Getting mixed advice about money and savings...what to believe?

[inneedofhelp]

So, I heard that consumer credit agencies are to be avoided, as debt consolidation is a big no-no. Then, I hear a financial adviser on the radio recommend to a caller with credit card debt to visit a national consumer credit counseling office.

What services do they actually provide? Most of my debt is 15% interest at least, and the cc companies have not been willing to reduce the amount (actually, this amount is pretty low as they used be around 19-20% average) no matter how many times I called.

I have a reduction in pay, and I was wondering....can a consumer credit company actually be able to reduce my interest rate?

This same radio show host also told a caller who was wondering if he should keep contributing to his 401k, or pay off cc debt, to continue to make extra payments on the cc debt, while contributing at least a small amount to retirement. However, I heard Suze Orman say that because the cc companies are now lowering people's limits to their balances, and closing the credit cards completely once they are paid off, it would be more advantageous to continue making the monthly payments on the cc debt, but to increase the amount put into savings (or retirement).

what gives? Which information is correct?

[irmanator]

I would go with the Suze Orman advice to contribute extra to savings as opposed to cc. I think it got changed with the times and with the fact of the cc cutting balances. Some used to think you could always use the paid off balance in an emergency, but not they are cutting limits so that wont work.

[Radiance]

As I have posted before, I have personal experience on this
I use all the free counseling I can get (from good companies, of course)
CCCS is one I use; although they split on different companies and I forgot what the branch I use is called now... will look it up on my email
I also use one called Balance which is through my credit union.

I used the free counseling and they are really great, professional and knowledgeable, you don't have to hire their services, you can use their direct counseling to get a good picture of the situation and explore solutions, ask questions, etc.

Then it is up to you if you want to hire them to assist getting you out.
I chose to follow their advice but on my own and they still help me anyway, for free.

By doing it on my own I don't have the credit affected, but I had to be very disciplined and brave and persistent.

I did consolidated a portion of my debt but, again, not through an agency but via a lower interest personal loan I got at my credit union.
This transferred that portion of my debt from a revolving ~23% credit card to a fixed 36 month loan at 12%.

They are not evil, they do provide a service.
For some people this has worked very well and for others like me, they have been a source of continuous free financial counseling.

Hope that helps

[Radiance]

Found it! they are now called apprisen dot com.
When they ask you if you want to sign up for credit consolidation, reduction, tell them not right now, that is all.

Try to build a relationship with your counselor.

[Mistee]

I would advise you to follow Suze Orman's advice and pay the minimum on your credit cards and build up your emergency fund.

My experience with Citi taught me to follow Suze's advice! I wasn't behind with Citi but my balance wasn't going down as fast as they thought it should apparently so Citi sent me information regarding their partner program whereby I send an extra $150 over my minimum payment each month for three months and Citi would credit my account up to $250.00 of the amount that I paid over the minimum; 10% I think the amount was. Anyway, the three months just ended and I received a credit of $34.00 and also Citi slashed my credit line by half! They left me $42 to use for purchases and cash advances!!! Yep, I'm not kidding.

I was forewarned that this could happen to me by others who believed the cc companies had their best interest at heart.

This made me believe more what Dave Ramsey said about not worshipping at the throne of the almighty FICO Score and Suze Orman saying to forget what she told us previously about paying more than the minimum and to build that emergency fund.

I just continue to pay on time, do not add to my debt, and save now. I have no qualms because it is the banks' money and they have the right to do as they please. I have that right also to not believe them anymore and cut up my cards and get rid of them. Live within my means and if I don't have the money, I just do without like I did when I was growing up with my mom and my sister.

The credit card companies seem to not want to play fair with the customers who are paying on time and have never been late.

[Mistee]

Their (Citi's) reason for slashing my limit was the balances on my other cards were too high. The balances were higher when they asked me to join their program and now that the other balances are lower, they are telling me this and with my extra $450 (150x3) in their pockets now. At first I was mad, but then I got glad and started laughing because I am happy that I have been awakened to the games these companies play.

I will be so glad to call into the Dave Ramsey Show and say "WE'RE DEBT FREE!" LOL

OP, I would SAVE my money!

[Mistee]

I am sorry to monopolize most of the board here, but I do believe you can do as good a job as a debt consolidation company can or better! So many debt consolidtion companies are springing up and being closed for fraud. Some of these companies collect your money and they sit on it and don't pay anyone. You can sit on your own money. But just take a bill, pay it and move on to the next one. Pay the minimums on all but the one you are targeting. The bill you are targeting pay as much as you can towards it with every extra penney you get. You have to keep this mindset or otherwise you're going to be overcome with fear and fear has never produced anything but "false evidence appearing real" from a preacher I heard say that!

[wincrasher]

These companies thrive because people think there is some easy way to get out of paying their debts, or paying substantially less.

Partly desperation, partly greed.

The sad truth, they will learn, is there is no free lunch.

[Radiance]

These companies thrive because people think there is some easy way to get out of paying their debts, or paying substantially less.

While I can see how that can be the case for some, I can say many of us have approached these companies for guidance because we were really clueless as to how to regain control of our finances

I still think anybody can benefit from a consultation with them. I know I do.
It doesn't cost me a thing. They don't even preassure me to hire their services, but they continue assisting whenever I need it. That doesn't sound evil to me.

My two cents, I guess there is always two sides to a story.

[inneedofhelp]

Can a consumer credit counseling company help if you don't really have any wiggle room in your budget and you are paying the monthly minimums? I understand my debt payoff plan and how once I finish one debt, I will use that money to put towards another debt and so on and so forth. Right now with the reduction in pay, I am having a reduction in money for food or for savings or for emergencies.

I have heard that if you call the cc company and tell them you are having difficulties, they may use it against you in order to close your account, raise interest rates, etc.



As for those who think some of us are "looking for a free lunch", well, all I can say is that I wonder what the view must look like from way up there. Not everything or everyone acts or thinks as others may assume.

[Radiance]

Can a consumer credit counseling company help if you don't really have any wiggle room in your budget and you are paying the monthly minimums?

Yes they can! They can help you fine tune your budget and/or consider other strategies.

I feel I am not getting message across... ???
A consumer credit counseling company can be used for free couseling and they are very good.
You don't have to get into their program.

I say, have the consultation, or many consultations, as many as you want and then see if you can do what they propose, or most of it, on your own.
Consultations are free.

have heard that if you call the cc company and tell them you are having difficulties, they may use it against you in order to close your account, raise interest rates, etc.

This is true, with this trend if you call on your own you need to be careful of what you say. Telling them to reduce the interest rate or you get your business somewhere else might be a better approach, they don't have to know you are having difficulty paying (unless youhave been already late) and you can put yourself on a position of power. "I am bombarded with offers of credit cards with lower interest rates than yours, what will you do to keep my business"

If you have already been late, that is another story
Personal loan to consolidate might help
Free consultation with a credit counseling agency helps too
Posting here asking for help building a payoff plan is best!

[lovcom]

All one needs is simple math skills. Little or no need for credit counseling if one is mature and knows basic arithmetic. There are those that need to be spoon fed, hand held however....often people think these CC companies are full of magic and special powers...one needs (1) the will, (2) math skills, (3) maturity, and (4) employment and (5) a keen sense of delayed gratification, (6) good credit repair book/s, and with all this, most situations can be mitigated.

[inneedofhelp]

All one needs is simple math skills. Little or no need for credit counseling if one is mature and knows basic arithmetic. There are those that need to be spoon fed, hand held however....often people think these CC companies are full of magic and special powers...one needs (1) the will, (2) math skills, (3) maturity, and (4) employment and (5) a keen sense of delayed gratification, (6) good credit repair book/s, and with all this, most situations can be mitigated.

I think A LOT of your response is highly indicative of assumptions, and lack of knowlege about people of all different incomes. Most of what you have written appears to be from the outside looking in, and looking in from way up high.

[EconoMutt]

I would go with the Suze Orman advice to contribute extra to savings as opposed to cc. I think it got changed with the times and with the fact of the cc cutting balances. Some used to think you could always use the paid off balance in an emergency, but not they are cutting limits so that wont work.

I agree 100%
I wouldn't count on the cc companies to keep those cards open after they've been paid.

[lovcom]

I think A LOT of your response is highly indicative of assumptions, and lack of knowlege about people of all different incomes. Most of what you have written appears to be from the outside looking in, and looking in from way up high.

I understand.

However there was a time when I too was swimming in big consumer debt, large credit card balances. But I did for myself what credit counseling companies wanted me to pay them for, and I felt as though my better interest was not something they cared about. They often wanted me to go further in debt for their services. The free ones lacked the will.

I dug out by first saving 6 months living expenses, then making massive monthly payments as best I could. It took 19 months, but I did dig out, and I know first hand the massive pain of doing this. Looking at my own situation back then, I can say I was like most people, in that my credit nightmare was self-inflicted, and was the result of being 35 years old and treating my money like a 16 year old brat. In other words, I was immature about how I dealt with money.

I think what I originally wrote to was the fact that most credit messes are self-inflicted, and often people don't want to do the dirty painful work. They think a credit counseling firm will do the heavy lifting; a kind of surrogate mommy. This is not to say they are to be avoided, but rather I think most messes can be dealt with ourselves. Perhaps really complex or big messess can benefit from such services.