Would debt consolidation work for me?

[davedmaine]

My debt (besides my mortgage) is 2 credit cards. I have approx. 10k on one card with 5.9% interest and $7.5k on the Disney Visa. I can't remember the interest but it's not great. Maybe 16%. I recently got a job after being laid off for a while. I am able to pay the minimum every month on them, and sometimes a little extra. At this rate, it will take me forever to pay them off! Will it benefit me to use an agency because 5.9% is a low rate to begin with? Will they be able to get it lower? I can't stomach the cost of the interest rates every month! I read that some agencies will not cancel but suspend the cards. I really don't want to close my Disney card account because I like the perks. We don't plan on going until the debt is paid off, but I wouldn't want to miss out on an offer for Disney Visa holders only. And.. I don't want to close my other card because of the awesome interest rate. Which is only 'awesome' if I have a balance. This is probably why I can't get out of this mess. I'm looking for any kind of suggestions to get me out of credit card debt.

You need an attitude adjustment regarding your credit cards .. Stay in debt because you have a low interest rate?

 

[ellochka]

Yes, you can close a credit card account with a balance on it. It's just like it being open, but you can't charge anything on it. It makes sense when 1) you have an annual fee or 2) your credit card arbitrarily jacked up your rate - then by the law they must give you an opportunity to close account, and the amount owed will stay under the old rate. There may be some impact on your credit history, but only if you have a significant available credit on that card. What happens when you close is that you will be having zero available credit, and thus you credit utilization will be higher. However, if it is high now, you are not risking much.

I think you need to stop pussyfooting around this issue. Now that you have a job, it's time to attack the debt and pay it off. Get aggressive. Read frugal living blogs. Cut your budget, tighten the belt for a few months, and you will see real results.

P.S. I am not against a low interest balance transfer. Read the fine print. Work out a plan to make it work. If you are reducing your interest from 13% to 3% on $7,000 it's $58 a month. That goes well with the whole "cut your expenses" part. But you have to have a realistic plan to pay it off soon. However, I would consider only the high interest card for that. The reason is that the savings from 5.9% to 3% (transfer fee) will be smaller. Plus I don't think it's realistic to expect you get $17.5 in new credit.

 

[usd2bmd]

Try this..http://www.vertex42.com/Calculators/debt-reduction-calculator.html

You can put in all of your balances and the interest rates that apply and choose how you repay it.

There is also a column that you can add any extra payments and how it will affect the payoff. It will tell you when it will be paid off and how much interest you will pay.

It is nice to see it on paper and easy to see a "light at the end of the tunnel".

Good luck.

 

[jliehr]

Quite simple, you are in the middle of an emergency. I repeat, YOU ARE IN THE MIDDLE OF AN EMERGENCY.

You don't need debt consolidation, you need to understand your hair is on fire and the debt is the most important thing that you need to take care of, NOW!

You mention a 4K vet bill, which is absurd in and of itself, but indicates you likely still have pets. Get rid of them, seriously. That food, cat litter, vet bills and everything probably comes up to $50-100 a month. Eating out once a week for a family can set you back another $100-200 a month. If most people were brutally honest with themselves, they easily waste $500-$1000 a month on stuff they think they need (cable tv, cell phone data plans, fast internet pipes, vehicles far too big that cost way too much to operate, keeping the AC or heat on when you could take off or put on clothes).

It seems daunting, but sit down and track every dollar that you spend in a month, be honest with what is needed and what is extra that you need to cut out. The layoffs didn't help, but the real issue is you are living beyond your means and not planning for the future.

I would suggest reading some posts from a personal finance blogger. Big warning, lots of harsh truth and a significant amount of vulgarity by this guy, but it is straight and to the point.

http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

 

[wilkeliza]

Quite simple, you are in the middle of an emergency. I repeat, YOU ARE IN THE MIDDLE OF AN EMERGENCY. You don't need debt consolidation, you need to understand your hair is on fire and the debt is the most important thing that you need to take care of, NOW! You mention a 4K vet bill, which is absurd in and of itself, but indicates you likely still have pets. Get rid of them, seriously. That food, cat litter, vet bills and everything probably comes up to $50-100 a month. Eating out once a week for a family can set you back another $100-200 a month. If most people were brutally honest with themselves, they easily waste $500-$1000 a month on stuff they think they need (cable tv, cell phone data plans, fast internet pipes, vehicles far too big that cost way too much to operate, keeping the AC or heat on when you could take off or put on clothes). It seems daunting, but sit down and track every dollar that you spend in a month, be honest with what is needed and what is extra that you need to cut out. The layoffs didn't help, but the real issue is you are living beyond your means and not planning for the future. I would suggest reading some posts from a personal finance blogger. Big warning, lots of harsh truth and a significant amount of vulgarity by this guy, but it is straight and to the point. http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Did you really just suggest someone get rid of their pet? I'm sorry but even if I lost my job I would never get rid of my dog. She is what keeps me grounded.

 

[tinkarooni]

Did you really just suggest someone get rid of their pet? I'm sorry but even if I lost my job I would never get rid of my dog. She is what keeps me grounded.

Are you for real? if it ever came down to my family or my pets the pets would be gone.

We love our animals but we love eating and healthcare more.

 

[wilkeliza]

Are you for real? if it ever came down to my family or my pets the pets would be gone. We love our animals but we love eating and healthcare more.

I am for real. Some of us don't have anything else besides our pets. Yes the OP had an emergency and ended up with 4K in vet bills but that doesn't mean you get rid of them. She found a way to provide for both even if it meant getting into debt. So if she got rid of her pet now she would still have the debt and be out their family pet.

My dog only costs me about $45 a month and then $200 for routine vet each year. If I can't afford that there are more serious problems that need to be dealt with.

I didn't see the OP as someone having to choose between their house payment, food and let so why instantly go to get rid of it?

 

[Marionnette]

Yes, you can close a credit card account with a balance on it. It's just like it being open, but you can't charge anything on it. It makes sense when 1) you have an annual fee or 2) your credit card arbitrarily jacked up your rate - then by the law they must give you an opportunity to close account, and the amount owed will stay under the old rate. There may be some impact on your credit history, but only if you have a significant available credit on that card. What happens when you close is that you will be having zero available credit, and thus you credit utilization will be higher. However, if it is high now, you are not risking much.

I think you need to stop pussyfooting around this issue. Now that you have a job, it's time to attack the debt and pay it off. Get aggressive. Read frugal living blogs. Cut your budget, tighten the belt for a few months, and you will see real results.

P.S. I am not against a low interest balance transfer. Read the fine print. Work out a plan to make it work. If you are reducing your interest from 13% to 3% on $7,000 it's $58 a month. That goes well with the whole "cut your expenses" part. But you have to have a realistic plan to pay it off soon. However, I would consider only the high interest card for that. The reason is that the savings from 5.9% to 3% (transfer fee) will be smaller. Plus I don't think it's realistic to expect you get $17.5 in new credit.

Wrong.

A credit card account is not completely closed until the balance is paid off. Until that debt is satisfied, the account remains open. You can only freeze the use of the card, which also negates the annual fee because you are no longer able to take advantage of its benefits. The OP should take note that any rewards on the Disney Visa will be forfeited if she transfers the balance out and closes the account.

And since the credit card reform act was signed into law, banks can no longer retroactively raise your APR on balances unless the card APR is a variable rate tied to an index (such as the OP's Disney Visa) or a promotional rate has expired (in the case of introductory rates or balance transfers) or if the cardholder does not hold up their end of the bargain when on a repayment schedule where a lower interest rate has been negotiated.

 

[PrincessGrownUp]

I really dread responding to this because I feel that it will go nowhere, but here goes anyway. We got our pets when we were living comfortably. When things started to get bad, the unexpected pet surgery sunk the boat. They are our pets and we adopted them knowing that they are our responsibility until the day they die. I'm not going to let an animal suffer and/or die just to avoid going into debt, something that can be paid off/fixed (I'm sure I will be quoted on this line). The surgery may have been 4k, but 'I' was the one who didn't cut unnecessary expenses right away to get me further into this mess.
If my family was going to starve or live on the street would I find a new home for my pets? Yes! Some facts:
- We have not adopted any new pets since getting laid off the first time.
- I have 1 dog and 2 cats and they don't come near to costing $100 a month.
- My cat passed away 3 days after the surgery.
- I would do it all over again to try to save my cat.

 

[hsmamato2]

OP.... I disagree with a pp(respectfully) in that you shouldn't feel like you need to get rid of pets.... what's done is done, and you took responsibilty for the 'other stuff' you bought,not just surgeries. Letting a pet go is an LAST DITCH effort to fend off starvation,not a cost cutting measure for most of us.
That said, I agree agree agree with many other pp's.... interest means nothing if you are ATTACKING those 2 bills with all your might! I repeat, consolidation is not what you need. Dave Ramsey has some good points (not everything but quite a few) on debt snowball and getting on your feet.
you can likely google that phrase debt snowball along with the name for ideas. Pare down your current bills to minimum,and pay off your biggest debt.then attack the next with that same money.

 

[ellie05]

I really dread responding to this because I feel that it will go nowhere, but here goes anyway. We got our pets when we were living comfortably. When things started to get bad, the unexpected pet surgery sunk the boat. They are our pets and we adopted them knowing that they are our responsibility until the day they die. I'm not going to let an animal suffer and/or die just to avoid going into debt, something that can be paid off/fixed (I'm sure I will be quoted on this line). The surgery may have been 4k, but 'I' was the one who didn't cut unnecessary expenses right away to get me further into this mess.
If my family was going to starve or live on the street would I find a new home for my pets? Yes! Some facts:
- We have not adopted any new pets since getting laid off the first time.
- I have 1 dog and 2 cats and they don't come near to costing $100 a month.
- My cat passed away 3 days after the surgery.
- I would do it all over again to try to save my cat.

OP the budget board you will find some good advice and then some not so good advice. My suggestion would be maybe try to find a part time job, maybe just a few hours a week and put that towards the debt. Every little bit would help. Maybe try giving YNAB a try to help you with budgeting and staying on track.

We also went into debt for our pets and I would do it again in a heart beat.

Good Luck :good vibes:good vibes:good vibes.

 

[Marionnette]

OP.... I disagree with a pp(respectfully) in that you shouldn't feel like you need to get rid of pets.... what's done is done, and you took responsibilty for the 'other stuff' you bought,not just surgeries. Letting a pet go is an LAST DITCH effort to fend off starvation,not a cost cutting measure for most of us.
That said, I agree agree agree with many other pp's.... interest means nothing if you are ATTACKING those 2 bills with all your might! I repeat, consolidation is not what you need. Dave Ramsey has some good points (not everything but quite a few) on debt snowball and getting on your feet.
you can likely google that phrase debt snowball along with the name for ideas. Pare down your current bills to minimum,and pay off your biggest debt.then attack the next with that same money.

Dave would say to attack the smallest debt first. In the OP's case, it is also the debt with the higher interest rate. Once that debt is paid off, then the money that was being sent to the smaller debt gets added to the amount that was being paid on the bigger debt. This continues until all debts are paid off. That's how the snowball works.

 

[hsmamato2]

Dave would say to attack the smallest debt first. In the OP's case, it is also the debt with the higher interest rate. Once that debt is paid off, then the money that was being sent to the smaller debt gets added to the amount that was being paid on the bigger debt. This continues until all debts are paid off. That's how the snowball works.

Ah yes.. you are right I had forgotten it smallest to largest, b/c it feels 'faster' that way, and you can see accomplishments.....

 

[ellochka]

Wrong.

A credit card account is not completely closed until the balance is paid off. Until that debt is satisfied, the account remains open. You can only freeze the use of the card, which also negates the annual fee because you are no longer able to take advantage of its benefits. The OP should take note that any rewards on the Disney Visa will be forfeited if she transfers the balance out and closes the account.

And since the credit card reform act was signed into law, banks can no longer retroactively raise your APR on balances unless the card APR is a variable rate tied to an index (such as the OP's Disney Visa) or a promotional rate has expired (in the case of introductory rates or balance transfers) or if the cardholder does not hold up their end of the bargain when on a repayment schedule where a lower interest rate has been negotiated.

All I can say is that I have done it in the past. The account was closed - and it appeared as "closed/paid on time" on my credit report, with the left over balance on it. I did it because the company jacked up its interest rate - it was not retroactive - they sent me one of those "Change of Terms" for the account (to be effective 2-3 months from the letter), which stated the new APR and the number to call for those who want to decline those new terms and close the account, which I did. Yes, that was before 2008-10 when a bunch of new regulations same out, and it's possible the credit card companies can no longer do it. However, if the card has an annual fee, it still makes sense to close the account. I am speaking from personal experience.

 

[TipsyTraveler]

I really dread responding to this because I feel that it will go nowhere, but here goes anyway. We got our pets when we were living comfortably. When things started to get bad, the unexpected pet surgery sunk the boat. They are our pets and we adopted them knowing that they are our responsibility until the day they die. I'm not going to let an animal suffer and/or die just to avoid going into debt, something that can be paid off/fixed (I'm sure I will be quoted on this line). The surgery may have been 4k, but 'I' was the one who didn't cut unnecessary expenses right away to get me further into this mess.
If my family was going to starve or live on the street would I find a new home for my pets? Yes! Some facts:
- We have not adopted any new pets since getting laid off the first time.
- I have 1 dog and 2 cats and they don't come near to costing $100 a month.
- My cat passed away 3 days after the surgery.
- I would do it all over again to try to save my cat.

Don't feel bad about going into debt for your cat. The 4k is something that will eventually go away -- the guilt you would've felt if you hadn't tried to save him/her is something you would've lived with for the rest of your life. I admire your dedicated attitude in recognizing your pets are a lifelong responsibility "for better or worse". Not every situation can be boiled down to a black or white financial decision, especially when emotions and responsibility are involved. What's financially right may not be what's ethically right. For that matter, having children isn't a great financial decision, yet plenty of people would argue it was the right decision for them. There's more to life than money. Keep chipping away at your debt, you'll get through this.

 

[jliehr]

I am for real. Some of us don't have anything else besides our pets. Yes the OP had an emergency and ended up with 4K in vet bills but that doesn't mean you get rid of them. She found a way to provide for both even if it meant getting into debt. So if she got rid of her pet now she would still have the debt and be out their family pet.

My dog only costs me about $45 a month and then $200 for routine vet each year. If I can't afford that there are more serious problems that need to be dealt with.

I didn't see the OP as someone having to choose between their house payment, food and let so why instantly go to get rid of it?

Get rid of the pets, get out of debt, and then if you get to a good place, reconsider if its something you want to pay for in the future. If you say you want to get out of debt, cut ALL unnecessary costs and get out of it as fast as possible.

Those are the obvious costs, damage to carpeting, furniture, extra cleaning over the years, pets are a huge money pit. This is coming from someone who grew up with dogs and had a dog and a cat until 3 years ago when I realized just how much the freaking things cost us over the years, a fence for $1600, vet bills to the tune of $500 a year for 7 years. Cleaning the carpets to get the smells out once a year for a few hundred dollars, boarding them when we went out of town and $75 a month in food over 7 years and we realized that the choice to have a dog and a cat literally had cost us a car. The dog lost control of her bladder and the medicine no longer helped, we had an option of spending similar money as OP to maybe fix her, and we had the money but we realized it would be selfish to try to put her through surgery and would prolong her suffering, so I made the choice to put her down. Then our cat got out of control, starting tearing things up and deciding the entire house was her litter box, that was an easy decision compared to the dog.

At the end of the day you have to justify your own money, but I frequently find people in debt and crying about how they just can't get ahead, but then they volunteer to spend $50-100 a month (or even more) that they don't have on animals. I was a dog guy, but once I sat down and saw how much they cost, and how much they damage things and how much they tie you down.

 

[wilkeliza]

Get rid of the pets, get out of debt, and then if you get to a good place, reconsider if its something you want to pay for in the future. If you say you want to get out of debt, cut ALL unnecessary costs and get out of it as fast as possible. Those are the obvious costs, damage to carpeting, furniture, extra cleaning over the years, pets are a huge money pit. This is coming from someone who grew up with dogs and had a dog and a cat until 3 years ago when I realized just how much the freaking things cost us over the years, a fence for $1600, vet bills to the tune of $500 a year for 7 years. Cleaning the carpets to get the smells out once a year for a few hundred dollars, boarding them when we went out of town and $75 a month in food over 7 years and we realized that the choice to have a dog and a cat literally had cost us a car. The dog lost control of her bladder and the medicine no longer helped, we had an option of spending similar money as OP to maybe fix her, and we had the money but we realized it would be selfish to try to put her through surgery and would prolong her suffering, so I made the choice to put her down. Then our cat got out of control, starting tearing things up and deciding the entire house was her litter box, that was an easy decision compared to the dog. At the end of the day you have to justify your own money, but I frequently find people in debt and crying about how they just can't get ahead, but then they volunteer to spend $50-100 a month (or even more) that they don't have on animals. I was a dog guy, but once I sat down and saw how much they cost, and how much they damage things and how much they tie you down.

Sorry but the way you just described that you are not an animal person. My dog has never destroyed anything and we clean our carpet and couch ourselves if they get dirty.

I have debt and still have animals. I'm sorry but the less than 100 I spend on my dog and the happiness she brings me is more valuable to me than the extra 1200 I could put towards my debt each year and I'm sure a lot of people agree with that.

 

[jliehr]

Don't feel bad about going into debt for your cat. The 4k is something that will eventually go away -- the guilt you would've felt if you hadn't tried to save him/her is something you would've lived with for the rest of your life. I admire your dedicated attitude in recognizing your pets are a lifelong responsibility "for better or worse". Not every situation can be boiled down to a black or white financial decision, especially when emotions and responsibility are involved. What's financially right may not be what's ethically right. For that matter, having children isn't a great financial decision, yet plenty of people would argue it was the right decision for them. There's more to life than money. Keep chipping away at your debt, you'll get through this.

It is a 100% black and white decision, anything else is just rationalization. The issue is many people have no clue what that kitten, puppy or baby will really cost them over the years. They just make decisions and kick the consequence down the road until it seems like a grey decision. The moral card of the responsibility of the pet is just a rationalization of not being able to make the tough decision.

Pets are not children anymore than dolls are children, there are people in debt and struggling because they spend a ton of money on things they don't need. Food and basic shelter are things that are actual needs that are reasonable things to go into emergency debt for as needed.

It's all about how you see things, and paying the monthly minimum on a huge debt is like deciding to only dig your way out of a sand pit with one hand because you don't want to let go of the shiny rock you saw that caused you to fall into it.

 

[jliehr]

Sorry but the way you just described that you are not an animal person. My dog has never destroyed anything and we clean our carpet and couch ourselves if they get dirty.

I have debt and still have animals. I'm sorry but the less than 100 I spend on my dog and the happiness she brings me is more valuable to me than the extra 1200 I could put towards my debt each year and I'm sure a lot of people agree with that.

That's a decision you make, you can replace the dog with cigarettes, soda, beer, vacations, lottery tickets or whatever and people make the same tired arguments and excuses for why they are in debt.

We are very much animal people, my parents currently have 4 dogs, 2 cats and 2 horses. I spent the past 30+ years of my life living with animals, it's a recent choice to go animal free. I miss the animals themselves, sure, but not everything that goes with them.

Just because I chose to be able to retire earlier and have more freedom over having pets in the house doesn't mean I don't love animals. It means I love myself and my family more than animals.

Your dog may not have destroyed anything, but I guarantee you it has damaged things, even if only as a puppy, and lowered your property value if you own a house. People shopping for houses will smell the pet smells, see the dog or cat hair and many people will be turned off by it.

 

[Luvchefmic]

Did you really just suggest someone get rid of their pet? I'm sorry but even if I lost my job I would never get rid of my dog. She is what keeps me grounded.

That was charming advice wasn't it Sorry you adopt an animal it's your responsibility for the life of that pet.

OP you have got to get those cards paid off. I understand you having debt due to unemployment. Sometimes you have to break out that card for food or gas.

Start truly making more than the monthly minimum and you will see a difference. I would put the one with the highest interest on "ice" but keep one in case you ever got a flat tire or something.