Credit card consolidation?

[matt_97055]

So life happens. I have built up way to much CC debt amd I want to get it under control. Any one have any advice for me?

 

[4FordFamily]

Treat credit cards like debit cards - if you can't pay it off that month don't spend it. I pay my credit cards biweekly or even weekly.

Consolidation gigs can often torch your credit and cause more harm than good. I don't know your financial situation but I've dealt with the aftermath of much of this with my clientele for years (I did cash out mortgage refinances and now I use reverse mortgages as financial tools for wealthier Americans). Anyway, good luck!

 

[jasonb87]

Is your credit good enough to get a personal loan with a lower interest rate?

 

[ReeferMaddness843]

I wouldn't do a consolidation as stated above more harm than good. I personally even use credit karma as a basic general guideline for what to do next. It's a soft pull weekly so doesn't affect credit at all and will give you a goal of what to do and how it will effect you. Start with your highest balanced card first and work that one down. Your ideal goal for best credit marks are $0, but all the while using the cards so the advice of using as a debit card is spot on. To heavily help your score 30% of total balance being used is the second best option. Just take it one day at a time. I don't recomend closing any accounts as that will also hurt. I recently went through the same thing when looking into purchasing a house and cut out a few frills and put that "extra" money into payments. Take your time and don't stress too much, that only makes it worse. Hope this helps some!

 

[ReeferMaddness843]

Also, unsure of your specific situation and what means are, but another option if available is add another card with a 0% balance transfer over 12mos then push as many cards to that one as you can so that you would be paying principle and not dealing with interest. Unless managed well this too can be a trap for some, but thought I'd throw it out there as it is a viable option for some.

 

[AdamNC]

Also as you pay off your cards, cut them up and cancel them. The more credit you have available can also affect your score.

 

[4FordFamily]

Also as you pay off your cards, cut them up and cancel them. The more credit you have available can also affect your score.

Having credit available that's open that you don't use actually raises your score. Closing the account can and will almost always drop your score because it impacts your utilization ratio.

 

[AdamNC]

Interesting, about 20 years ago I was told just the opposite by a family financial advisor. Because back then having that open available credit could let a potential lender know that you could be spending more, thereby risking the chance to get into financial debt and not be able to pay. Have things changed since then?

 

[ReeferMaddness843]

Closed accounts end up compiling into a single closed category and doesn't list a reason as to why so it can be interpreted as closed due to nonpayment or closed on ones own accord. Regardless it will potentially effect negatively.

 

[Ineedhelp]

I dont usually dip into the lounge but I have to on this one.... I HIGHLY HIGHLY suggest you go to amazon or go to his website.... Dave Ramsey.... He is not a personal financial advisor but someone who used to make a lot of money and then lost everything and he is now way better off from what he learned on his mistakes... "Debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice." —Dave

 

[Ineedhelp]

and by the way im not perfect, I have cc debt and all that as well but I have changed to make a commitment not to live off of interest rates and what I want... It is a change of lifestyle but you change now your future will be so much better.

 

[Frop]

My advice really depends on your lifestyle. Between us and a particular family member I could drop their monthly cost by about $750/mo.

1) selling the house for something half the size [this cuts utility usage on heating/cooling and mortgage cost]
2) removing luxuries [TV, home phone, fast food].
3) use the rest on the cards

It's cheaper to own a house than to rent. So idk if you are renting then 1 doesn't apply and makes this harder. At which point I'd try to see how much cheaper it would really be and then save to get into a house and worry about the credit cards next since your savings will go towards the cards.

Just don't lose hope in being able to pay it off. If you lose hope it will get worse. Graph what you use. Just aim to from this moment on not go more into debt this month than last. Slowly you will go out of debt. And pray. Life is about luck, "the race isn't to the swift." Hopefully Jesus can bring you some.

I know from my family member their debt started when they were poor then they became above average and never removed their debt. If you can't do it now maybe the opportunity will come just hang in and try not to make it harder by spending more.

Good luck!

 

[4FordFamily]

Interesting, about 20 years ago I was told just the opposite by a family financial advisor. Because back then having that open available credit could let a potential lender know that you could be spending more, thereby risking the chance to get into financial debt and not be able to pay. Have things changed since then?

Yes the issue is how utilization ratios (which are roughly 1/3 of your credit score) are calculated.

Let's say you have 3 credit cards with 10k limits, each with 5k balances. You're obviously 50% which is over 30% which negatively impacts your score.

Now close one of those accounts you still owe 5k on it but now your total available credit is 20k and you owe 15k still. This is a 75% utilization, which really harms your credit score. You're making payments on a closed account but closing it hurt your credit.

Also credit history and current credit history play in here as well - open and active cards you pay responsibly every month help you more than cards you close. Close the account and it literally just becomes history. Of course that history is still a factor but accounts you've had a long time and kept on top of for a long time are healthy for your score.

 

[4FordFamily]

I dont usually dip into the lounge but I have to on this one.... I HIGHLY HIGHLY suggest you go to amazon or go to his website.... Dave Ramsey.... He is not a personal financial advisor but someone who used to make a lot of money and then lost everything and he is now way better off from what he learned on his mistakes... "Debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice." —Dave

Dave has many merits but also is very misguided and closed minded on several financial tools. It has been said of Dave that he is "the stupid person's financial adviser" - as rude and blunt as that is, the truth is that a financially astute person can leverage debt to grow wealth successfully and can become exorbidently wealthy, whereas many of Dave's teachings will keep you from moving backwards as fast but as far as growing net estate values or maximizing them there's an expensive opportunity cost to his methods.

Of course, if you're not a finance nerd or astute with finance and investing, his methods are generally good moves and even some are otherwise, such as his propensity to suggest not buying things on credit you can't pay off that month.

 

[4FordFamily]

Also, "Rich Dad Poor Dad" by Robert Kyoksaki.

Good book.

 

[matt_97055]

My credit is amazing just my debt to income is out of wack. I have tried bank's to do a personal loan with no luck. I think I am just stuck for a while

 

[jasonb87]

My credit is amazing just my debt to income is out of wack. I have tried bank's to do a personal loan with no luck. I think I am just stuck for a while

Have you looked at the snowball effect to payoff debt?

 

[4FordFamily]

My credit is amazing just my debt to income is out of wack. I have tried bank's to do a personal loan with no luck. I think I am just stuck for a while

It sounds like you're trying to get a mortgage. I can tell you, if you don't pass DTI (debt to income) requirements for mortgages then you really cannot afford the home you want at the moment (unless you're self employed and your tax returns cause your issues due to "net" income and writeoffs). Truthfully I "qualify" for 2-3 times the house I could afford per HUD or FHA/Fannie/Freddie guidelines.

If that's not what you mean then disregard lol! I just know DTI all too well and it's a common issue.

 

[Brew12]

It sounds like you're trying to get a mortgage. I can tell you, if you don't pass DTI (debt to income) requirements for mortgages then you really cannot afford the home you want at the moment (unless you're self employed and your tax returns cause your issues due to "net" income and writeoffs). Truthfully I "qualify" for 2-3 times the house I could afford per HUD or FHA/Fannie/Freddie guidelines.

If that's not what you mean then disregard lol! I just know DTI all too well and it's a common issue.

That really is crazy. I know what I can get pre approved for as far as mortgages go and there is no way I would want to afford it. :confused:

 

[matt_97055]

I have a mortgage already I just dont like the 24% interest. It just feels like the balances never get paid down