Is it bad to pay Credit Debt by taking out a loan?

[batman]

Hello,

This is my first post here on this forum. I have been browsing around for a few minutes and this looks like a great place to learn about financial information!

Well if you care here is a lil info. about me. I am 21 and going to school full-time at a community college in my area. I got myself into a lil bit of trouble with credit cards. I am about 2500 $ in debt with credit cards. I received a letter in the mail saying I was pre-approved for a 4,500$ loan. I was thinking about taking the loan and using it to pay off my credit cards and fix up my truck to sell. Do you think it is a bad idea to take out a loan to pay off credit? I have a summer job doing landscaping only making $8 dollars an hour. When school starts I will probably get a part time job at Lowes or a place like that.

Thanks,

[sweeps]

It is only good if it will help you get out of debt faster. Have you reviewed the terms of the loan for interest rate, fees, etc.? Also will you rack up more debt? Then all bets are off.

[batman]

Ya I still have to go into the CitiBank office and get the details, these online credit calculators are very helpful. The rate I 'am going im going to be paying off these cards for years!

[Merch]

To be honest, 2500 is not a lot of debt. If you work 40 hours a week 8 for the next 3 weeks, that's 960 take out taxes. That's 672. If you got an extra job and started busting it work like 60 hours, you could have over 1,000. Home Depot near me pay $12 an hour.

If you got 12 and worked 60 a week, that's 1500. I don't think that the interest rate is killing you. I think you need to focus and just bang it out.

If I were you, I would read Dave Ramsey's Total Money Makeover. It has sound advice to get you on the path.

Once you are out of debt, I would continue to work in college and stockpile that cash. Once you graduate you'll need a pile of cash to settle into a new city, get an apartment, clothes for your job, etc.

[maat55]

As a rule, borrowing to pay debt is a bad idea. Working more and spending less is your best option. You can try to moving the debt to a 0% card for awhile.

I highly reccommend that you cut up your card, if you cannot pay the balance in full each month, you should not use one at all. Get highly focused on doing nothing but paying off this debt.

Just as important as getting an career education, is learning how to manage your personal finances. Most people learn how to make money, but not how to spend and invest it. Take the time to read a few personal finances books. I also reccommend the book stated above and these:

The Millionaire Next Door
The Automatic Millionaire

My world would be many times richer had I read these books at your age. This 2500 debt is your first little mountain to climb, make it your last one. Good luck.

[batman]

thanks, I will look into those books. I just applied at Lowes online, hopefully I will get hired.

[disneysteve]

In general, I say you can't borrow your way out of debt. That said, though, I agree with sweeps that if it gives you a lower interest rate and helps you get debt-free faster, it could work. Just be sure that you fully understand the terms and conditions of the loan and that there are no hidden costs or fees.

I also agree with everyone, of course, that the real solution is to stop what caused the problem in the first place. Keep your spending below your income. Build an emergency fund and general savings. Increase your income through more hours or better jobs.