Am I on the right track?

[Offshore82]

NO. It doesn't. That leaves you with the same $23,000 in debt but instead of owing it all to credit card companies you owe some to the credit cards and some to the bank. It does nothing to reduce your debt. It just shuffles it around a bit.

.....

No kidding. Thanks for pointing out the obvious, it was a big help.

By the way- you can borrow your way out of debt if the terms and conditions change drastically.

The personal loan is paid for in 5 years, or I can pay for 85 years on the card at the same amount per month.

[disneysteve]

My wife and I currently have $23,000 in credit card debt

I contacted a national bank and requested a $23,000 personal loan to pay the credit cards off. They would only do $15,000

This leaves us with $8000 in debt.

NO. It doesn't. That leaves you with the same $23,000 in debt but instead of owing it all to credit card companies you owe some to the credit cards and some to the bank. It does nothing to reduce your debt. It just shuffles it around a bit.

You can not borrow your way out of debt. Not from a bank. Not from a family member. Not from a retirement plan. You just can not borrow your way out of debt.

The only two ways to get out of debt are 1) increase income and 2) decrease spending. Number 2 is generally the easier of the two to accomplish. You have at least $600/month going to "random things." That needs to stop. You and your wife need to sit down and go through the budget with a fine tooth comb and cut out all unnecessary spending - new clothing, toys, entertainment, cable tv, fancy phone service, gym membership, haircuts, charitable donations, dining out, etc. As for number 1, go through the house room by room and collect anything that you don't need and can sell either on ebay, craigslist or a yard sale. I've read that the average family can make at least $1,000 by doing that. I don't know how old your daughter is but sell all of her outgrown clothes and toys she no longer plays with and books that are below her reading level. Sell tools you never use, wedding gifts that have never come out of their boxes, unwanted holiday gifts that you never got around to returning. Anything and everything that you can live without needs to go. The other piece of number one is working more. Do both of you work now? Get second jobs. Turn a hobby into a business. Whatever it takes.

Don't forget to look at every possible expense. Get new quotes for auto, home and life insurance and see if you can get cheaper policies. Buy more store brand groceries and clip more coupons to cut the food budget. Be more mindful of your driving to conserve gas and make sure you know which stations in your area tend to have the lowest prices. Lots and lots of ways to trim spending that can all add up to big savings.

What shouldn't you do?

DO NOT borrow from family.
DO NOT borrow from retirement plans.

[creditcardfree]

If you are currently adding money each month to your credit cards, then you are living above your means. Only getting control of your spending will leave you with the extra money to pay off the debts. Moving the money around does not pay it off.

I'm not saying don't take out the personal loan, but just make sure you have the finances under control so that you don't end up in the same situation 2-3 years from now. Take the fixed rate on the amount that the bank will allow. Put the extra $50 towards the credit card each month.

Do not ask to borrow the money from family. It changes the relationship you have with them. From family to borrow/lender. Don't do it.

It's also never a good idea to borrow from a retirement account. It's good that your plan doesn't allow this.

Are there things you spend money on that you can eliminate to free up cash to pay off your debt? Cancel cable, gym memberships, subscriptions, caller id, cell phones. Stop a bad habit: soda, alchohol, cigarettes. Look at EVERYTHING you spend money on and evaluate whether it has a bigger priority over paying off the debt. Is there something you can sell to bring in some cash...outgrown toys, clothes, electronics, extra furniture. Look around for things to sell and start listing them on ebay or craigslist.

[Offshore82]

Hi everyone,

My wife and I currently have $23,000 in credit card debt, which is eating us alive. Most of this was racked up during our college years as my wife had to put herself through school on her own. We are now both 27.

I started tracking expenses 2 months ago, after all the monthly bills are paid we have $600 left over- or should. The problem is the $600 gets eaten up by clothing for our daughter, toys, vet bills, all the random things that just don't get on the monthly bill list.

I contacted a national bank and requested a $23,000 personal loan to pay the credit cards off. They would only do $15,000 which would pay off the largest credit card we have. The interest rate is 9.9% and would save us $50 a month- and be paid off in 5 years vs 85!

This leaves us with $8000 in debt.

I have 3 options here:

-Apply for another personal loan at a different bank (doubt they would give me one?)

-Ask for a loan from a family member.

-Ask my parents to take a home equity loan out for the full $23,000 and let us make the payments. I do not know if they would help us like this or not, their house is paid for and has been for awhile. The payment would be low enough that defaulting should not be a concern.

I also have $70,000 +/- in a 401K but have been told I can not take a loan out against it (due to program rules?). We are very responsible with our money, but can't seem to get these cards behind us.

My goal here is to just get all the debt off the cards and into something that is a low fixed rate.

Any thoughts out there?