OMG credit card debt, what would you do?

[HHSTigerFan]

Not looking to get ripped here, but because of a job loss and medical bills, woke up one morning and had a little over $26K in credit cards.. WOW!!

Our details. Its on 1 card, CC company has agreed to lower the rate to 8%.. Our current mortgage is 6.125%, balance of about $70K and house is worth about $140K.. Current household income is about $85K, I am trying to get back working fulltime here ASAP, right now working a part time job making about $600 a month, so our income should go up here shortly, maybe to $110K..

Anyway, should we refinance our house and roll the card debt into that?? Or just leave it as is, and hopefully get it paid off with a couple of years? My initial thought is to keep it on the card as long as the rate is 8%, if it goes up, refinance..

Thanks..

 

[Darcy03231]

I would keep it on the CC and keep paying it down as fast as you can. There's no way I would trade unsecured debt (cc) for secured debt (mortgage).

 

[minnie1928]

I agree, don't roll it into the house. The rate difference isn't HUGE and it'll will push you to pay it off faster. Based on your income & mortgage, I think it's very doable.

 

[HHSTigerFan]

I would keep it on the CC and keep paying it down as fast as you can. There's no way I would trade unsecured debt (cc) for secured debt (mortgage).

And that was my thought, end up paying a little more, but don't want to risk attaching it to the house..

Trying to cut a lot of the little things so we can knock this out quick, just looks like a big hill to climb.. Stopped Netflix, cut AT&T phone to the basic $19plan, internet to the $25 plan, thermostat down a few degrees all winter..

Luckily my wife has a job that allowed us to keep current on our bills, but the medical bills and medicine was just too much to handle on one income.. And like fools, we didn't have much of a savings because thought nothing would happen like this.. Had bought an 80 acre farm and threw every extra penny at that, got sick and had a piece of property worth $500K paid for, but only $2000 in savings.. that won't happen again..

 

[lady9]

Plus you would have closing cost on the refianance and I assume it would be more than the extra interest on 8%.

 

[singnring]

Most importantly, if you roll that CC debt into a mortgage, you'll be paying interest on that amount for the life of the mortgage!

Just work at paying it down as quickly as you can.

Tighten your belts and cut costs where you can; put every extra cent towards that debt.

Make some lifestyle adjustments and make the payoff of the CC debt your first priority.

 

[a1tinkfans]

Just sending some support and wishing you Luck!
You CAN do it, keep paying, every week make extra principal payment, no matter how small...It will go down and you will feel so good without having to risk your home, tacking on more $$$..... Sorry about the medical situation and bills, it is a very hard road, indeed!!
Again, Best of Luck!!!

 

[lttlmc3]

Just sending some support also. We have a lot of CC debt also, and we are just now starting to be able to chip away at it. Remember, every little bit helps!

 

[Bren's Mom]

Depending on how far into your mortgage you are, you might check into a low-no-cost refi. I just saw TODAY that our credit union is offering a no-cost refi, you must not have your current loan with them, it's either an 8 or a 12 year mortgage, at 4.25 or 4.5%. No closing costs, no nothing. And this place is straight up, we got a home equity loan from them a few years ago. We paid virtually nothing, exactly what they said we'd pay. So there are some good deals out there. You can do cash out with this one, but I wouldn't recommend that anyway. But if you can bring your mortgage down, might be worth considering.

 

[Purseval]

Cut up the credit card and don't ask for a replacement. Make whatever payments you can until it's paid off. Leave your house alone.

 

[Cheshire Figment]

If you can get a drop of at least 1.0% on your mortgage rate a refinance will help. But you should at a term that approximates the term remaining on your current mortgage - don't add years if you can avoid it. And then you can apply the mortgage payment saving to the credit card bill.

 

[TheZenMaster]

I would definitely look into getting another card offering 12 months of 0% APR and transferring as much as you can over to that card. We just did that with Discover. Minimum payments are still there but now we're paying off principal and chipping away rather than paying any interest.

 

[DisneyBamaFan]

One other piece of advice - as you pay them back, make minimum payments on all but one card. Put all of your extra funds toward that one card. Knock them off one card at a time, starting with the card that has the highest interest rate. Why? Because as soon as that card is gone, you now have additional funds from its minimum payment to apply to the next, and so on.

It works. You can be cc debt free a lot sooner than you might imagine.

Good luck...

 

[5stljayhawks]

Seek Prof. help. Not "debt consolidation" but a true professional who helps manage debt day in and day out. Doesn’t sound like you are in pickle yet, but……


http://www.nfcc.org/ may also want to listen to Dave Ramsey and or Suzi Orman.

 

[bumbershoot]

One other piece of advice - as you pay them back, make minimum payments on all but one card. Put all of your extra funds toward that one card. Knock them off one card at a time, starting with the card that has the highest interest rate. Why? Because as soon as that card is gone, you now have additional funds from its minimum payment to apply to the next, and so on.

The bummer is, per her post, it's only ONE credit card.


I'd just pay that thing down as fast as possible. I don't own a home, but if I did, there's no possible way I'd tie my home to some other debt. Keep 'em separate. Your CC company is actually being very nice, to lower your rate. So put everything possible towards it!

llnoe.com is a good website that follows Dave Ramsey's very good ideas about getting rid of debt. Of course, since you only have the one card, it's different than if you had 8 cards...just like with us it's different because all we have is the car and DVC to pay off...but since August we've paid around 5K towards our car, and I never ever thought we could have done that just a year before.

 

[HHSTigerFan]

We just have one card, so we won't have any knocking them out one at a time..

And no offense, but I would throw up if I had to listen to Dave Ramsey..

Min payment on the card is $520, finance charges of about $180, right now we have budgeted to pay $750... And honestly, we aren't that concerned about it because our mortgage payment is so low..

And I think we are going to Disney in June, had a trip planned prior to getting sick, had the resort paid for(DVC rental, owner was AWESOME by pushing our dates back, but needs to be used by August) ,park tickets bought and $1000 in Disney GC's for DDP... kids have had a tough 18 months, so what the heck..

 

[Buckeye Princess]

Just wanted to send you some good vibes and goodluck. I paid down about 20k in credit card debt a few years ago. It took me about a year and a half and it was a tough time but seeing that card hit zero was an amazing feeling. I'd set mini goals like hitting below 10k etc. It sounds like you are on a good start. It was a good experience because now I'm married and am in a position where we could be spending a lot, but I know how much I can do without so instead we live well below our means and are stockpiling our savings. I don't think i'd have that mentality now if I hadn't had to go through paying off that large debt.

 

[santa's surpriz]

I am a banker, use a Home Equity Line of Credit since you do have the equity. You can get one with no closing or processing fees and no annual fee. Most offer a fixed rate option that you can lock in the amount for term and fixed rate. Right now variables are usually lower but you can set up the Fixed Rate Option (FRO) at any time. If you are going to pay interest you might as well get some of it back. Since your payments will be lower with a lower interest rate you can pay more and it will go straight to principal.

I do this very often, I always feel good about the amount of money I can save people on a monthly basis and how happy they are to see a light at the end the tunnel.

 

[Swimalie]

We just have one card, so we won't have any knocking them out one at a time..

And no offense, but I would throw up if I had to listen to Dave Ramsey..
.

Try listening to Clark Howard. He's awesome. And maybe skip Disney until you can pay cash.

 

[HHSTigerFan]

Try listening to Clark Howard. He's awesome. And maybe skip Disney until you can pay cash.

Normally we wouldn't go, but the trip is mostly paid for, has been since before I got sick, about all we need is spending cash, as the room, tickets and DDP are all paid for.. And thats all assuming I haven't found a FT job yet, if I do get a job, will have to see if I can get the time off..