $3500 of it to pay off high interest rate credit card debt (@ 12.9%-14%). Just a thought!0
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There's some sound advice- but don' pay off the smallest balance first - this doesn't make sense - pay off the highest interest loan first...that's just common sense...
The smallest balance advice is sound - the reason - it provides quicker results and helps to foster the process. People give up when they don't see results. The emotional release that comes with seeing debts (even smaller ones) eliminated is well worth any extra interest you might pay. And for most people, the math actually ends up pretty similar in either direction (ETA: obviously that will vary depending on the size and nature of the debts). The faster the smaller debts go, the easier it is to snowball.0 -
Yeah but how low can someone's credit score get if they've never missed a payment? I doubt you can have a low credit score without some type of delinquent debt.
Actually, if you carry no debt for a couple of years or so, your credit score will start to drop. Pay cash for all of it, and your credit score will eventually be zero.
There is nothing better than being debt free, but that takes an enormous amount of self control and financial fortitude.
I hate car payments...won't even buy a car until I have all the cash in place. I never buy a new car either...that's a real suckers game.
I was a loan officer for 4.5 years. My credit union was the main financial institution of a major university & it's incoming/current students & alumni and we always opened new accounts and credit cards for new students. A lot of the students would not have credit scores because they have no history reported on their credit report. Normally, a credit score goes from 350-850 (fico). There are a lot of websites that charged you money to monitor your credit score and their scores can be way off from what lenders use. (they can go into the 1000s). Your credit score cannot be "0" unless you have never done anything with credit....like the incoming 18 year old students I was talking about or people that pay cash for everything. I do think you are right though in that it would go down.0 -
Dave Ramsey Rocks as far as budgeting and living debt free. Order his books thryu Amazon..get them cheaper there.
They have worked wonders for me.
Blessings,
Nic
Or borrow them from the library for free. :-) That's what I did when I went debt free. I got the YNAB software and then through the YNAB forums members I learned about Dave Ramsey. Read all of his books and did a variation on the snowball. Was completely debt free in under a year, and owed about the same as the OP.0 -
That is not so bad! I had $24,000 debt with 12% interest!!!! It took discipline to pay it off, with a few tricks.
If you have discipline, apply for 0% interest credit cards and transfer your balance. Applying for new CCards will lower your score but it will go up again after 24months.
Through a divorce I had $24,000 worth of debt at age 27. I asked close family to lend me the money & I promised I would pay them back at half the interest rate (which would have allowed me to pay it off faster). They turned me down. I was stuck at 12% interest and had to figure out a way to pay it off fast.
I had a Fico score of 760.
I opened up new credit cards at 0% for 6months and kept transferring back and forth between them while I was paying it down in large chunks every month. The debt got smaller and smaller. These cards were solely used for paying down debt, never for shopping. Everytime I had a transfer balance cheque of 1.99%, I would use it. It took me 5 years to pay it off!
Here is a breakdown of the Fico score in percentages%:
30% is DEBT TO AVAILABLE RATIO (keep the ratio low, avoid maxing your cards.)
35% is PAYING BILLS ON TIME (Consistently pay on time & paying more than the minimum will raise your FICO score)
15% CREDIT HISTORY (hold on to credit cards you've had for years)
10% APPLICATION FREQUENCY (If records show multiple credit cards and loans applications, it will lower FICO)
10% CREDIT DIVERSITY (Lenders prefer different types of credit: owning a credit card and car loan is better than just 1 credit card)
What will impact your FICO NEGATIVELY:
1)Minimum payments
2)Late payments
3)Closing of a credit account
4)Having too much unsecured credit
5)Debt consolidation loans (which requires closing an account)
6)High debt load
12 months after paying off my debts my FICO score went up to 801. I don't recommend bankruptcy, it will hurt your credit history really badly for 7 years.0 -
First thing, call the credit card companies and ask them if they will lower your rate. I did this and got one of them knoced down from about 15 to 3 and was able to transfer the balance from another one with no transaction fee, the others did nothing, but it only takes one. Next see if you can get a card with a 0% intro/balance transfer offer. Then transfer one or a portion of one onto it. It takes time, but you can do it.0
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OP, i'm not really saying you should do what I did but if you want to get out of debt sooner rather than later and you have some time to let you credit score improve then it is a viable option. There is some good advise here, but dont get scared off by the whole "moral majority" crew here who act like credit card companies are some poor little kid who you take advantage of but who never takes advantage of you. Do what YOU have to do to survive. Remember, you dont need credit... in the long run cash is king, credit cards are the devil.
I have cookies for all of you who wasted your money paying off your cards the "right" way. Well done! You are and will always be a credit card companies best friend.0 -
Dave Ramsey Rocks as far as budgeting and living debt free. Order his books thryu Amazon..get them cheaper there.
They have worked wonders for me.
Blessings,
Nic
This !!!0 -
Dave Ramsey Rocks as far as budgeting and living debt free. Order his books thryu Amazon..get them cheaper there.
They have worked wonders for me.
Blessings,
Nic
This !!!
Which book would you recommend? Thanks!0 -
I say The Dave Ramsey method also!0
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Dave Ramsey Rocks as far as budgeting and living debt free. Order his books thryu Amazon..get them cheaper there.
They have worked wonders for me.
Blessings,
Nic
This !!!
Which book would you recommend? Thanks!
I personally used "Total Money Makeover" and used the advice on his website as well.0 -
Oh, and I highly recommend against intentionally doing charge-offs. That's pretty much legal theft IMO. You spent the money. You bought the items. Charging it off means you keep the items and everyone else gets to pay for it with higher interest rates and fees.
Yeah, those poor credit card companies. Dont knock it til you try it.
I really don't get this attitude
You are not stealing (no not to strong a word) off corporate America you are taking it of peoples savings and pensions. All the people that have worked hard and been responsible.
I worked very hard to save $50,000 and put them into shares that are now worth $10,000 . You haven't taken that money of faceless America you have taken it off me!!
If you hadn't got that loan you would have been the first to leat about being denied a service that is your right.
I lol at the fact you think you have got away with it -- your bank will get a new manager or a change of policy and will chase you for it in the future, they don't forget0
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