Get out of debt brehs

[the artist known az]

Been considering getting a debt consolidation loan since I have a balance spread out on four cards but not sure were to start. Anyone have any positive experience with them? I cut down my expenses as much as possible and only carry my debit card.

I'm in the same boat and thinking about trying to get a loan through my credit union. I've contemplated a HELOC but I don't know enough about it to trust doing that then we fall into a recession or my home value drops

 

[winb83]

Cut my credit card debt down to almost nothing. That Chase card at the top is what remains of that dumb impulse buy $2200 Samsung OLED I bought last year.

 

[phcitywarrior]

Yeah if you can get approved for a high enough limit it's best to get that transferred just to stop the interest. If that isn't an option you can try a local credit union and get a debt consolidation loan. Credit card interest is some of the worst interest you can pay cause it's so high. The best option is a balance transfer to a card with 0% interest for at least a year.

This is not a bad idea to get a balance transfer just to halt the interest but I’m not a fan of opening another CC when you’re already in debt.

I know you are good at managing multiple CC accounts but most people need less, not more.

 

[phcitywarrior]

Great thread. Honestly, best thing most folks can do is just sit. And by sit, I mean sit at home and just live life “boring” for a few months.

No trips, no going out, little eating out etc. just get maniacal about paying off debt. This is one of the things I agree with Dave Ramsey on. You gotta treat the debt like a cancer and attack it with a vengeance. In just 18months most CC, APRs have gone up 4-5% points. That’s crazy.

 

[winb83]

This is not a bad idea to get a balance transfer just to halt the interest but I’m not a fan of opening another CC when you’re already in debt.

I know you are good at managing multiple CC accounts but most people need less, not more.

I learned to manage debt from trial by fire. Credit management is a decision you make. I was terrible with debt starting out.

 

[phcitywarrior]

I learned to manage debt from trial by fire. Credit management is a decision you make. I was terrible with debt starting out.

I fully agree with you that it is a decision you make, I'm more so commenting on the order of operations to tackle the cc debt.

Example

John Smith has 12K in CC debt at 25% APR (that is also rising). His credit limit is 15K

Your suggestion would be to open up another CC and do a balance transfer for 0% interest for say 18 months. Let's say he takes out another CC with a 15K limit and does the balance transfer so his effective APR is 0% for the next 18 months. His debt is still 12K but now his credit limit is 30K.

IF, and this is the big if. If John hasn't learned to manage his credit prior to getting the new line of credit, he could end up in a worse position now that he has even more credit. I would say it's better for John to pay down the current CC debt and learn the proper credit management decisions. Obviously there's some math he'd have to do on how much interest he's saving but still.

 

[winb83]

I fully agree with you that it is a decision you make, I'm more so commenting on the order of operations to tackle the cc debt.

Example

John Smith has 12K in CC debt at 25% APR (that is also rising). His credit limit is 15K

Your suggestion would be to open up another CC and do a balance transfer for 0% interest for say 18 months. Let's say he takes out another CC with a 15K limit and does the balance transfer so his effective APR is 0% for the next 18 months. His debt is still 12K but now his credit limit is 30K.

IF, and this is the big if. If John hasn't learned to manage his credit prior to getting the new line of credit, he could end up in a worse position now that he has even more credit. I would say it's better for John to pay down the current CC debt and learn the proper credit management decisions. Obviously there's some math he'd have to do on how much interest he's saving but still.

Balance transfer and destroy all the other cards.

When I got a debt consolidation loan they mailed all my credit card companies on my behalf and requested my accounts be closed. None of them actually closed the accounts so I had $0 revolving credit balances on all my cards and a large loan I had to still pay interest on.

I didn’t destroy my cards because at that point I decided I was getting out of debt. I stopped spending on the cards but still had them.

This is one of those things you either have to be all in on or it’s not going to work. There’s not much to learn it’s about the self discipline to not spend money you don’t have. If your credit is good enough to get a limit that can cover all your debt on a 0% into offer you’ll save lots on interest doing a balance transfer.

 

[phcitywarrior]

Balance transfer and destroy all the other cards.

When I got a debt consolidation loan they mailed all my credit card companies on my behalf and requested my accounts be closed. None of them actually closed the accounts so I had $0 revolving credit balances on all my cards and a large loan I had to still pay interest on.

I didn’t destroy my cards because at that point I decided I was getting out of debt. I stopped spending on the cards but still had them.

This is one of those things you either have to be all in on or it’s not going to work. There’s not much to learn it’s about the self discipline to not spend money you don’t have. If your credit is good enough to get a limit that can cover all your debt on a 0% into offer you’ll save lots on interest doing a balance transfer.

The bolded are facts. Dap + Rep