Financial trouble

[seekingKNOWLEDGE]

Last time I posted on here I was in pretty good shape financially. Since then, a lot has changes- somethings avoidable, some not.

So I know have a decent amount of debt that I've amassed. Nothing too crazy, but enough. I was considering a personal consolidation loan, but not sure it is worth it in the long run.

Here's the details.

Car loan- 10,625 4.4%
Bike loan- 1,800 7%
school loans that I currently pay on- 4,000, pay only interest; 52 a month
Credit card debt- 2,700 17.99 APR
Hospital bill- 500 no interest

I know I've lived beyond my means, and am actually moving to a much cheaper situation to help get out of this debt. I know what I've done wrong, so am just looking at how to get out of it, not how I got here. I recently received an offer for a personal loan up to 25K @7.99%.

I was contemplating the 20K option, which it stated would be $488 a month for 48 months. I could pay at least $700 a month, some times up to $1,000.

Would this be wise, where my car debt is at a lower rate? Although this is the only debt that has a lower interest rate, it is also the highest debt

I could pay them all off with the loan, with a few hundred to spare, which I could just add to the first payment.

Is this a wise idea, or am I setting myself back further?

Thanks in advance....

[photo]

Originally Posted by seekingKNOWLEDGE

I recently received an offer for a personal loan up to 25K @7.99%.

With the exception of the credit card debt, it's higher than anything else! In fact, it's about twice as much as your highest debt. Fortunately, the cc debt isn't so terribly much, so I'd just scrimp and save and pay that off as fast as you can.

It may be more convenient to consolidate, but it will end up costing you much more in interest.

[maat55]

Personally, I would sell the bike(I sold mine just to beef up my EF), attack the CC first, SL second and hospital third.

How much is the car worth?

I would not borrow to pay these debts.

[disneysteve]

The personal loan makes no sense at all since the rate is higher than almost all of your debt so forget that option.

You say you will be moving to a cheaper living situation. Take every penny of income freed up as a result and attack the highest interest debt first - the credit card. I'd also look into selling the bike and possibly the car depending on what they are worth vs. what is owed.

It might possibly make sense to take a small personal loan just to pay off the CC and cover any difference owed when you sell the car and bike if those loans are upside down. Then buy a cheap car - under 5K. But I'd much rather see you get out of this without any new borrowing. You can't borrow your way out of debt.

[ltj2010]

Consolidating only gives you the feeling that you accomplished something. Just start with the smallest one and get it paid off and then move onto the next. I agree to sell the bike also

[nitemarecooper]

Originally Posted by ltj2010

Consolidating only gives you the feeling that you accomplished something. Just start with the smallest one and get it paid off and then move onto the next. I agree to sell the bike also

I agree with this advice as well. If you could put the cc into the loan and leave everything else out, that would make sense and save money. If it were an all or nothing deal, don't do the deal. You likely will pay more in interest due to the loan at 7.99 being higher than all else.

[jteezie]

Forget the loan altogether. It's a waste of your time, there are likely loan origination fees (like 1%), and other crap that it isn't worth it to pay off $2700 3-6 months early. 2700 @ 17% over 3-6 months isn't that much ($100-200). Is it worth your time, gas, lost time with family, etc. to drive there for the paperwork?

[seekingKNOWLEDGE]

Thanks for the advice guys, its as I figured. That the loan wouldn't actually help, but it would seem that way where I'd be paying only one collector.

I can go as low as 5K with the loan, and it is through Discover, so I'm not sure there would be any driving involved. This would make sense to take the 5K and pay the CC off, then put the rest right back towards the loan, wouldn't it- dropping 10%.

As for the bike, I've tried to sell it. Its a beginners bike, so only 250cc, so its not very desirable. I owe about 600 less than it is worth. Since I had paid a lot over the monthly payment in the beginning, the next payment isn't actually due until 3-22-2012.

The car is worth between 10500 and 11500.

Should I use the 5K for the CC debt, then pay back whats left over, forgo the monthly bike payment and put that towards the monthly payment on the loan? Then when that's paid off, put that money towards the bike, then all towards the car. When that's paid off go after the student loans.

I do have about 1.5K worth of silver, but I think holding this will bring higher returns than the interest rates would take. Especially if I were able to drop that 10% on the CC debt.

Thanks again, folks.

[LittleMsMom]

I get the feeling you REALLY REALLY want to do the Loan. Even though you say you realize we are telling you not to do the loan. That being said the loan is 7.99% what are the FEES for the loan? Most credit card transfers charge at a minimum 1% or 2% fee plus a flat fee etc. If you are going to do the loan; ONLY do it for $2,700 (to pay off CC at 17.99%). Just a fee of 2% on 2,700 would be 54, if you barrowed 5k and applied it back to the loan the same day you would be paying $100, a difference of $46. The fees are where they get you...so read the fine print.

By consolidating the debts to a HIGHER interest rate you are costing yourself MORE money during the paydown process. How much money do you have each month to apply to debt repayment? Is the reason you want to consolidate is that you can't pay the minimums on all the debt so you want to reduce the minimums?

Do you live somewhere where you could you possibly sell the car, then just use the bike for transportation until your debts are paid off and you have saved up to buy a new 2K-3K car? I suggest this because you said you tried to sell the bike but could not.

What is the interest rate on the student loan?

I would do the following:
#1 Credit card debt- 2,700 17.99 APR (Transfer debt to 7.99% Discover Loan ONLY $2,700 since they will charge the fee based on the loan amount. So if you take out MORE like 5K then apply the extra back to the loan you are being charge a fee on the 5k instead of just 2,700.) ++ Please note I am only suggesting the loan transfer because I just feel you are going to do it anyway.

#2. Pay off CC debt 2,700 @ 17.99 OR 7.99%
#3. Pay off Bike Loan 1,800 @ 7%
#4. Pay off Car Loan 10,625 @ 4.4%
#5. Pay off School loan 4,000 @ ?? %
#6. Pay off Hospital Bill 500 @ 0 %

Note I went in order of highest interest to lowest, you will need to move the student loan to where it would fall interest rate wise once you post what interest rate it is at.

As for the Silver....Do you have a 1,000 Emergency Fund? If not I would sell the silver and keep 1K of it as an Emergency Fund and apply the $500 to your debt.

Good Luck...Keep us informed of your progress.

[Redraidernurse]

Don't do the loan. Listen to the previous posters.

[maat55]

[quote]

Originally Posted by seekingKNOWLEDGE

As for the bike, I've tried to sell it. Its a beginners bike, so only 250cc, so its not very desirable. I owe about 600 less than it is worth. Since I had paid a lot over the monthly payment in the beginning, the next payment isn't actually due until 3-22-2012.

I started with a Honda Rebel, it was not near enough power and weight for me. The gas milage was great at about 79 per gallon. I would sell it and pay cash later for another bike.