Any tips on consolidating debt?

[the3rdkey]

I just tried to get a loan through my credit union to put all my debt in one big bulk. I think this will be the easiest way to pay off them damn cc's. My bank said they wouldn't approve the loan on a signature alone. Anyone have advice on anything I can try online that is not a scam?

Thanks.

 

[pogipinoy27]

The best way would be to pay down the CC with the highest interest as much as possible for the short term. Eventually you will get offers to open up a new CC with a 0% balance transfer. Balance transfer and start paying down. If you get another offer do that as well.

The trick is to actually pay down your balance. It'll seem like a long uphill battle but it'll be well worth it. If you want more info look here:

https://www.mytotalmoneymakeover.com/index.cfm?

http://clarkhoward.com/shownotes/category/7/40/224/382/

 

[Ender]

You could also consider your local Primerica office. They are a division of Citigroup that focuses on debt reduction (ironic, I know).

Honestly, the post above me is the best advice. The slow way is the best way.

 

[BigSpoonyBard]

[quote name='pogipinoy27']The best way would be to pay down the CC with the highest interest as much as possible for the short term. Eventually you will get offers to open up a new CC with a 0% balance transfer. Balance transfer and start paying down. If you get another offer do that as well.

The trick is to actually pay down your balance. It'll seem like a long uphill battle but it'll be well worth it. If you want more info look here:

https://www.mytotalmoneymakeover.com/index.cfm?

http://clarkhoward.com/shownotes/category/7/40/224/382/[/quote]

The problem with this strategy is that each one of those new cards pings your credit score. And the 0% only lasts a few months before the rate goes up to the same place you were at before. This is a strategy that can actually hurt your overall credit score.

If you can't get a consolidation loan, focus on paying one card down at a time. Cut out extraneous expenses for a while. Pack your lunches. Put all your extra money on the card you've chosen, while paying slightly above your minimum on the others (e.g., rounding up to the next even $10 increment). Once you've got one card paid down, go to the next. The key thing is to not let the feeling of being overwhelmed get to you. Stay calm, and act rationally.

Here's a nice little article about some of the bad strategies, and some of the good.

 

[keithp]

Go here: Dave Ramsey

You need to get Dave's book, "The Total Money Makeover". It will completely change your way of thinking about money, and quite possibly change your life in the process. Your local library probably has a copy if you don't want to buy it.

Also check if your cable/sat provider has Fox Business Channel, if so tune in at 8 EST each night to listen to Dave. The guy helps people get out of debt every day, and is no-nonsense in telling it like it is. Basically he advocates paying down your smallest debt first, and once that's paid off to roll that money into your next largest debt, and so-on until you're debt free. Which card has the highest rate doesn't really matter, just attack the smallest balance first so you make progress.

There's alot more, but seriously tune him in or read his book! He's also on XM in the afternoons I think, but I've only seen his show on FBC.

Oh yeah, he also says debt consolidation companies are worthless, and don't offer anything you can't do yourself. He's a millionaire now, but climbed out of debt himself when he started out. There may also be debt-consolidation counseling classes offered in your area through his organization, which he calls "Financial Peace University". His website I posted has the details along with alot more info.

What's with the debt threads lately?

 

[chosen1s]

[quote name='BigSpoonyBard']The problem with this strategy is that each one of those new cards pings your credit score. And the 0% only lasts a few months before the rate goes up to the same place you were at before. This is a strategy that can actually hurt your overall credit score.

If you can't get a consolidation loan, focus on paying one card down at a time. Cut out extraneous expenses for a while. Pack your lunches. Put all your extra money on the card you've chosen, while paying slightly above your minimum on the others (e.g., rounding up to the next even $10 increment). Once you've got one card paid down, go to the next. The key thing is to not let the feeling of being overwhelmed get to you. Stay calm, and act rationally.

Here's a nice little article about some of the bad strategies, and some of the good.[/QUOTE]

Ramsey is good, but he is conservative because he knows he is speaking to a broad audience and most of them are not responsible enough to make the "challenging" plans work.

I know someone who paid off $50,000+ by juggling 0% cards, and his credit score was not hurt in the least by the little "pings". So long as you're closing the old cards, for every ding your credit score takes, there is an opposite plus for closing a different card. Additionally, every time you make an on-time payment your credit score benefits. You just have to be SURE you are responsible enough to manage the juggling act and use a little common sense in which 0% cards you accept. Some only give you 6 months, others give you 13 months.

The debt consolidation plans are a scam that play on your inner desire to fail at getting rid of your debt. They offer a lower monthly payment amount, but in the long-run you're worse off because you're paying a lot more over the years.

Other option is to borrow from someone who REALLY trusts you (parents). In that case I would be tempted to put something up as collateral. Threat of a lost car will motivate you to pay your friend or family member back, and losing the car would be better than losing a relationship. This option would be my last resort.

You could also suffer through an extra job (an excellent Ramsey recommendation).

It really comes down to: How bad do you really want out of debt? Are you annoyed by it, or are you committed to getting out?