Help with credit card debt

I've been reading the thread "how do you handle your debt" and I didn't want to hijack the thread. I got my CC bill on one of my cards yday and I got a over the limit fee b/c I used it for a $10 purchase and then the interest kicked in and put me over the limit, so I called and they took the charge off. While I had them on the phone I asked them if they could drop my APR rate which is 17.9%. I think this was my first CC I ever had but the interest rate has gone up since I first got it. They said I had the most competitive rate right now and they could NOT lower it. I said I got a offer in the mail with another company for 0% intro on balance transfers for 13 months I think, but they still wouldn't budge(I do have the offer so I didn't lie)

What would you guys do? Between my wife and I we have about $11,000-$12,000 in credit card debt. A couple have low balances like $225 and other $230. We are at the first stages of trying to turn things around so I'm thinking paying these off first and then putting that $$ we don't owe those cards to another lower balance card and so on. A couple will take a while.

Wife asked me if we should consolidate them all into one payment and I've read that, that isn't the best idea sometimes. We do have a child and daycare is $130 a WEEK. Seems that most of our checks go to just bills, so its going to be a long frustrating process. I think about it everyday and stress and it seems like it takes forever for a week to go by for one of us to get paid.

 

Focus on paying off the ones with the highest balances and interest rates first. Some folks say just to focus on the interest rates, but if you've got $1000 on a card with a 20% rate, and $7,000 on a card with a 15% rate, which one's costing more per month?

Secondly, don't transfer your balance unless you can pay it off before the 0% runs out. What they don't tell you (but is included in the fine print) is that if you don't pay off the full amount by the time the 0% expires they'll charge you interest retroactively for the entire amount that you transferred.

Thirdly, I'm assuming you have a bank account. Most banks or credit unions have a loan officer on hand. And most of them are happy to set up an appointment with you to give you a little bit of free financial counseling. Don't knock it; if anybody knows the tricks that lenders play on people, it's someone who works for a lender. If they're honest with you, they won't try to sell you on any one plan; they'll just lay out what your options are. Even if you don't take them up on any of them, at least you'll know where you stand.

Also, maybe try the trick of not carrying your cards with you. Leave them at home. If you go to the grocery store, bring one card, and make a list. Don't deviate from the list, and put the card away again when you get home. When I was living on my own for the first time I got a credit card for "emergencies" but made the mistake of carrying it with me all the time. Before I knew it I had managed to max it out (fortunately it only had a $1500 limit; since I was an 18-year-old kid working part time and going to school that was all they were willing to give me). I stopped carrying it around with me and I'd paid it off within a couple of months of VERY frugal living that I couldn't possibly duplicate now (I think I lived on Ramen, spaghetti and oatmeal ). But the point is, if you're not carrying it around, you're not using it.

Good luck!

 

I used the Total Money Makeover by Dave Ramsey after I got out of college and into the USAF. Ate beans and rice until I paid off student loans a PITA credit card. Then I cut up the card and not I only use cash. Whether you consolidate the cards or not you are still paying off the same amount, granted interest may change. I agree with what the abover poster stated.

Also, you can get the book cheap on Amazon. You have buy new since the books contains simple budgets and worksheets to knock out debt. Also, it's kind of addicting. First, knock out credit cards and loans, pay off truck, pay off home, max 401(k)...BAM...cash inflows explode!!! I'll be honest, it sucked getting out of debt. Some of my debt never seemed to die. Took me about 18 months to knock out my debt. After hard work, a good budget, and frugal living it finally paid off. I cannot complain one bit.

One more thing...I do not have a credit rating since I do not have debt. Cash from Uncle Sam and mutual funds only. Best of luck and I hope it works out well...

RJ

 

Good points so far in here. I had a few cards with interest rates around 15-20% and the balances totaled around $7,000. I went to my credit union and got a loan to pay off the cards and the loan has a 10% interest rate and a set monthly payment with the option to pay more if i want. Might be something to check into if you're tight on cash.

 

When I got divorced, I ended up with $13,000 of debt Never paid attention to interest rates, always paid more than the minimum, and just never thought about it... UNTIL one month, I could only make the minimum payment and my balance didn't go anywhere . Opened my eyes. Had a friend set me up on a budget and got that stuff paid off in ~ 15 months.

Now credit card is paid off monthly. Using my credit card like that, just got me a new tv (from the points)

OP Good luck getting your finances under control.

 

I was in your same situation not long ago except with about $40,000 in unsecured debt, plus being way upside down in 2 vehicles... Your best bet is to use the Dave Ramsey method (daveramsey.com), except don't buy his books... LOL

Pay off your bills, smallest to largest. Knock out the little balances that have that annoying little payment every month, then take that money and add it to the payment for the next highest amount and keep moving up.
Also, start selling things you don't need, eliminate monthly bills on things you can live without (i.e. landline phones, cable/satellite TV, etc...) Use that money to pay off the balances...
Get a 2nd job in your free time, that will help tremendously.

If you try to start with the highest bills first, you won't make any headway...I've tried it, and it doesn't work...
Also, consolidating is good if you can get a fixed payment with a fixed interest rate... Check with your local community credit union, they will work with you... Mine did and it helped me tremendously!!!

 

X2 on going to the bank or Credit Union. I did that and they did a debt consolidation loan for me and significantly lowered my interest rate.

 

When I bought my Tacoma back in Dec of '12 my credit score was 750. When we had our little girl we got rid of our smartphones and got dumb phones, so our cell bill is $130. We have cut back on eating out within the last two weeks, but we would never go to expensive places. I figured if I paid the lower balances and paid it off that would give up some motivation or boost to go to the next card. I have thought about getting rid of our cable, but not sure. Our cable bill is $115 with internet and DVr which is $15 a month I think thats right.

 

yeah when I called them yesterday they told me that, that was the most competitive rate they had.

 

Discipline is the key to financial freedom. Sounds like you have the right mind set at this point in your life, just continue to think this way.

BTY you have a smart phone now, the fancy one that cost more each month is a dumby phone in my book.

 

I know its going to take a while, but I think I get all down and out not seeing any results. One day a month to make a payment and 29-30 days thinking about debt.

 

Just remember this for when you finally pay it all off so you don't end up doing the same thing all over again. I can't tell you how many people I know who do this. Those stupid books and videos don't teach you anything IMO, it’s about discipline and understanding how to avoid temptation.

So many people forget to answer the obvious question before buying … “Is this something I really need?”

 

What you make doesn't matter, its what you spend that does. This is personal information that I would edit and remove if I were you.

 

I would love to get rid of my wife's student loans too. It's just a pain in the ass to try to keep under control especially when she currently doesn't work.

 

I saw a post that read to possibly cancel cards while they still had balances on them... DO NOT DO THIS! This will negatively impact your credit rating! Instead, if you DO transfer only a portion over to a 0% card, I may call and ask to lower the AVAILABLE amount of credit and ask it to be lowered to basically what I owe on it. Or, just leave them alone and close a bunch of them when paid in full.

Also, when you are done paying them off, keep one or two. Do not open store cards to get 10% off your purchase, just make small purchases on the cards you have and then pay them off at the end of the month. If you don't have a credit card, good luck renting a car or paying for some sort of emergency if you don't have the money available (furnace repair, large car repair, etc.). It will adversely affect your credit rating if you have 5 cards with $10,000 limits and they are not being used. Take two cards, fill up on gas with one and pay it off every month and take the other to buy groceries and again, pay it off monthly. Take the cash you were going to spend for gas and food and set it aside to pay off your debt monthly.

 

I'm dealing with the same situation with credit card debt. Went from living with my parents to buying my own house, had to make a lot of intial purchases i didn't see coming and didn't have the cash to do it with. Ended up racking up the debt to a decent size.

For me personally I need plans in life, keeps my stress down and gives me focus. I'm a little anal when it comes to money organization, so I set up a spreadsheet with formulas so I could see calculating changes based on how I moved my money around and created a budget so I could account for every cent I had coming into my bank account. Then I set up share accounts with my credit union for differnt things I needed to pay (cell phone, CC bill, house utilities, fun, etc). That way I could see where all my money was going instead of into the almighty checking account, which would always suck every cent I had. Also these share accounts keep me accountable. I can't go to an ATM and take money out of them. I need to transfer money from/to them from online or at the bank. I'm not sure if you've heard of the envelope system? Well it's that idea but in the digital age!

I like to think of paying off debt like going to the gym, you aren't going to do it unless you have motiviation to do it. To find motivation for me, I had to prioritize all my bills (mostly CC's) by highest interest rate, then lowest balance. For me seeing change gives me the light at the end of the tunnel, if i try and tackle the $5,000 on one CC I'll personally drive myself to drink....which doesn't help the debt!! Seeing things disappear keeps my focus because I can see my plan working.

There is some good advice on here but i think it's really what will work best for you, for me it's divide and conquer! I would highly recommend talking to a credit union as well. The guy at mine gave great insight and strategy's on how to tackle an overwhelming problem.

Good luck and hopefully things get easier for ya!

 

OP, while it makes sense to start paying off the credit card with the highest interest rate, or the highest balance first because you will pay less in the end, I would actually start by paying off the smallest balance first. Let me explain.

Just make the minimum payments on the other cards, and attack the smallest balance card like your hair is on fire until its paid off! Then move on to the next card with the smallest balance, and so forth. Trust me, if feels pretty good when you pay one off and you dont have to see that bill anymore each month.

This is how I did it, paid off about 5 cards with balances from a few hundred to several thounsand each. I tried paying off the highest first, but it felt like it wasnt getting anywhere. This method worked for me, even though I probably paid a few bucks more in interest, I have no CC debt now.

 

Do this http://www.daveramsey.com/store/prodtmmoclassic.html I am debt free minus my Home because of his book. I had CRAZY debt being 18 and getting CC's and just buying the world, shit credit stuff in collections, I'm talking low 500 score, I know have a 760. Took a few years but it really pays off and its a sense of accomplishment

 

I know that feeling... I created a spreadsheet with all my debt, under each heading, I put the Total Principle Owed, the Monthly Payment Amount, what the debt was for (i.e. credit card, car payment), then a box to check off once it was paid.

Over on the right, I also have a Total Debt Owed column with a Total Monthly Payment under that, it was very helpful visually to be able too see that "Total Debt Owed" decrease on a month-by-month basis. Also, assign each paycheck to cover certain debts, pay those before you do anything else! Any extra in your paycheck apply towards the smallest debt to get it knocked out, as you pay off the debts, you can watch your monthly payment amount drop...

I'm a VERY visual person, and this system has helped me pay over $50,000 in principal in a MUCH shorter timeframe than I ever imagined possible... I felt there was no hope, that I would drown under the load... If you would like me to set you up an Excel spreadsheet (It will be simple), just PM me and I'll send it to you!

 

My sister did a consolidation loan from a credit union when she was 20 and about 12K in credit card debt. Most of them were store cards with high interest, plus she had missed payments and had the rate go up more. Really did help her a lot, although it took her a while to change the original behaviour.

I'd not worry as much about paying off student loans..at least you can claim the interest on your taxes unlike credit card interest.

I only have one major card and it's mainly used for ordering concert tickets online (which I admit is a big thing I do).

If you got a second job, try doing cleaning at night. I did it for years and it's not a bad extra bit of coin.