Would debt consolidation work for me?

[TipsyTraveler]

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.

Would you say the same regarding medical expenses for your children, spouse, ailing parents? That it's a simple black and white financial decision? The "morality card" of your responsibilities to your loved ones is simply a rationalization of not being able to make tough decisions? "Sorry, Junior, getting you the medical treatment you need is going to be a poor financial choice for us, so the decision is easy."

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.

Nope, they sure aren't but, just like children, they are living beings who depend on you. When you make the decision to take on that responsibility you do everything in your power to see it through.

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.

Exactly. As you see it, pets are disposable. As I see it, they are not. Everyone has different priorities. No matter what my financial situation, (I'm debt-free, for the record) I will move mountains to make sure I can give my pets proper care because they're one of my highest priorities. Perhaps people who don't have that level of commitment shouldn't get them in the first place.

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[Marionnette]

The OP is asking about debt consolidation. Maybe we should ignore the sideshow intended and stick to her question.

 

[PrincessGrownUp]

The OP is asking about debt consolidation. Maybe we should ignore the sideshow intended and stick to her question.

I'm going to make everyone smack their foreheads. I've been thinking about 2 things. 1) Can I get one of those 'debt solution' companies to lower the interest rate just on the Disney Visa? I would close, suspend, inactivate, (whatever they do) the other card too but the $85 monthly interest fee just on the Disney Visa makes me CRINGE! 2) I thought about getting the Disney Visa down to 5k then transferring the balance to a 0% for 18 month card (3% transfer fee). I would definitely be able to afford the monthly payment to get it paid off in 18 months.
Sorry to bother everyone with this. I've been trying to decide what is the right thing to do. I just want to pay this off ASAP. It has been keeping me up at night.
I like the suggestion of getting a 2nd job, but I feel like I'm barely home as it is. I might see if I can work in my sisters store around Christmas. Thanks everyone.

 

[Marionnette]

I'm going to make everyone smack their foreheads. I've been thinking about 2 things. 1) Can I get one of those 'debt solution' companies to lower the interest rate just on the Disney Visa? I would close, suspend, inactivate, (whatever they do) the other card too but the $85 monthly interest fee just on the Disney Visa makes me CRINGE! 2) I thought about getting the Disney Visa down to 5k then transferring the balance to a 0% for 18 month card (3% transfer fee). I would definitely be able to afford the monthly payment to get it paid off in 18 months.
Sorry to bother everyone with this. I've been trying to decide what is the right thing to do. I just want to pay this off ASAP. It has been keeping me up at night.
I like the suggestion of getting a 2nd job, but I feel like I'm barely home as it is. I might see if I can work in my sisters store around Christmas. Thanks everyone.

A reputable debt solution company will want to deal will all of your debts, not just the ones that you pick and choose. They probably would not be able to lower the interest rate on the other card since it already has a decent rate. They might have some success with Chase. But they will want to know about all of your debts and they will want to handle all of them. Even if they were to be able to reduce your interest rate to under 10%, you're still looking at about $50/month in interest payments alone on $7500.

Get busy and do some math. Use that credit card calculator that I linked to. Figure out how much you will need to pay every month to get that Disney Visa down to $5K in a reasonable amount of time. Can you afford to pay that amount? On time? Every month? Then figure out what you would need to pay at 0% interest in order to pay off a balance transfer of $5150 (the $5K+3% transfer fee). Can you afford that amount (about $300/month in addition to your other card's minimum payment)? Realistically, not hopefully, because if you can't (as you've already learned) balance transfers can come back and bite you in the butt.

My advice:

• Stop looking for the easy way out. There isn't one. It took a while to accumulate this debt, it will take twice as long to dig yourself out.
• Forget about the debt counselors unless you're willing to allow them to handle ALL of your debts. You don't get to cherry-pick which ones they handle and which ones you retain control of. Taking the approach that you want to take (turning just one card over to them to negotiate while keeping another card under your own control) doesn't work with their get-out-of-debt plans.
• Stay away from balance transfers. You've done one once and it didn't work out the way you expected it to. Life has a way of happening and you could wind up with another sick animal (or sick child, car accident, house emergency, job loss) that prevents you from meeting your payoff goal.
• Freeze the credit cards -BOTH OF THEM. No more purchases on credit until you get your debt under control. No pay-at-the-pump gas transactions. No swiping the Visa to pay for groceries so that you get the Disney Rewards Dollars.
• Pay the minimums on your cards until you have $1K saved in an emergency fund and then begin to aggressively attack the balance on the Disney Visa . Use Dave Ramsey's Debt Snowball for inspiration and guidance.
• Get a part-time job. It doesn't matter that you're rarely home as it is. The only way to make these debts disappear is to pay them off. In order to "pay this off ASAP", you need to throw more money at the situation. That's only going to happen if you spend less of your cureent income on other things or else bring in more money through a second job.

 

[ellochka]

Doing balance transfers can work - but you have to aggressively pay off the debt. I used balance transfers to reduce interest and pay off a second mortgage. It took three years, and I was very disciplined about it (it also helped that we were spending ~60% of what we were making). I also had a plan B - an way to cover the whole amount owed in case I lost job or something happened. But then I work in analytics, so I know how to work the numbers.

If you can, you can start with transferring $5,000 from Disney to another card, and then aggressively pay off Disney first, and then start cracking on the other card. However, it seems that you will have to make another transfer at one point in the future, as the promo period would not give you enough time to pay everything off. Just make sure you transfer before your promo rate goes up.

 

[PrincessGrownUp]

A reputable debt solution company will want to deal will all of your debts, not just the ones that you pick and choose. They probably would not be able to lower the interest rate on the other card since it already has a decent rate. They might have some success with Chase. But they will want to know about all of your debts and they will want to handle all of them. Even if they were to be able to reduce your interest rate to under 10%, you're still looking at about $50/month in interest payments alone on $7500.

Get busy and do some math. Use that credit card calculator that I linked to. Figure out how much you will need to pay every month to get that Disney Visa down to $5K in a reasonable amount of time. Can you afford to pay that amount? On time? Every month? Then figure out what you would need to pay at 0% interest in order to pay off a balance transfer of $5150 (the $5K+3% transfer fee). Can you afford that amount (about $300/month in addition to your other card's minimum payment)? Realistically, not hopefully, because if you can't (as you've already learned) balance transfers can come back and bite you in the butt.

My advice:

• Stop looking for the easy way out. There isn't one. It took a while to accumulate this debt, it will take twice as long to dig yourself out.
• Forget about the debt counselors unless you're willing to allow them to handle ALL of your debts. You don't get to cherry-pick which ones they handle and which ones you retain control of. Taking the approach that you want to take (turning just one card over to them to negotiate while keeping another card under your own control) doesn't work with their get-out-of-debt plans.
• Stay away from balance transfers. You've done one once and it didn't work out the way you expected it to. Life has a way of happening and you could wind up with another sick animal (or sick child, car accident, house emergency, job loss) that prevents you from meeting your payoff goal.
• Freeze the credit cards -BOTH OF THEM. No more purchases on credit until you get your debt under control. No pay-at-the-pump gas transactions. No swiping the Visa to pay for groceries so that you get the Disney Rewards Dollars.
• Pay the minimums on your cards until you have $1K saved in an emergency fund and then begin to aggressively attack the balance on the Disney Visa . Use Dave Ramsey's Debt Snowball for inspiration and guidance.
• Get a part-time job. It doesn't matter that you're rarely home as it is. The only way to make these debts disappear is to pay them off. In order to "pay this off ASAP", you need to throw more money at the situation. That's only going to happen if you spend less of your cureent income on other things or else bring in more money through a second job.

Thank you for the info. It's very helpful! I can't wait until the day when I come back here to say that it's all paid off! I put some things on eBay andk signed up for a kids consignment sale. Hopefully both will be very successful.

 

[PrincessGrownUp]

Doing balance transfers can work - but you have to aggressively pay off the debt. I used balance transfers to reduce interest and pay off a second mortgage. It took three years, and I was very disciplined about it (it also helped that we were spending ~60% of what we were making). I also had a plan B - an way to cover the whole amount owed in case I lost job or something happened. But then I work in analytics, so I know how to work the numbers.

If you can, you can start with transferring $5,000 from Disney to another card, and then aggressively pay off Disney first, and then start cracking on the other card. However, it seems that you will have to make another transfer at one point in the future, as the promo period would not give you enough time to pay everything off. Just make sure you transfer before your promo rate goes up.

Thank you!

 

[maxiesmom]

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.

And I hope you never get a pet, because it should be a life-long commitment. Not one for just when it is easy. Living creatures should never be disposable.

 

[lauradis]

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/

My dog or my children? children

my dog or little debt? my dog

Really dogs are living creatures that you promised to take care of till they die.

Ill give you points for saying 4k in vet bills is crazy.

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.

 

[lauradis]

Op - Money and budgeting classes from your local credit union would be a good idea.

I wouldn't go the debt sleaze way. Most people don't learn much from them and repeat the behavior of getting in debt again.