Would debt consolidation work for me?

[PrincessGrownUp]

First off.... and I am not trying to be snarky....
-1- I notice 2 things- you got 'laid off for a while' and $17,000 in cc bills on gas and groceries. That is a LOT of gas and groceries for a 'little while'. I say this b/c the first rule of managing your own money is understanding clearly HOW you got in this position, so you can avoid doing it again.
-2-paying the minimum is not good-take serious look at your budget and finances and funnel EVERY extra cent into the biggest bill first,make min. payments on the 2nd one,till the 1st is paid off, then take ALL the payments you were aiming into bill#1,and funnel it ALL into bill #2.(see pp comments about strict budgeting) and DO NOT use the cards AT ALL while doing this.
-3-Don't bother with an agency, you have 2 big bills,pay them off. The difference in interest will be smaller,the faster you apply yourself to my point #2 anyway.
-4- RED FLAG-If you are $17,000 in debt, and can only pay the minimum monthly, and you *say* you won't take a disney trip till it's paid off,then WHY would you need to keep that card 'for the offers'??? Saying this indicates (again,just reading a post,I don't know you) that you *might* just want to take advantage of more 'discounts'....and hanging on to that card 'just in case' will somehow benefit you.... If you can't afford to pay your bills,and you are worried about a few bucks in monthly interest (and you should be) then you should be 1000% ready to ditch that card and not rack up more debt to get that 'discount'.
-5- I hope you don't think I was trying to be snarky or mean, I am not. You asked for suggestions, those are my best ones.
Again, I don't know you, or how you got into this, but I do know the only way to get out is to get serious. You don't need an agency for this- you need a serious budget plan,one you can live with,and a payment schedule that will get you ahead of the game,it will take you quite a while, but it is doable.

No, I don't take it as snarky. I appreciate the help. My cc debt started with an unexpected 4k vet bill then snowballed during 2 layoffs.
I admit, there are some 'fun' things on my bills but it's mostly the necessities including lots of pediatrician/specialist co-pays.

 

[PrincessGrownUp]

Op, can you pay $1000 plus every month right now? And I'm no cc fees calculator...for more specific numbers ,bankrate.com probably has a calculator for everything. This is why my best suggestion is to pay your 2 bills,and don't add anything to the cc's till you do.

Nope. Part of my 10k cc debt is from a balance transfer that I obviously couldn't pay off.

 

[PrincessGrownUp]

Do you budget, or do you track expenses afterwards? There is a BIG difference. I'd strongly suggest you look into a zero-based budget. youneedabudget.com is the one I use, but you could also just use a basic cash envelope system -- but you need a budget that lays out your choices clearly and IMHO, a zero-based system is the best way to get that clear picture.

Form a budget, throw as much money as you can at the debt and just start to make progress.

I budget a little bit. I figure out how much of my check goes to food shopping, gas, daycare, aftercare, my cc bills and I apply whatever I have extra (which isn't much) towards them.

 

[hsmamato2]

Nope. Part of my 10k cc debt is from a balance transfer that I obviously couldn't pay off.

Urgh..... Ok then probably you already learned it's best not to go that route again.... Hope things work out for you,you have gotten lots of good tips here....those transfer offers are designed to 'catch' people that way....(i did it myself,once,many years ago,learned my lesson)

 

[PrincessGrownUp]

Your problem isn't the interest so much as it is the amount of debt that you have accrued. That will not change even if you go to a legitimate credit counselor.


Put in your exact balances and interest rates. You can choose to calculate a pay-off time based on the amount that you can pay each month. Or you can pick the number of months you want it to take for you to be debt-free and it will tell you how much you need to pay each month to reach that goal.

I was in your situation, I would attack that Disney Visa balance with a vengeance (paying the minimum on the other card each month). There would be absolutely no spending on the CCs until they were BOTH paid off. Once the Disney Visa was paid off, I would then attack the other balance with the same intensity as I approached the Disney Visa.

I don't think getting another card with a 0% intro APR is a good idea unless you absolutely know that you can pay off $17500 in the time period that the promotional rate covers. Just for a reality check:
[*]To pay off that amount in 15 months, you would have to pay $1160+ each month, plus the balance transfer fee of up to 3% ($525 on $17500).
[*]OTOH, if you were to just set the same 15-month goal on your two CCs without even getting the interest lowered on either one, you would pay $693 on the higher balance and $555 on the Disney Visa each month for a total of $1248/month.
[*]Those numbers are both pretty high and probably not reasonable. And overall, the amount that comes out of your pocket is about equal, so why risk losing that "fabulous" rate on the account with the higher balance? It's possible that even with the best intentions you would not be able to pay off the transferred balance before it balloons into an outrageous APR.

Thank you for the link. I'm going to find out my exact APR then plug it in.

 

[PrincessGrownUp]

Thanks for the help and good wishes everyone. I know I have a problem because I don't want to get rid of the cards. I haven't used the cards and I keep the Disney card at home and the 5.9% with me for emergencies. Would it be really bad to cancel them? Or should I cut them up and leave the accounts open? I am not too concerned with my credit score. We are not moving anytime soon and I will not finance a car!

 

[SirDuff]

Thanks for the help and good wishes everyone. I know I have a problem because I don't want to get rid of the cards. I haven't used the cards and I keep the Disney card at home and the 5.9% with me for emergencies. Would it be really bad to cancel them? Or should I cut them up and leave the accounts open? I am not too concerned with my credit score. We are not moving anytime soon and I will not finance a car!

I don't think you can cancel them when you still owe on them. Or are you asking about cancelling them once you've paid them off?

 

[wallawallakids]

Thanks for the help and good wishes everyone. I know I have a problem because I don't want to get rid of the cards. I haven't used the cards and I keep the Disney card at home and the 5.9% with me for emergencies. Would it be really bad to cancel them? Or should I cut them up and leave the accounts open? I am not too concerned with my credit score. We are not moving anytime soon and I will not finance a car!

I would not cancel them! I would cut them up and not use them. You say now you do not care about your credit score, but you should. Plus you NEVER know when you will need that score. If you cancel them, your score will go down. Credit is rated by how much credit you have available and that ratio to how much you have used up. If you close those accounts, that becomes negative (As in how much you have available vs. how much you have used.) You will have more out then available and your credit will suffer. Cut them up, do not use them, but do not cancel them.

 

[PrincessGrownUp]

I don't think you can cancel them when you still owe on them. Or are you asking about cancelling them once you've paid them off?

No, I was asking about canceling them now. I will leave them open.

 

[PrincessGrownUp]

I would not cancel them! I would cut them up and not use them. You say now you do not care about your credit score, but you should. Plus you NEVER know when you will need that score. If you cancel them, your score will go down. Credit is rated by how much credit you have available and that ratio to how much you have used up. If you close those accounts, that becomes negative (As in how much you have available vs. how much you have used.) You will have more out then available and your credit will suffer. Cut them up, do not use them, but do not cancel them.

Thanks. I will cut them up.

 

[Stacybaeasm]

Your credit score also affects insurance rates (my car insurance rate is a bit higher than it was because my credit score changed due to canceling a credit card). Employers can also check your credit score before they offer you a job. Plus there are other sneaky things that your credit score effects. I would caution you to never think "I don't care about my score right now."

 

[Marionnette]

Thanks for the help and good wishes everyone. I know I have a problem because I don't want to get rid of the cards. I haven't used the cards and I keep the Disney card at home and the 5.9% with me for emergencies. Would it be really bad to cancel them? Or should I cut them up and leave the accounts open? I am not too concerned with my credit score. We are not moving anytime soon and I will not finance a car!

You cannot cancel an account that has a balance owed. You can freeze the accounts (not the cards - THE ACCOUNTS!), which will prevent you from making any further purchases with the cards. Doing this would mean that you couldn't rely on those cards in the event of an emergency, just as if you had canceled them. However, the cards and your credit histories with those cards remain on your credit report. Once you pay off the balances, you can decide whether to lift the freezes or cancel the accounts.

 

[goofy77]

I don't think they sounded mean and snarky. They where telling them how to do it. The truth hurts sometimes. O ya she said she doesn't want to close either of the cards so I really don't think she is ready to get out of debit. That's just me.

Maybe you didn't mean to come off sounding mean & snarky but you did. Did you ever consider maybe the OP had to put groceries or gas on the credit cards while they were without a job. If you've ever been unemployed, you do what you have to do to buy groceries & necessities. If this means charging them b/c you need the cash that week for insurance or the electric bill then you do it.

OP I would pay the minimum on both cards and then put some extra towards the higher rate card. I know tax season is still a little ways off but if you get any tax refund back put it all towards the higher rate card.

 

[goofy77]

Really?

i would not cancel them! I would cut them up and not use them. You say now you do not care about your credit score, but you should. Plus you never know when you will need that score. If you cancel them, your score will go down. Credit is rated by how much credit you have available and that ratio to how much you have used up. If you close those accounts, that becomes negative (as in how much you have available vs. How much you have used.) you will have more out then available and your credit will suffer. Cut them up, do not use them, but do not cancel them.

 

[Marionnette]

I don't think they sounded mean and snarky. They where telling them how to do it. The truth hurts sometimes. O ya she said she doesn't want to close either of the cards so I really don't think she is ready to get out of debit. That's just me.

I agree with you to a certain extent. Not wanting to cancel a card because of its "perks" makes it sound as if someone is not serious about resolving a debt problem. But I can also understand not wanting to let go of a card when that is your "lifeline" in the event of an emergency. For someone like the OP, who had to rely on a CC just to make ends meet during periods of unemployment, the card represents security in the face of uncertainty. The downside is that the accumulation of those debts just means that it can be so much harder to pay off once life is on a more even keel.

And that's why an emergency fund is so critical to have!

 

[PrincessGrownUp]

Well, I just called Chase and my rate is actually 13% variable. I inquired about lowering it and they said that is the lowest they can go right now. They go by the industry standard and check every 6 months to see if they can lower it.

 

[MrsPete]

Hard and solid fact: You cannot borrow your way out of debt.

More moderate fact: Consolidation may mean you'll pay less interest in the long run, but it is something of a risk. If you move your debt to another loan, your credit cards will again be "available" for charging. Many people who go this route begin with the idea that they're going to get out of this situation, never get into debt again, etc., etc., etc. . . . and a couple years later, they're right back where they were with the credit cards PLUS they have the consolidation loan to pay off.

My advice: Look at the interest rates you're paying. Look at what you'd be paying if you consolidate. Let that make your decision, but IF you go with the consolidation route, close the credit card accounts. You've proven you'll fall to the temptation -- shut that door.

As for credit scores, forget them. Your real goal should be to build financial stability. The credit score doesn't measure that: Rather, it measures the type of debt you have and whether you're making at least minimum payments. It's a distractor from the real goal. Every time you need to make a financial decision, ask yourself whether it'll make you more wealthy in the long run. Let that be your guide.

 

[wallawallakids]

Really?

Yes. Really.

 

[goofy77]

In the long run the interest rate doesn't matter. Save up 1,000 dollars for an emergency fund first then close and cancel your credit cards. Then after you have the 1,000 dollars saved then start to pay off the small debit first and pay the min pay on the high debit. Any extra money that you have you need to throw it on the first debit. Then when that is done you take the payment from the first one that you already paid off and move it to the 2nd debit. It's going to take a while but it's worth it. I paid off over 30K in credit cards. You can do it. Good luck

 

[bigbabyblues]

One small thing we did was to pay our monthly payment, and then when we got paid again in two weeks, we sent another, smaller payment. Even if it was only an extra $50, it cut down on some of the interest being added.