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Credit Card Debt - Consolidation

Joined
26 June 2004
Messages
250
Location
NJ
Dear Members,

I thought I'd post to get some help/suggestions. Here is the breakdown:

I owe a total of approx. 12k in credit debt. (I have four credit cards.) I keep hearing ads on the radio on debt consolidation programs that can help me save hundreds of dollars. I've been making the payments on time but realized that with the amount that the credit card companies are making, I can spend that money elsewhere. (Lately, I've noticed that my rate has been going up)

I would like to know if you have any recommendations as to who or where to apply for in order for me to pay one company for my debt. I don't know too much about how this works or what the hidden catches are, but I'll give it a shot and see how it works.

I Googled and found some answers but wanted to hear from you guys with your opinions. Of course, my first step is to stop using the cards, which I have been for the past few months. Things have changed in my life where I don't want to end up struggling for these payments.

Thank you in advance.

Please let me know if you need any additional info.
 
Can you do a balance transfer onto a new or existing free card. Often balance transfers can get you 0% for a year or so.

I've gone that route before but this time, I thought maybe if I dealt with a non-credit card company, I can get a better deal at the end.

Thanks for the advice.
 
Do you own a house? A HELOC to pay off the credit cards coupled with an agressive repayment plan might make life easier.

I don't trust any of the plans that advertise on radio -- they all sound like scams to me. If you have a good income, you should be able to get a decent debt consolidation loan from a bank or credit union.

And obviously: once you get them paid off, never run them up again.
 
A few years ago when I had to make a lot of purchases for my office I ran up about $40k on my credit card. I paid it off very quickly by putting all of my credit cards in the safety deposit box. I then only used cash or my debit card for any purchases and didn't buy bull$hit things that I really didn't need.

If you can afford to pay $1,200 a month and not use your cards, you'll have them paid off in a year. I don't trust those consolidation companies that advertise on the radio. They are advertising because they will obviously make money off of you by your using their service.
 
I think you need to look at reducing the total cost of the money you borrowed. The only two ways to do this are A) cutting the interest rate and B) cutting the pay back period. Both of these reduce interest expense.

Home equity loans are probably the lowest rates you'll be able to get therefore most likely the lowest overall cost. If you don't have a home, then a secured loan of some kind would have the next best rate. Balance transfers on teaser rates would work too as long as you meet the terms and don't miss a minimum payment. If you're interested in debt consolidation, stick to local resources-- banks, credit unions, or other local companies. I think you'll get better results that way.

Remember that lowering the total cost is what matters. After that you'll need to figure out how to stay out of debt. Other than emergencies, there is no good reason not to pay off credit at the end of the month and certainly no good reason to have more than one card.

Good luck.
 
Debt consolidators are usually scams designed to pocket as much in upfront fees as possible. Be very careful and do your research if you do decide to go this route.

I'd look to consolidate onto a HELOC if you have equity in your house, a new credit card at a lower rate, or negotiate directly with your credit card companies if I were in your shoes.
 
Debt consolidators are usually scams designed to pocket as much in upfront fees as possible. Be very careful and do your research if you do decide to go this route.

I'd look to consolidate onto a HELOC if you have equity in your house, a new credit card at a lower rate, or negotiate directly with your credit card companies if I were in your shoes.
+1, good advice here!
 
Basically what these debt consolidators will try and make you do is settle with the respective credit card companies for a lump sum. Credit card issuers will usually settle for pennies on the dollar.

The lump sum will be paid by the debt consolidator to the respective credit card companies, but will include a markup so they can make some money. You then are responsible for paying back the debt consolidator on the agreed amount, plus their markup.

You will ruin your credit, as you'll likely have charged off debt.

If you are willing to ruin your credit, you can negotiate with the credit card companies yourself. Not the most honorable, as you were the one who spent the money, but you catch my drift.
 
If you are willing to ruin your credit, you can negotiate with the credit card companies yourself. Not the most honorable, as you were the one who spent the money, but you catch my drift.

There is one other option -- sell the NSX to pay off the debt.

I know, I know -- Crazy talk!
 
I've been credit card debt free for years - if they're used, they're paid off monthly.

You can debt consolidate yourself, you don't need a program, you just need common sense and dedication. Lower however much you're investing/saving per month and apply that additional amount to the highest card you owe on. Once it's paid, then go to the next and continue until you don't have any left, and then significantly increase your investment contributions.

Quick example, using 3 cards...

Balance $5,000 @13.9%APR, paying $150/month
Balance $7,000 @9.9%APR, paying $200/month
Balance $2,000 @7.9%APR, paying $100/month

You're investing/saving $1000 per month

Drop your savings to about $200 per month and push that additional $800 to credit cards. In the above example, I would add $800 to the 13.9 card and pay $950/month. Do that, you'll have it paid in 6 months. Then, shift that $800 and the $150 you were paying (now $950) to the 9.9 card in addition to the $200.. for $1150/month. Keep doing this until they are all done.

Once it's complete, go back to saving the $1000/month but increase that investment a couple hundred bucks more to $1200 and leave the remaining $250 as extra for play.

Only use one credit card, and pay that balance off in full each month or maintain a balance under $500 at all times. This will REALLY be manageable and do wonders to your credit.
 
Ding Ding Ding we have a winner ^^^^

This is a great plan. I would be hesitant to lower IRA or 401k contributions, but placing less money in a basic saving account is a good idea. If the bank is giving you 2% interest for the money you are placing in your saving account you are much better off paying the 12% interest on credit cards ASAP.
 
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