OT....anyone "consolidated" their bills?

[donnabc]

Just wondering. DH and I were talking about trying this last night....you know so you pay ONE bill instead of your car, student loans, credit card, etc. each month?

Has anyone done this? I am open for any suggestion.

 

[TEK224]

I have done it on a few occasions. The important thing to remember (and do) is once you pay off the credit cards or other loans is not to run them up again. If you do, you have the "consolidated" (and probably higher) payment to make as well as the bills you've run up again.

Believe me, it's easier said than done!

Terri

 

[dizagain]

Hi! We did this several years ago when we realized how STUPID we were to have gotten ourselves into a cc mess...we were paying minimums and our balance was just going up. So, we cut them all up and called AFS to consolidate everything. We have been pleased with the results thus far even though it's slow going for us, we can most definitely see the balances going down and have paid off two leaving three to go. They were able to completely remove finance charges from one, get the percentage below 10% on the others except for Sears which won't budge. As I paid off the first two, I added that slotted money to the Sears which is helping. They do charge a "voluntary" fee per month - for us it started at $30 and is down to $18. DH doesn't like that part, but I feel it's fine because those balances went nowhere when we were trying on our own and with them we've accomplished something. Anyway, for us this is the best way to go and we've been cash only for almost four years!!! Well, except for the Amex we got this year- we're experimenting with our will power...charging gas only at this time to get points and hope to move into groceries.

I am a supporter of this type of service if used correctly! I'm not a fan of consolidation loans, so this works great - pay them and they pay everyone else!

 

[luvthatdisney]

I have to start with the fact that I am an avid Dave Ramsey follower - so I thought I would take his advise directly from his website on dedt consolidation - here it is...

"The idea of Debt CONsolidation is to give you a lower payment. They are only two ways to lower payments; either lower the interest rate or lengthen the term. So you stay in debt just as long, or even longer.

There are three reasons debt CONsolidation is a CON.
1)It seldom helps on the interest rate.
2)It keeps you in debt longer
3)You can’t borrow your way out of debt.

We only recommend consolidation to avoid bankruptcy. Most people think the problem is the debt. They ignore the fact that debt is only a symptom of over spending. 88% of those who use debt CONsolidation wind up with more debt.

The only way to get out of debt is to get righteously indignant and attack it with a fury."

Just wanted to provide an opposing viewpoint - not trying to flame you for this idea - just wanted you to hear what dave says on the subject!!

 

[tmt martins]

I did it a few years ago but added what I was paying per month .I got a low interest no down payment loan and paid the same amount as if paying all the different ones .It took me about 2 years to payoff but it was nice to only do 1 on-line payment for CC and then my car & ins.
Like they say you can only consolidate for convience if you stick to it we put all cards other then Disney Visa in safe and still haven't touched them in 2 years.This will be the first time in those years we have had a balance carry over( DVC down payment & PAP's for X-mas)and we charge everything that will accept it and payoff each month.

 

[jennifer293]

I haven't done it myself but I know several people who have and each and every one of them took that one payment a month to heart and went right back out and ran up new debt.

So BE CAREFUL... I would cut up all CC's but one for emergencies and maybe put it in a bowl of water and freeze it or something so you can't use it anytime you want.

 

[luvthatdisney]

I just thought I would add one thing...

There are alot of members of the DIS that are very good with paying off their cc balances at the end of the month and not carrying a balance.

OP if you are not one of these people I would advise you not to do the consolidation of your bills as the prior post noted most of us that cant keep our cc's paid off end up falling into the credit trap again and start charging our cards up - again. Or at the least applying for new cards - since technically you only have that small payment now and you would be able to afford one more bill - wouldnt you?!?!

Please just be careful. Making a budget and sticking to it has helped us more than I could ever express in words. I have "found" so much money that way I was so shocked! The word budget is like the word diet - no one likes to do one, but really if you tried it for a few months you would notice a big change in your spending habits! You just have to stick to it....you can do it!

 

[tmt martins]

The best way if your a problem spender is to start making min payment on all bills except smallest one .
Then pay as much as you can afford on that one until it's paid off.Keep doing this until all is paid off .

BUT YOU HAVE TO STOP SPENDING in order to do this.

 

[my3kids]

It isn't eliminating debt, it is just moving the debt around. It seems all you gain is the ease of one payment instead of a number of them.

 

[dizagain]

Hi again!! I just have to clarify again that we did NOT take out a consolidation loan...we used AFS to go to bat for us with our interest rates (and they succeeded where we failed). Perhaps we didn't go about things on our own the way some say is "right"-we definitely tried, but those cc balances didn't start to go down AT ALL until we started this program. We have never picked up a cc since we began with the exception of an amex that you have to pay in full anyway. So, I do believe that in some instances a program such as this can help...we were in over our heads and now we are not and that light at the end of the tunnel is very visible. Good luck!

 

[luvthatdisney]

Just be careful as I have said before as some of these places like CCCS show up as a bankruptcy on your credit report - that also goes for other places like Ameridebt. Not sure what AFS is, but I would check to make sure how it appears on your credit report. I would check with someone who is knowledgeable about credit reports as Im sure AFS wont tell you that as they want your business.

Check on www.creditboards.com - they are real helpful with credit reporting issues!

 

[donnabc]

Thanks for all the replies...sounds like people have a variety of opinions
Perhaps we have enough equity in our home to take out an equity line...maybe that would be the better way to go...
I will look into AFS though. I wouldn't want my credit affected...although it is already not as good as it could be d/t the level of debt we currently have

 

[dvcgirl]

Thanks for all the replies...sounds like people have a variety of opinions
Perhaps we have enough equity in our home to take out an equity line...maybe that would be the better way to go...
I will look into AFS though. I wouldn't want my credit affected...although it is already not as good as it could be d/t the level of debt we currently have

I wouldn't recommend either consolidation or a home equity loan until you are able to live without using credit cards for a prolonged period of time. It is fairly common for people to be lured by the quick consolidation fix or pulling equity out of their home ..only to charge those CC right up to where they were to begin with. And if you go the home equity route you are putting your home on the line. Lumping unsecured debt (revolving credit card debt) in with secure debt (home mortgage) is hardly ever a good idea. The only time it can work is if you can live totally without credit cards and within your financial means.

 

[luvthatdisney]

donna~ it seems like I keep responding, but I am very passionate about this issue. Can you tell????

Anyway, I would not move unsecured debt (cc's, medical bills, etc...) to a home equity loan which is a secured loan (secured with your home!). If heaven forbid something happened and you could not work and get behind on your bills - cc's cannot come take your home away (forclosure) if you get behind.

Just keep that in mind - alot of people look at what is happening today - not what could happen. If I were you I would get on a budget and stick to it! Have you checked out Dave Ramsey's site. I found Dave here on the DIS boards - I am so glad I did - I was laid off in early November - very unexpected but we are ok as I had an emergency fund set up and was working on baby step 2. Since I have a budget going and have already paid off several cc's, we are financially able for me to go back to school. Something I never thought I would do - as I am 38 years old - this is going to be interesting!

You need to sit down a take a good long look at your finances and your goals. Money is a personal thing and everyone really needs their own approach as they have different comfort levels. Check out Dave's site and see if it might be something you could work with. It sure has helped us!

 

[dizagain]

Just be careful as I have said before as some of these places like CCCS show up as a bankruptcy on your credit report - that also goes for other places like Ameridebt. Not sure what AFS is, but I would check to make sure how it appears on your credit report. I would check with someone who is knowledgeable about credit reports as Im sure AFS wont tell you that as they want your business.

Check on www.creditboards.com - they are real helpful with credit reporting issues!

Hi I would definitely look into AFS-or any program- closely before doing ANYTHING to make sure it is what is right for you. That particular program is not consolidation. We have moved (transferred by DH's company) twice and purchased homes plus bought one new car since beginning the program. Our credit score is not perfect due to things before we started on the right track but our using AFS didn't even appear on our report at all, only the appearance of our now-timely payments. Good luck and remember these programs are only worthwhile if they help you get out of debt and you learn something in the process! We sure did!

 

[disneysteve]

The one question that nobody has asked yet is this: Why are you considering consolidating your bills? Are you having trouble keeping up with the payments? Or do you just like the idea of making one payment instead of 5 or 6?

If you are in trouble financially and struggling to pay the bills, that's one thing. If, however, you're doing just fine but want to simplify your life, then some type of consolidation might not be a bad idea. Although I agree with the warning about turning unsecured debt into debt secured by your home, that isn't always a bad thing. We took out a HEL a few years ago to pay off my car and a chunk of my student loans. As a result, I got a lower interest rate and one that was tax deductible too. Just be sure that you don't boost the total amount you eventually repay by stretching a 5 year loan into a 10 or 15 year loan. Even at a lower interest rate, you may not save any money if the repayment period is significantly longer.

 

[crisi]

I wouldn't recommend either consolidation or a home equity loan until you are able to live without using credit cards for a prolonged period of time. It is fairly common for people to be lured by the quick consolidation fix or pulling equity out of their home ..only to charge those CC right up to where they were to begin with. And if you go the home equity route you are putting your home on the line. Lumping unsecured debt (revolving credit card debt) in with secure debt (home mortgage) is hardly ever a good idea. The only time it can work is if you can live totally without credit cards and within your financial means.

But if you can live without credit cards for a prolonged period, and prove yourself to be disciplined with your budget and making progress, a HEL can be a great thing. As Steve said, its tax deductible, which credit card debt isn't, and comes at a lower rate. Of course, all that is because you are RISKING YOUR HOME!!!! which is why you absolutely, positively want to establish the discipline first.

The other thing to pay attention to is if you want to consolidate for "one payment" is how realistic that is. We have one credit card we use. But we have payments for insurance, phone, cable, water, garbage, cell phones, gas, electricity, etc. coming in every month. In other words, you could have twelve bills and consolidate them down to eight, but you'd still have eight bills - plus the incidentals.

 

[dvcgirl]

But if you can live without credit cards for a prolonged period, and prove yourself to be disciplined with your budget and making progress, a HEL can be a great thing. As Steve said, its tax deductible, which credit card debt isn't, and comes at a lower rate. Of course, all that is because you are RISKING YOUR HOME!!!! which is why you absolutely, positively want to establish the discipline first.

The other thing to pay attention to is if you want to consolidate for "one payment" is how realistic that is. We have one credit card we use. But we have payments for insurance, phone, cable, water, garbage, cell phones, gas, electricity, etc. coming in every month. In other words, you could have twelve bills and consolidate them down to eight, but you'd still have eight bills - plus the incidentals.

Absolutely...if you are very disciplined then the HEL route can be a smart one. However, if you are using a HEL to pay off CC debt, well you need to figure out how to spend less money. Here's a little stat from an article I just read...


"Surveys indicate that 71 percent of homeowners who use a home equity loan to pay off their credit cards end up back to their old spend-and-charge habits," Martin says. "Any individual who gets a home loan to bail them out of financial difficulty should also work out a plan to address the root of the problem."

 

[disneysteve]

We have one credit card we use. But we have payments for insurance, phone, cable, water, garbage, cell phones, gas, electricity, etc. coming in every month. In other words, you could have twelve bills and consolidate them down to eight, but you'd still have eight bills - plus the incidentals.

Actually, you can simplify a lot of that if you want to. Our auto insurance, phone (local, long distance and cell), alarm, Internet, gym and a couple of other things get billed to our credit card, so paying one CC bill actually settles 8 or 9 other bills. Our water, gas, electric, life and disability insurance, HEL and a few other things are deducted automatically from our checking account, so we don't have to pay those each month. The only bills I actually have to sit down and pay every month are the mortgage (which I could set up automatically - just haven't yet) and the CC bills. I only write about 5 checks per month for incidental stuff. Everything else is done automatically or electronically.

 

[DMRick]

The only bills I actually have to sit down and pay every month are the mortgage (which I could set up automatically - just haven't yet) and the CC bills. I only write about 5 checks per month for incidental stuff. Everything else is done automatically or electronically.

I too, love not writing checks, and understand that would be nice (I have 2 checks to write each month..church, heat, in addition to transfering my Paypal money over from one account to another) But..as someone said earlier, if the OP isn't a person who pays off the cc's in full each month, think carefully before you consolidate. I know some have mentioned getting a refi, because they wanted to redo their home, etc, and throw in the cc loan, but that shouldn't be done (IMO) for that reason (cc payments), unless you don't plan on using cc for anything other than convenience and they will be paid off. It's too easy to start the circle of cc debt again.