What would you do in this situation?

[inneedofhelp]

Here is the premise:

You have over $10,000 in cc and loan debt. You can only afford to pay the minimum per month. But, you aren't charging more, so the balance is slowly going down.

You have very little to no emergency savings, and you are eeking by each month, without much left over to put towards savings or debt--mainly towards food and necessary items.

Your credit score is in the high 600s, but not yet 700.

3 of your major cc companies continue to keep reducing your credit limit as more and more of the debt is paid off. You have never been late, or missed a payment, but, this is what they are doing. It appears that the likelihood is the cc company will close the account once the debt is paid.

You will have all of your debt paid off in under 3 years.

Part-time and odd job opportunities are hard to come by in your region due to high unemployment.

In this situation, would debt consolidation be something to use? If you can find a company that really can lower the monthly payment, so you are able to keep more of your paycheck to use towards the emergency saving, would you use their services, and if so, which is the most legitimate company to use?

Or, would you keep paying the minimum, and keep looking for a part-time job?

[debtconsol]

My idea would be to set aside some money for emergencies and neccessities every month, and the rest must be used to pay off the lowest debt. Attack the lowest debt. Then when that's paid off, go for the second one. Don't worry about paying the minimums all of the credit cards. Finish them off one by one.

Before you do that though, cut up your credit cards. Blow them up if you have to. If your in debt, don't jump and start using credit cards.

[minnie1928]

I would not go the debt consolidation route. The high 600 score you have will tank and considering the relatively small amount of debt (I know, it seems huge but in relation to what others have posted...it's not) it's simply not worth it. I would call the CC companies and push for lower rates. It can't hurt to ask, and it will only cost you some time (not money). I would also review my monthly expenses to see if some more corners could be cut. REALLY look at your wants vs. needs. Cable tv is not a need, neither are cell phones, etc. And continue to look for a part time job. Do you get a large tax refund each year? If so, reevaluate your withholding rate in order to get a smaller percentage taken off each check.

[disneysteve]

You will have all of your debt paid off in under 3 years.

I think this is your answer right here. Your situation isn't bad at all. You will be debt-free in a very short time period. Why even consider doing something that will totally trash your credit rating? You don't owe much and you are on track to have it paid off pretty quickly.

Attack your budget with a vengeance and cut out every penny of unnecesssary spending. Continue to look for opportuniites to make extra money. I don't care where you live. There are always options thanks to the internet. Start selling on ebay. We are in the single best time of year to start an ebay business. Hit the malls the day after Christmas and the following days and snatch up stuff at 50 or 75 or even 90% off. It is pretty easy to make a profit when you buy stuff at 10% of original price.

Forget about debt consolidation.

[maat55]

I would not do debt consolidation.

Personally, I would make up flyers doing odd jobs of any kind you are capable of. Painting, cleaning, fixing things. Go to older neighborhoods and find odd jobs.If you are determined, you will find them.

As mentioned above, cut your budget including little wants like: pop, chips, cigarettes, beer etc.

Make it a quest, a business to get out of debt.

[inneedofhelp]

It is hard right now cause I keep hearing those debt consolidation commercials, and though I know they aren't the best option, I find them tempting. Right now my budget is cut very tight, and I can't cut it any further, really. I will continue to look for part-time work as well. I don't own much worth selling, but will look into that as well. The idea of maybe having a couple hundred "extra" per months makes me feel like I would be more at ease. In reality, not having an emergency savings is what makes me uncomfortable. If I had the same amount of debt, but e.s, then I would feel much more comfortable. Sigh. Those commercials sound so good, but I know I have to be leary of them.

[EconoMutt]

Have you checked out a lending site like prosper.com?
I see people consoldating their cc loans on this site.
Normally your debt is spread out over 3 years.
Maybe they will offer a better interest rate than
you are currently paying.

[TermMonster]

inneedofhelp - the dirty little secret is that credit card companies are reducing credit limits because THEY mismanaged THEIR capital! In many cases, the reduction of credit limits has nothing to do with you or your credit. In my opinion, you are on the right track - stay comitted and continue to pay down those credit cards.
The risk of building an emergency fund is it is easily used to fund "overspending." If you do build an emergency fund, set it up a another bank and don't get a debit card, checks, or credit card attached to the account. Make yourself go into the bank to make a withdrawl. The key is to make it very inconvenient to access the funds. Good luck!

[lovcom]

inneedofhelp - the dirty little secret is that credit card companies are reducing credit limits because THEY mismanaged THEIR capital! In many cases, the reduction of credit limits has nothing to do with you or your credit. In my opinion, you are on the right track - stay comitted and continue to pay down those credit cards.
The risk of building an emergency fund is it is easily used to fund "overspending." If you do build an emergency fund, set it up a another bank and don't get a debit card, checks, or credit card attached to the account. Make yourself go into the bank to make a withdrawl. The key is to make it very inconvenient to access the funds. Good luck!

One real reason the cc company is lowering the OP's limit is because the OP has a long history of making the minimum payment amount, and not making any new charges.

And it was not just the cc company that mismanaged....the card holder did too! We got to be objective and responsible and not put all the blame on the cc company.

As to the OP, I would suggest he/she look into ways of increasing income, which might mean finding a higher paying job, or look around and see if there is a 2nd car or other valuables that can be sold to raise money to pay a chuck of the cc debt. Also look at the possability of downsizing one
s household, rent a smaller place might help, or get a roommate or two. Perhaps cancel/downgrade the cell phone plan, cable TV, magazine subscriptions, etc.