Ok my husband and i are trying to get out of debt! We hate that we are in so much debt and we want to eliminate it as soon as possible. We DONT have a lot of money so its not that easy. I just wanted peoples opinions on whether or not we should try to get a debt consolidation loan. We currently have approx $50,000 in debt.
$26000- 2 vehicle loans
$12,00-2 personal loans
$12,000-Credit Cards
What is the BEST way to eliminate this debt?? I know paying more on everything per month can really help but unfortunatly we dont have THAT much more that we can pay towards everything. We are young and accrued all this debt a few years ago. We realized we were really stupid for doing this and we have learned our lesson. Now how do we get out?
I also should add that NOTHING we have is unpaid or in collections or backed up. We have no back taxes, or unpaid anything. We just make minimum payments on everything but all of our accounts are always current.
This would be a $50,000 loan for 7 or 8 years from our bank (Bank of America)
Given the vehicle loans tend to have fairly low interest rates to start, I’m not sure I’d touch them unless you can really lower your rate.
Now you don’t state if you own your own home or rent so it is difficult to suggest how to proceed with the credit card debt. At a minimum, try calling the credit card companies and ask them to reduce your interest rate. If you’ve been consistent with your payments, some will work to reduce it to a fairly low rate. You just need to ask them.
My wife and I also worked our way out of debt (although not quite as high a balance) through a credit counseling service (Consumer Credit Counseling Service - a free service that helped work out a repayment plan for us, since we weren’t making enough to get out of debt and struggling to make payments). You may want to check out options like this. They aren’t just for people unable to pay their debt.
on Aug 19th, 2009 at 1:33 pm
1. pae off the kredit kards first…hiest % interest
2. if yu pae the minimun on KK, it take bout 25 yeers tu pae it off, assuming yu never agin charj NE-thang on em.
du yu wanna pae forever for thangs yu bot 5 yeers ago?
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on Aug 19th, 2009 at 2:17 pm
If you can get a loan that is fixed get it for the credit cards only and pay exactly to it as you were paying them and clear them as fast as you can. Then take that amount and add it to the next smallest loan and pay it off and work your way up to debt free
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on Aug 19th, 2009 at 3:00 pm
Debt consolidating its a good idea, but should be the last option. Consolidating all of your credit cards debts means you will have to close up all those accounts, which can damage your credit ratings. Most companies will not let you consolidate your personal nor car loans, so it only works toward you credit cards. The best thing I advise is to keep making the pmnts and when you get your taxes at the end of the year, you can use it towards your debts. Any extra money you get use it towards it. What I do is that I make two pmnts a month to my credit cards, even the minimum twice a month helps.
Good luck!
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on Aug 19th, 2009 at 3:47 pm
Given the vehicle loans tend to have fairly low interest rates to start, I’m not sure I’d touch them unless you can really lower your rate.
Now you don’t state if you own your own home or rent so it is difficult to suggest how to proceed with the credit card debt. At a minimum, try calling the credit card companies and ask them to reduce your interest rate. If you’ve been consistent with your payments, some will work to reduce it to a fairly low rate. You just need to ask them.
My wife and I also worked our way out of debt (although not quite as high a balance) through a credit counseling service (Consumer Credit Counseling Service - a free service that helped work out a repayment plan for us, since we weren’t making enough to get out of debt and struggling to make payments). You may want to check out options like this. They aren’t just for people unable to pay their debt.
References :
on Aug 19th, 2009 at 4:24 pm
Well, I am going to add in my two cents worth. I love to listen to Dave Ramsey and his advice is very good. He would tell you to line up your debt according to how much you owe and then pay off the smallest balance first while maintaining minimum payments to the other debt.
For instance you have debts 1, 2, 3 and 4. Debt 1 is the smallest amount that you owe, and so you concentrate your extra money say $50 onto debt one along with debt ones minimum and maintain the minimums on the other three. Once Debt 1 is paid off you will take that $50 and the minimum you were paying on to Debt 1 and apply both of those to Debt two along with Debt twos minimum again, while paying the minimums on the other two debts. Again, once debt two is paid off, you will take the $50, Debt ones minimum and Debt twos minimum and apply all of those to Debt Three along with Debt threes minimum. By the end, you are making principal payments on your vehicles and may even pay them off quicker.
This is what he calls the Debt snowball. The trick is to work the snowball until all of your debt is knocked out. If you go with the highest or lowest interest rate first, that might be the largest sum that you owe and then it takes a long time to get rid of your debt on that one while if you get rid of the smallest dollars owed then you arrest accruing more debt quicker.
Dave will also tell you that you might have to eat Beans and Rice, Rice and Beans until your debt is gone but, once it is gone then you are free.
I think if you use the debt snowball, you can be out of debt quicker than if you take out a consolidation loan.
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on Aug 19th, 2009 at 5:13 pm
I do like the idea of consolidating debts….but there is one major trap. You MUST stop using credit until you get the loans paid off. I have seen this over and over……people get a loan and pay off their credit cards. Then they turn around and run up the now-empty cards all over again. Now they are in twice the amount of debt, and end up filing bankruptcy.
So keep that fact in mind
Also, all of the answers here were petty good for a change. Personally I would just get a loan to cover the credit cards. You don’t give much info on those personal loans, but if the interest rate is high then add them too. The follow Jen’s advice….pay off the lowest balance loan first and move on to the next ones.
And yes..it will be a long road. Getting a second job will help but many people don’t have that option.
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