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Chipping away at $15,000 worth of Credit Card Debt

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    Chipping away at $15,000 worth of Credit Card Debt

    Question is at the bottom if you want to skip my stats.

    I'm yet another one...shaking my head and wondering how the heck did I get in this mess. Most of my debt is from a period of under employment, depression driven shopping, and frivolous spending/eating out/travel while on a student budget.

    After failing at trying to pay off card 1 (the highest APR) I started doing the snowball and have been making progress on Card 3 which I find very encouraging. Then I had some dental emergencies which set me back.

    Income
    Income of $42,000
    Savings: $1,000
    I have retirement savings but do not want to access that unless circumstances become dire.

    Debt
    Card 1 - $8000 at 12.24%
    Card 2 - $4200 at 8.49%
    Card 3 - $3000 at 10.15%

    Expenses
    Rent/Utilities $750
    Insurance $80
    No car/cell payment
    Credit Card minimums total $300. I try to put an extra $100 towards this every month, as well as any "found" money.
    Misc/Food - i have no idea but I know there is some room for savings here especially with better planning. In terms of the money I have left after all the bills are paid...all of it gets spend by the next pay period.

    -------------------------------------------

    So my main question is if a personal loan/consolidation would be a good idea? The average APR on all my cards is about 10.29% so the rate would have to beat that. Upstart gave me a $15,000/11.82%APR/5 year/$313.00 a month quote...which might be worth looking into if they would lower the APR a little. Or is a personal loan just a bad idea?

    Even though I know this is just moving the debt around, these things make it very appealing:
    1. I can close 2 of those accounts (and bury the third one deep in my freezer for emergencies) so I wouldn't be tempted to add on any charges.
    2. Make one monthly payment
    3. The loan has a clear end date.

    Does anyone have any advice? Thank you for reading.
    Last edited by katiemaybe; 06-02-2016, 11:39 PM.

    #2
    Is your income you listed pretax or post?

    And as a short quick answer, don't consolidate.
    Last edited by porkpistol; 06-03-2016, 03:57 AM.

    Comment


      #3
      Welcome to the site.

      1. You can't borrow your way out of debt.

      2.
      Misc/Food - i have no idea but I know there is some room for savings here
      Fix this! Use the money saved to add to your snowball.

      3.
      Income of $42,000
      Work on this too. Find something to do to boost your income at least temporarily until the debt is repaid. Work overtime. Get a part time job. Sell stuff on ebay/craigslist. Make and sell a craft. Babysit. Walk dogs. Whatever. Every extra dollar you can earn goes straight to the debt.

      So no, I would not take a personal loan, especially at such a high rate. Now if you can get a good 0% balance transfer deal on a new credit card, that might be worth considering. Otherwise, I'd focus on the spending side to free up money to go toward the payments.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
      * There are no shortcuts to anywhere worth going.

      Comment


        #4
        Originally posted by disneysteve View Post
        Welcome to the site.

        1. You can't borrow your way out of debt.

        2. Fix this! Use the money saved to add to your snowball.

        3. Work on this too. Find something to do to boost your income at least temporarily until the debt is repaid. Work overtime. Get a part time job. Sell stuff on ebay/craigslist. Make and sell a craft. Babysit. Walk dogs. Whatever. Every extra dollar you can earn goes straight to the debt.

        So no, I would not take a personal loan, especially at such a high rate. Now if you can get a good 0% balance transfer deal on a new credit card, that might be worth considering. Otherwise, I'd focus on the spending side to free up money to go toward the payments.
        Your statements are very contradicting. You can't borrow your way out of debt, but if you do it at 0% interest you can? What if they aren't responsible enough to pay off the balance in 18 months or whatever 0% lasts for?

        Comment


          #5
          Originally posted by katiemaybe View Post
          I'm yet another one...shaking my head and wondering how the heck did I get in this mess. Most of my debt is from a period of under employment, depression driven shopping, and frivolous spending/eating out/travel while on a student budget.
          Welcome to the club.

          Misc/Food - i have no idea but I know there is some room for savings here especially with better planning. In terms of the money I have left after all the bills are paid...all of it gets spend by the next pay period. ... Does anyone have any advice? Thank you for reading.
          You need a budget where every dollar does something. Only then should you try "other stuff" like lower interest loans.

          Comment


            #6
            I'm not a proponent of debt consolidation loans simply because they are only treating one symptom not the disease itself. The disease is a lack of budget and reckless spending. A debt consolidation loan doesn't change your outlook on spending nor does it put pressure on you to devise a written budget and stick to it.

            Forget about that loan quote you got. You don't need 5 years to clean up this debt. Your income isn't great but given that you don't have a car payment/cell phone payment and your rent is modest you should really be able to attack your CC bills with vigor. I think you really need to re-evaluate your Misc/Food expenses and get on a budget. Along with the budget I would suggest going to the envelope system until your debts are cleaned up. Get some envelopes and label them Food, Gas, Entertainment, Toiletries, Clothes, household items, etc. Only put the cash in the envelope that you have budgeted for and spend only that on each category. When your envelope is empty you have to wait until the next pay when you can start the budget process over again.

            What you should find yourself doing with the envelope system is questioning your purchases more. When I did this I often found that I spent less than I budgeted for so the next pay period I didn't need to add as much cash to each envelope and I had more money the following months to pay back my debts.

            Comment


              #7
              Are you young and pretty? Check out sugar daddies web site where college girls are getting a ton a cash. Sorry, I don't know any more besides what wife told me above a few days ago at breakfast. It is an interesting business Their problems is precisely what you are facing, CC debt!

              Comment


                #8
                The problem is that budgets are scary, because they make you confront Uncomfortable Facts. It's exactly why I put it off for so long. And I didn't want make waves in the marriage with the wife.

                But when things came to a head over 2x as much CC debt as you have and I overcame the Fear of Facts, my wife didn't dig her heels in and demand to keep spending.

                So I devised a reasonable budget, we changed car insurance, cut back on the cable channels, etc, etc and used that extra money to chip down the CC debt.

                The big thing is that once we started doing that, the 0% balance transfer offers started flooding in. That's when the CC balances really started to drop.

                Comment


                  #9
                  To OP: You make $42,000/year (assuming post tax?)

                  Monthly expenses are $1,630 assuming you don't spend more than $500 on food. Do you live alone? Sign up for Mint and learn to track your spending. You will be shocked.

                  $3,500/month - $1,630 = $1,870.
                  You owe $15,200. Throw $935 at CC, and $935 at savings. (Ally or Synchrony, etc. 1% is better than nothing.) In 16 months you will have no CC debt and you will have an EF of $16,035.

                  Originally posted by sv2007 View Post
                  Are you young and pretty? Check out sugar daddies web site where college girls are getting a ton a cash. Sorry, I don't know any more besides what wife told me above a few days ago at breakfast. It is an interesting business Their problems is precisely what you are facing, CC debt!
                  Something tells me you won't last long around here with the snarky "advice."
                  Last edited by Koolmagicguy; 06-03-2016, 07:33 PM.

                  Comment


                    #10
                    Originally posted by porkpistol View Post
                    Your statements are very contradicting. You can't borrow your way out of debt, but if you do it at 0% interest you can? What if they aren't responsible enough to pay off the balance in 18 months or whatever 0% lasts for?
                    What if they can't? That does not negate the benefit of having paid no interest for 18 months.

                    Comment


                      #11
                      Originally posted by Koolmagicguy View Post
                      Something tells me you won't last long around here with the snarky "advice."
                      Exactly. There needs to be a Dislike button next to the Like.

                      Comment


                        #12
                        Originally posted by porkpistol View Post
                        Your statements are very contradicting. You can't borrow your way out of debt, but if you do it at 0% interest you can? What if they aren't responsible enough to pay off the balance in 18 months or whatever 0% lasts for?
                        What if OP was able to call the CC companies and get them to drop the rates to 0%? Would that be an offer she should accept? I think you'd agree that it is. So what if a 4th CC company said they'd give her that 0% deal? She should still take the offer.

                        That is very different than the high interest (11.82%) personal loan that she was asking about. That just moves the debt from one lender to another but does nothing to help her get it paid off. In fact, it makes the situation worse by raising the rate on nearly half of her debt. The 0% CC would help because it would save her a ton of money in interest so 100% of her payments would go to reduce principal.

                        The question about what happens if she can't repay it in time is important, though, because if the 0% offer expires, you might be on the hook for all of the back interest, so understand the terms in detail.
                        Steve

                        * Despite the high cost of living, it remains very popular.
                        * Why should I pay for my daughter's education when she already knows everything?
                        * There are no shortcuts to anywhere worth going.

                        Comment


                          #13
                          Originally posted by sv2007 View Post
                          Are you young and pretty? Check out sugar daddies web site where college girls are getting a ton a cash. Sorry, I don't know any more besides what wife told me above a few days ago at breakfast. It is an interesting business Their problems is precisely what you are facing, CC debt!
                          Why, sv2007? Are you on that site? Which are you?--The sugardaddy or the college woman who needs to earn some money?
                          Last edited by Joan.of.the.Arch; 06-04-2016, 05:25 AM.
                          "There is some ontological doubt as to whether it may even be possible in principle to nail down these things in the universe we're given to study." --text msg from my kid

                          "It is easier to build strong children than to repair broken men." --Frederick Douglass

                          Comment


                            #14
                            Originally posted by Joan.of.the.Arch View Post
                            Why, sv2007? Are you on that site? Which are you?--The sugardaddy or the college woman who needs to earn some money?
                            Let's think it this way: I offered a possible solution, what have you brought to the table?

                            Comment


                              #15
                              Katie, the rate you cite for the personal loan is quite high, and higher than 2 of the 3 cards, so no, that loan would not be a good one. But you might try the 0% balance transfer to one CC (which you would have to move around every 15-18 months and pay a 2-4% balance transfer fee each time, so it's NOT interest free, it's more like paying the interest up front, but at a lower rate than the personal loan. Then you could close two of the three CCs and put the third in the deep freeze for emergencies and have the one monthly payment. Do a careful budget and ALSO start allocating some for savings. Life doesn't stop when you are paying off the debt, but building up some extra liquidity and having a savings account to dip into might help you avoid adding any additional to the CC debt. Good luck--it IS a process, but tracking it somewhere regularly where you can see the numbers go down helps.

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