Getting rid of credit card debt?

**cfiler** · 07-04-2006, 02:11 PM

I'm sure most of you have been here before. Well, I'm in debt.

No matter how closely I watch my money, I still get nickeled and dimed to the point where I become broke constantly, and have a hard time paying more than the miminal payment for my bills.

What did you do to get out of debt?

**cfiler** · 07-04-2006, 02:13 PM

I have a car loan, and was thinking about consolidating that with my credit card debt, and then paying off that loan. Would this be a good idea?

I'm looking for suggestions since I'm meeting with the bank next week.

**alphaman** · 07-04-2006, 02:29 PM

If you have enough equity in your car, excessive cc debt, and high enough rates on your cards, then it could make sense. Get a good budgeting software, figure out how much discretionary income you have, and put 80% of it toward your debt. Use the rest for fun. If you have an emergency, you have no fun. Treat the amount you put towards the principal of your debt as a bill. Pay that first, don't use what ever's left over after fun to pay your debt.

And cut the cards up. Get an Amex charge card for emergencies. You can't carry a balance on them.

**stee** · 07-04-2006, 02:33 PM

I wouldnt consolidate unless it worked out that the interest rate was lower on the loan you have now. If so it would probably be the easiest way for you to get rid of your cards. If so make sure you cut them up or you may just end back at square one.
Dont get any other kind of credit or loan untill you have paid off your initial loan.

If you cant or dont see it worth while to consolidate, look at what you are paying on your cards etc. Work out what the highest interest rate on your card/s are and pay that one off first. The sooner you pay of the higher interest rates the sooner you will be in control.

It could be an option to contact the credit card company and explain your situation. They may reduce your rate or allow you to pay off in installments. What ever you do the ball will be in their court and if you end up in a legal battle with them some time in the future you will benefit from the initial contact.

If you have repayment cover it might be a good idea to cancel it (if your job is safe).
Make a statment of accounts and make sure your strickt untill you are back on your feet.
If you cant make a payment contact them in good time to tell them.
First and foremost don't do nothing. Best of luck with it man.
Debt sucks ballz.

**J-Dogg** · 07-04-2006, 02:59 PM

Think smart too though bro, most people make the logical choice....combine debt, get a better intrest rate and pay it down.

The problem is, a lot of people still have 3-4 cards with a balance of zero.

I'd pay the minimum on them all, but the one with the highest rate, pay as much as you can on that one....then repeat.

**bigpapabuff** · 07-04-2006, 06:07 PM

A consolidation loan a lot of times does work out the best, if you can get a good interest rate. You will be able to get this info from the bank, and they will want to work with you because they would rather collect your interest than have somebody else collecting.

If a consolidation loan doesn't workout you might be able to get another credit card which would allow you to transfer balances and doesn't collect interest for one full year. Those are the kinds of deals that come and go but look into it, because you would have a full year to try and pay down your credit cards. After that the rate might be pretty bad, you'd have to look into it. If you do this make sure you cut up the card after you transfer balances.

Cancel all your cards. Use only your checking account. This forces you to live within your means. You could get a debit card, which is as convenient as a debit card, but doesn't acrue interest. With the debit keep track of all your spending, and you should be able to get back on your feet. It's a tuff road back but it's worth it... good luck!

**J-Dogg** · 07-04-2006, 06:10 PM

I should have went on to say that after people have 3-4 cards with a balance of zero, they use them and charge them back up.

**spywizard** · 07-04-2006, 11:05 PM

Originally Posted by cfiler

I'm sure most of you have been here before. Well, I'm in debt.

No matter how closely I watch my money, I still get nickeled and dimed to the point where I become broke constantly, and have a hard time paying more than the miminal payment for my bills.

What did you do to get out of debt?

I earn more money.. enough money to live the lifestyle that i choose..

it's a trap though.. the more money you make, the more you spend..

the idea is to control something without actually paying for it..

**firmechicano831** · 07-04-2006, 11:25 PM

I try to keep my credit cars very low to about $200

**Mizfit** · 07-05-2006, 06:02 AM

Consolidate.. it is a great idea.. i did it when i was younger and it saved me alot of money, and actually made it manageable.

When your older you will be happy you did it.
But once you consolidate stop racking up the bills.

I consolidated then i cut up the cards.

**zimmy** · 07-05-2006, 10:47 AM

if you can't consolidate...i'd recommend going with a free credit counceling service like incharge. They will work with your credit companies and lower all your rates (but close your accounts for use). I know that i'm paying the same amount now as I would have been doing the minimums on my cards b4 and I have paid up a good 2k in 6 months. It doesn't go on your credit score BUT... those credit companies you have cards through probably won't be so fast to give you another card in the future.

**Phreak101** · 07-05-2006, 11:05 AM

cfiler

I'm a sub prime loan officer, I see and deal with situations like yours everyday. As well intentioned as some of the advice may be here, do NOT go to a credit counseling service. It is seen as a red mark on your credit report, and they have many issues that screw people over.

For example, a client of mine enrolled in a very popular one she heard on the radio, some non for profit BS, and the company ended up sending in all her payments in late EVERY MONTH. So now not only does she have late payments on all her credit cards, her credit is much lower, AND her balances are higher than when she started due to the late charges.

These companies are only doing what you can do yourself. They have pre-negotiated rates with creditors that they rip a premium off of. Example - They tell you your new low rate will be 10%, they are getting 8% from the CC companies, and pocketing the 2%. SCAM!

Best thing for you to do my friend is call the creditor, ask to speak with the collections dept (if you are behind), and explain to them your situation. They will allow you to make partial payments, close the card, and set you up on payment plans that you can afford. Some will even knock off a 1/3rd of the balance just to get you to pay it! Most companies are very willing to work with you assuming you are willing to work with them.

Do you own a home? You could take out a small line of credit to consolidate the bills as well.

***G-1000*** · 07-05-2006, 11:28 AM

I cant help on this one. I have never hade a credit card with more then $50 on it.

**Mizfit** · 07-05-2006, 11:39 AM

Things are different in canada we don't have all the debt consolidating companies that the States do...

Back in the day i did mine through my good old fashioned bank.

**JDawg1536** · 07-05-2006, 12:19 PM

Debt consolidation is a raping. Getting out of debt is all about discipline.

**Mizfit** · 07-05-2006, 01:35 PM

Originally Posted by JDawg1536

Debt consolidation is a raping. Getting out of debt is all about discipline.

paying off multiple debts and paying interewst on them is a bigger raping

**Phreak101** · 07-05-2006, 01:41 PM

Originally Posted by Mizfit

paying off multiple debts and paying interewst on them is a bigger raping

Paying a company to make your credit worse is the biggest raping of all

**Mizfit** · 07-05-2006, 01:50 PM

Originally Posted by Phreak101

Paying a company to make your credit worse is the biggest raping of all

i don't know how it's done in the US.

I took out a loan from the bank when i was younger - so it was pretty good.

**Phreak101** · 07-05-2006, 02:11 PM

Originally Posted by Mizfit

i don't know how it's done in the US.

I took out a loan from the bank when i was younger - so it was pretty good.

That's the easiest solution, however most people don't have the credit to get a loan fi they are admitting to themselves and to others that they are in dire need of getting their credit cards paid off...

Not everyone is as smart as you, my ADD sister.

**Mizfit** · 07-05-2006, 02:34 PM

Originally Posted by Phreak101

That's the easiest solution, however most people don't have the credit to get a loan fi they are admitting to themselves and to others that they are in dire need of getting their credit cards paid off...

Not everyone is as smart as you, my ADD sister.

I avoid debt like crazy now.. i have one credit card and it has a low limit.

**JDawg1536** · 07-05-2006, 03:33 PM

Originally Posted by Mizfit

I avoid debt like crazy now.. i have one credit card and it has a low limit.

thats the way to go. in the US you dont want to go through debt consolidation. it is just a way for you to write one big check that amounts to a little bit more than a lot of little ones.