Consolidation loan...

I have been struggling with getting out of debt and am considering a consolidation loan and am wondering if any of yall have any experience with these or some advice. Im thinking if I can get a loan for everything with a lower interest rate than my current stuff I will save money. Ive tried several different things and I just cant seem to get ahead at all. Im hoping I can get a loan and get everything into one monthly payment and maybe save some money every month and get out from under this debt faster. Whats yalls thoughts and opinions? Im open to other suggestions if youve got them.

 

The big things to look is you will lower your payment but did you do it by adding term to the debt, ie 6000 payed off in 3 years at 180 month or the same 6000 at 120 payed off in 6 years , look at how much intrest you will pay in the extra term. Just my .02

 

If you can, by all means do it. Our economy was a little better than yours, and they are now predicting a recession up here by the end of the year. Our $ is supposed to slump down to .70 vs. yours by year end also. I believe the economies in both countries are about to take a bump. Our gas/oil sector up here out west, is currently tanked and all those from the east who migrated out there for the "gold rush" are now filtering home again. Amazing how many Alberta plates, hung on the back of big $$$$$ pick up trucks are floating around here.

 

Im a finance manager by trade ( waiting for the heckling) I try to talk people out of long terms , just for what Backwoods savage said 7-8000 in intrest on a 30k truck , seem silly to me , but people will try to go 84-96 months just so they can afford it. Thank god the one bank that was doing 120 month loans went out of biz.

JIM

 

Whatever you decide to do, add up all the down payment/payments for a grand total cost. That will give you an all in all "in the end" cost. And don't "pay" someone to do this service for you, there are plenty of ways to do it for free yourself.
If you don't consolidate, concentrate on paying off the smallest debt first, when that is paid off, then use the money from that payment to add to the next biggest debt payment, so on and so forth. It will help you feel like you are actually getting somewhere too.

EDIT: Looks like MM beat me to it...sound advice

 

Struggling to get out of debt and struggling to pay the bills are 2 different things. With either one if you have a realistic budget and track where EVERY dollar goes for a couple of months it will surprise you.

Gary

 

Oh, and if you do consolidate, any "extra money" that you now have from lowering the total monthly payments, needs to be put onto the principle of the consolidation loan instead of just treated as "windfall" money. But unless you have some real high interest stuff now, I'd lean toward paying off one by one, smallest first

 

That was our strategy. Mrs. TD was able to step down from a high stress job after being freed from debt.
The first thing you have to do is get started.

 

Every commercial on TV is aimed at this kind spender.
Learning to do without is the key.

 

Paying off a high balance, high interest debt is more difficult if you're on the edge.
Do what MM said and give yourself a small victory first. Then you've got a little breathing room.
The worst thing you can do is get a consolidation loan, then think you've got extra money to play with. That got you into trouble in the first place.
Get frugal, and do it quick. Make your coffee at home instead of stopping at the gas station or worse yet.....Starbucks. $3.50/day (or more) is $100/month.
Start actually THINKING about where your money is going, then do what you need to do to quit spending on things you don't actually NEED.
Don't eat out for a while. There are lots of ways to slow down spending. Stop thinking about going on that cruise, especially if the plan is to put it on a card.
Being out from under debt load is very freeing.
Live within your means. Lots of cliches, but they all came about from folks who've been in your shoes.
Oh, and oatmeal is cheaper than Cheerios.

 

I lost my job like so many others in 2008. Because I had side jobs on the books, i was considered self-employed and couldn't collect unemployment. Going from 100k to 20k is not easy. I traded in my bmw for a hyundai and I put my mortgage on my credit card more times than I care to admit to through 2009 and 2010 as I struggled to make ends meet as I tried to find full time work again. I picked up a steady side gig which doubled my income to 40k, but getting full time work didn't happen until 2012.

I had 40k on credit cards at one point.

I looked into the loans too, but they don't really help fix the problem.

What i've been doing ever since is getting 0% for 18-24 month new lines of credit cards There's a 3% balance transfer fee which usually equates to 1 month's interest charge. I now have almost all of my debt at 0%. As the cards come due, i prepare a few months ahead of time, and apply for new cards. I take the 3% hit again, but its like buy 1 get 17 months free interest. It's not good for your credit score, but it's no worse than having a high debt to income ratio either. And let's face it, you shouldn't be buying anything right now that requires a credit check anyway. as you pay them down, turn them off, and in time, both your debt to income ratio and your available open lines will come down, and your credit score will go back up. I had GREAT credit before all this... 825+, and at my low i was in the 500s.

I've paid off 3 cards already. I have 2 left. my credit score even with 2 very high lines of debt open has gotten me back into the 790s. and i still have 4 cards open with 0 balances. So, it's not too too bad.

it's what worked for me. 0% is better than 7% you'll get on a personal loan. It's still unsecured debt. And there's 3242342 options out there to get a new transfer. Just plan ahead, set reminders in outlook/gmail etc to move the money before it goes to the default 24% rate or whatever it may be.

 

store brand oatmeal

 

This is the truth. Get the loan, but for the shortest time period, any savings you put back into the payment and cut up your cards. I hope you are working a second job also. It is necessary. I always a had a full time job, plus pick up 16 hours of OT each week, and I had a weekend job for one week end a month.

 

That is scary right there Brian. Glad you are getting it back together.

 

First and foremost, every persons situation is slightly different. I'll explain my situation and why I don't agree with a consolidation loan.

My wife and I have done a few consolidation loans. They present two problems. One they clear off debt from credit cards or other open credit lines that allow you to add to your debt. Second, depending on the types and amounts of debt you are consolidating, you might be extending the life of your credit. This results in lower payments, but you will end up paying a great deal more in interest.

Are you familiar with Dave Ramsey? He has a book The Total Money Makeover that is a 7 step process to get out of debt. Any plan to get out of debt requires that you create a budget and follow it. Dave's plan is no different. The rest of his plan revolves around the budget and your snowball payment. You budget all of your payments. Then determine what amount is left over, and is called your snowball payment. Your snowball payment is applied to the lowest balance that you owe. You pay this amount until you have fully paid off that one bill. Once you've paid off that bill, you take the amount you've been paying monthly to your lowest bill, and apply that to the next lowest bill. Your snowball is starting to get larger.

Example:
Debt:

• $500 balance on credit card 1 - minimum monthly payment of $40
• $1000 balance on credit card 2 - minimum monthly payment of $60
• $5000 balance on credit card 3 - minimum monthly payment of $190
• $12000 balance on a car loan - minimum monthly payment of $320

After creating your budget, you determine that you have $20 extra that you can apply to you debts. This is your snowball payment.

Payments:

• Credit Card 1 - pay minimum of $40 + $20 snowball payment to equal $60
• Credit Card 2 - pay minimum of $60
• Credit Card 3 - pay minimum of $190
• Car loan - pay minimum of $320.

Once Credit card 1 is paid off, that total payment of $60 is added to the payment for credit card 2 to total $120/month.

• Credit Card 2 - pay minimum of $60 + $60 snowball payment to equal $120.
• Credit Card 3 - pay minimum of $190
• Car loan - pay minimum of $320.

Once credit card 2 is paid off, that total payment of $120 is added to the payment for credit card 3 for a total of $310/month.

• Credit Card 3 - pay minimum of $310
• Car loan - pay minimum of $320.

Once credit card 3 is paid off, that total payment of $310 is added to the payment for car loan for a total of $630/month.

• Car loan - pay minimum of $630.

**** Anytime you end of extra money in a month, you can apply that extra to your snowball payment. Which helps you payoff the total faster.


I highly recommend going to the library to checkout Dave's book.


It's not easy getting out of debt. One rule I've found and you must be strong about it is not buying things you don't need. Wants vs needs. Most of us build debt because we spend money on wants rather on just what we need. It's hard to put wants on hold, but if you want to get out of debt, you must avoid spending money on wants. Sacrifice is your new best friend. For us, we started to see results in a very short window. It just depends on the type of debt and amounts of debt.

Feel free to PM me.


Jason From RI.