Overwhelmed ... Credit Cards

[cornflake]

If you have good credit, you have options there.

Yes, definitely call and ask for a lower rate. If you've been paying on time they may not want to work with you though, as they've been getting the higher rate, there's not a real reason for them to lower it - but they sometimes do and you lose nothing at all by asking.

If they don't, look into the peer-to-peer. With high credit, you could cut your interest below half of what it is now, have a set term, pay them all off in one shot and just have the single smaller bill if you got a loan that way.

 

[NYCDiane]

Going with a CCCS is going to mess up your credit. Yes, you'll be paying things off over time. However, on your credit report, it's going to say under each and every card DEBT BEING MANAGED BY A CREDIT COUNSELING SERVICE Trust me, I look at credit reports everyday and I've seen this countless times (and from each credit bureau)

You may consider calling the card companies and asking them to eliminate your interest and let you pay "x" per month until paid in full. They will close the card but at least you'll eliminate the interest

You might also consider looking at the credit card calculators at Bankrate.com. Simply enter how long you want to take to pay each card off, what the interest rate is, what the current balance is and hit "calculate" and it will give you an amount to pay each month so you can get the card paid in the amount of time you want. You can also put in the amount you want to pay and it will tell you how long it will take to pay off. It's a great tool for managing your debt.

Good luck to you. I know how it is to be in credit card he11 --- I'm working my way out of it now and it is NOT easy!!!!

 

[crazyme5kids]

With my IRA, you can take a loan against it, but you can only take a certain percentage against it. However, it does not effect the amount you have in the IRA and you can continue to contribute to it. The IRA continues to grow.

If you loose your job, you still pay it back. If you default on the loan, that is when money would be taken from the IRA. I've know a few people who did it and it worked out well for them. Other IRA's might do it differently though, if they allow it at all. It might be an option worth looking into.

 

[disneyofcourse]

Good for you for asking how to fix this situation! I would not get a loan or borrow against anything to pay these off. First look at what you're able to cut. Cable? Cheaper phone plan? Cancel a vacation? Sell a car? Have a yard sale? I can go on and on.

Get a piece of paper, write down every penny you spend and see what can be cut. Any extra money should go straight towards paying the card with the highest interest rate (In my opinion) I think you can pay this thing off way sooner than you think! Its $22k - not the end of the world!


Any possible way to start any type of business? Maybe walk a dog nearby during your lunch break each weekday? Get a extra Part time job? Job on the weekends...putting the whole paycheck into paying off debt.

 

[peacelover]

I was in that situation several years ago. (10). due to a divorce, so I know exactly where you are coming from. I have one more credit card to pay off, and hopefully it will be paid off in 2012.
These are some of the things I did to get almost out of debt
I called every credit card company and asked them to lower my interest. Some of them did and some of them refused to budge. As I continued to pay down my debt, I started transferring balances (this was about 2 years into getting serious about paying off the debt) to 0 percent offers/ cards. It took a while until I was able to get these offers, so don't go applying for new cards just yet. It will hurt your credit score.
I always kept an emergency fund, so I would not have to charge something on my card and not be able to pay it right back.
I took in a roommate. This might not be for everyone, and it sure had it's stresses. But with kids, it was the only way to increase my income without not being gone all the time. It is hard to find the time for a 2nd job when you are a single parent.
Get rid of cable, use an antennae and netflix.
Get the cheapest possible cell phone.... no data plan.
Apply a portion of your ax refund to your credit card every year.-minus some savings.
Good luck, you can do this.

 

[crazyme5kids]

Another thing you can do, and this is only if you do take the IRA loan, is to call your credit card companies and negotiate a lower payoff amount. If you owe for example $5000.00 negotiate to pay $3500.00 right away. Some companies might go for it, others might not. You might also have to agree to close the card though.

 

[seashoreCM]

... and stupidly used them for my kids & me to survive ...

OT: An oxymoron.

More seriously, paying all the extra towards the card with the highest interest is best.

Any relatives you could borrow from?

Borrowing from a 401k has one very dangerous downfall. If you should lose your job then the balance becomes due or you suffer a big tax penalty on the spot.

 

[crazyme5kids]

OT: An oxymoron.

More seriously, paying all the extra towards the card with the highest interest is best.

Any relatives you could borrow from?

Borrowing from a 401k has one very dangerous downfall. If you should lose your job then the balance becomes due or you suffer a big tax penalty on the spot.

Not necessarily true. With my IRA plan no one who lost their jobs (we had big layover) had to pay it immediately. They are just paying it off as the would have if employed. Again, each IRA is different, so if the OP decides to investigate that route that is a question she will need to ask.

 

[marie1203]

I like Suze Orman better than DR because she cares about your credit and fico score. I think you have gotten pretty good advice so far. I never had to use debt managing company so I can't help you there.

 

[hsmamato2]

Do you own a home and have equity? You could always take out a home equity loan.

.

No- this is not a good idea- cc debt is something you can work with, don't attach anything to the home where you live, you don't want to lose your roof over your heads.

 

[bumbershoot]

I got in a bind during my divorce and stupidly used them for my kids & I to survive.

If it was the only thing you could do, it wasn't stupid. Don't put yourself down like that, if it was the only thing possible (or "seeable") at the time.

I heard the same thing but it worked for me. She was looking for ways to pay down her credit card and I gave her some examples. One worked well for me. I realize it is not for everyone.

Exactly. And since, as she says, "I have not used any of them, at all, in at least a year", she's NOT in a situation where she is used to using them and therefore will just get herself into problems again. She's already used to NOT using them. I mean...I still wouldn't do it, but it's not as bad as suggesting it to someone who is still actively using the cards.

Another thing to keep in mind is that even though your minimum payment goes down because you're paying on the balance, you should not drop your monthly payments down. This will defeat your debt reduction plan.

I second Dave Ramsey!

Go get "The Total Money Makeover" from the library.

I third it.

Even just having the concept in your head might help you, even if you don't do it perfectly.

ugh...Dave Ramsey...forget him.

Don't forget him. He has helped countless people. jducky did you not see the post that stated a family paid off 90K by using Ramsey? Does that just not count to you? Perhaps if they'd paid it in a different method they could have done it a bit faster, or with a bit less interest rate, but don't toss the baby out with the bath water. He's done a LOT of good in this world. He helped us out, when we didn't think it was possible. NO ONE ELSE was doing that for us.

I like Suze Orman better than DR because she cares about your credit and fico score.

Even if he doesn't "care" about them, using his methods still HELPS them. My husband's credit score skyrocketed after using Ramsey's methods for just a year. It's been astonishing. Doesn't matter one little bit if DR cares about them; the credit companies don't ask one's *intentions* when coming up with the scores....

 

[family3indisney]

My friend went through something similar with her divorce, although I believe her debt was higher. She went to her credit union and applied for a low interest loan, I think she got around 3% interest rate, but that was a few years ago. She then went and paid off All the cards and now just has one low interest loan. She drives a beater used car so she can pay her loan off faster but says its worth it to open the mail box and not have a dozen credit card bills sitting there.

 

[hsmamato2]

I also vote for checking out Dave Ramsey AND Suze Orman sites. I listen to them both,they both know a lot.
FWIW,DR's method of tackling your cc bills one at a time, paying the min. balance on all but the SMALLEST balance is psychological, - what is supposed to happen is when you write it all down and track every penny, you pay off the smallest balance as FAST as you can (while paying your other bills) this way you start eliminating one bill at a time more quickly,thus helping to reduce the 'overwhelmed' feeling of so many balances.
I can see the value in that. I can imagine the feeling when that first,smallest one is DONE. then you tackle the next,etc etc. sounds like a good motivator to me

 

[ajh88]

I would be hesitant about asking for a settlement offer. That will go on your credit report as something like "account settled for less than full amount" or something along those lines. I don't know what sort of impact it has on your score, but I'm sure it is probably not good.

Some creditors do have hardship plans. While I was in school, one of my cards let me go on a temporary plan (like for a year), where they lowered my interest rate to 0 and decreased my minimum monthly payment. At the end of the period, everything went back to how it was before (interest rate, etc). I don't know if any of your cards would offer this option to you if you are current - it seems like I had to be at least 1 payment behind to qualify for that program - and at that point, your credit has started taking hits. The upside for you is that you could either target that debt and pay it off -OR- use the extra money freed up to get one of the higher interest cards paid off.

I think one of the best ideas is seeing if you can get a consolidation loan, get a more favorable interest rate, pay off the cards, and keep just one for emergencies (and close the rest, unless you *know* you won't re-charge on them). I know our credit scores suffered to some extent because we closed all of our credit cards when we got in over our heads. We've been pretty successful in paying them off (still working on a couple), but I wouldn't want the temptation - you could very well end up with a consolidation loan AND 5 maxed out cards again - and then be even worse off.

And while I like various aspects of both Dave Ramsey and Suze Orman's philosophies, I really *love* Gail vaz Oxlade.

Good luck.

 

[njmom47]

But when you close a card (cancel it), doesn't that affect your score as well? Isn't history (how long you've had a particular card) part of your score?

 

[dclfun]

Do you have anything you could sell on Ebay? You'd be surprised what people will buy. Lots of my friends are currently selling their kid's clothing from last spring/summer or have sent them to an Ebay trading assistant if they don't have the time or want the hassle of selling things themselves. I have made $5151.00 since early January on Ebay selling American Girl things that my kids don't want. It just so happened that we had alot of retired things that sold for much higher amounts than I ever would have envisioned. I know people who go to Goodwill and buy things to sell. Someone bought a bag of 25 cross stitch kits for $5.00 and sold each kit for over $15.00 on Ebay- she had quite a bit of profit from that one bag. If you do have things to consider selling you can check out recent ending prices to see if it's worth your time to list.

I hope your financial situation starts looking brighter for you. You did what you could to support your family at the time and no one should judge you for that!

 

[JDUCKY]

Don't forget him. He has helped countless people. jducky did you not see the post that stated a family paid off 90K by using Ramsey? Does that just not count to you? Perhaps if they'd paid it in a different method they could have done it a bit faster, or with a bit less interest rate, but don't toss the baby out with the bath water. He's done a LOT of good in this world. He helped us out, when we didn't think it was possible. NO ONE ELSE was doing that for us.



Even if he doesn't "care" about them, using his methods still HELPS them. My husband's credit score skyrocketed after using Ramsey's methods for just a year. It's been astonishing. Doesn't matter one little bit if DR cares about them; the credit companies don't ask one's *intentions* when coming up with the scores....

But how much more money did that family end up paying out by not paying down the highest interest accounts first?

What's more beneficial to a family needing money? Saving more of it or just feeling good they paid off a small card with little interest on it?

I'll take saving money any day!

 

[superme80]

But how much more money did that family end up paying out by not paying down the highest interest accounts first?

What's more beneficial to a family needing money? Saving more of it or just feeling good they paid off a small card with little interest on it?

I'll take saving money any day!

When you are in an impossible situation the psychological benifits really outweight saving money. Yes they paid more, but KNOWING you can tackle your own debt really helps a lot of people. I am another vote for Dave Ramsey. I want to wish you luck in you situation. I know you will find a way to pay them off!!!!

 

[cornflake]

Is the 'don't take out a loan to pay off the cards' Ramsey too? Because I don't understand that one except if it's his 'debt is bad!' schtick.

The ccs ARE loans. If they won't budge on the interest, and someone can take out one consolidation loan, cut the interest significantly and pay off all the cards at once, that makes logical and financial sense.

 

[apnep]

OP Here...

...just wish I could make some progress!

Just to answer a couple questions:

My credit is not bad - My score was about 700 when last checked.

There are 5 credit cards, and they were all maxed out so there isnt much shuffling I can do with the balances.

The interest rates vary but go up to 18.99% I didnt realize I could just call & ask for a lower rate.

I dont have much I can cut out of the daily expenses. I will take another look & see what we can do without.

Its just a never-ending battle. I pay & pay every month and the balance never moves! I just want to see some results.

Dear OP,

My DH and I used to have a lot of credit card debt spread across different cards. Other people might not recommend this option, but many banks send you offers for 0% balance transfers for a year or two and then they raise the % rate after the two years are up. It can cost up to $75 to transfer the balances. We transferred a few times before we got it all paid off.

We DID pay off smaller debts first. Snowballing works. I think it's great that you haven't used the cards. Don't let people tell you Dave Ramsey is hooey. If it wasn't for Dave we wouldn't have a great savings account now.

If you have cable, get rid of it. That's extra money. Think about all the little "luxuries" you allow yourself and stop getting them. Maybe it's a cup of coffee. Maybe it's eating out. Every little thing adds up.

I agree with other posters not to touch your 401K; however, maybe you should stop contributing and use that money to pay down your debt?

Good luck OP. You can do it!!

ETA: We paid off the debt our way first; then we used Dave to save. I had never heard of him before we planned our savings. He probably wouldn't agree with the balance transfer idea, but why pay interest if you don't have to? Just a suggestion. BTW, we have excellent credit scores, so no flaming.