Credit card debt question options?
Tia asked:
I have maxed one of my credit cards ($2000). I work full time so I can pay it back over time, but the thought of having that debt on my credit card scares me a little. The minimum payments are $25 a month, but I pay more than that. I also have a car loan and was wondering if maybe I could take out a personal loan, consolidate both and pay one repayment a week. What advice do you have for me?
Norma
I have maxed one of my credit cards ($2000). I work full time so I can pay it back over time, but the thought of having that debt on my credit card scares me a little. The minimum payments are $25 a month, but I pay more than that. I also have a car loan and was wondering if maybe I could take out a personal loan, consolidate both and pay one repayment a week. What advice do you have for me?
Norma
Tags: Car Loan, Credit Cards, Full Time
July 29th, 2009 at 7:50 pm
Tonya
Don’t consolidate: it may show up on your credit card report and then it’s viewed negatively and affects your credit rating.
Instead, you can figure out ways to pay it off faster. You’re doing the right thing by paying more than the minimum.
Look at it this way… could you figure out how to save just $10 a day? Cut out lattes, or bring lunch from home, or rent a movie instead of going to the movies. If you could cut just ten dollars a day from your expenses, you could pay off $300 a month!
Try reading “Pay it Down” or “Get Out of Debt, Stay Out of Debt.”
August 2nd, 2009 at 2:50 am
Bradley
Loan for a loan is dangerous, i suggest that you try and finish off the payment for the card paying more than the minimum,
and on some months pay in a big sum - finish it off !!!
August 5th, 2009 at 7:29 am
Shane
keep doing what u are doing! pay it off as soon as u can! do not consolidate! if you do they will close ur account on ur credit card. if you what to continue to have the card in the future don’t consolidate!
August 7th, 2009 at 10:19 am
Juanita
Never, ever even consider consolidating your debts. Yes, you see the new payment total and think “Oo, that’s low” but forget that you are now paying off that debt for several more years (usually longer than the original debt would have lasted).
Continue to pay off more than the minimum $25 on your credit card - and cut up the card so you cannot use it again.
Continue to pay off your car loan as before.
For one week, write down everything you spend.
You then get a bigger picture of where any un-necessary spending is going, i.e. you may buy 4 magazines a week, a DVD, a CD, etc. These things aren’t vital or really necessary so you can cut these out.
Work out your income, then deduct rent, gas, electric, car insurance, travel. You then have your final monthly figures. You can then work out how much extra you can put towards your credit card and car loan.
Buy in bulk and freeze foods where possible, take advantage of BOGOF (buy 1, get 1 free) offers but only if you actually need that item! Shop at the end of the day when shops drastically reduce their soon to be out of date foods - buy it, then freeze it.
It can be done, just takes a bit of planning and a bit of cutting back.
August 10th, 2009 at 1:28 am
Bessie
Keep paying as much as possible on your cc and get it paid off and keep it paid in full!!! If you cannot afford to pay the balance in full every month, they you should not have a credit card. If your finances are in such bad straits, then get a second job to pay off your debts.
August 12th, 2009 at 11:06 pm
Louise
Don’t take out any more loans!!! Or use anymore credit cards. Put every extra dollar you have towards that credit card. We tend to want instant results, b/c with credit we can get things we want instantly. But paying back a debt should take time. The interest rate on your car should be fairly low.
One credit card on your report is not bad if you are paying according to the terms. If the interest rate on the card is high then you could look into a balanace transfer to another card, if it is really low interest rate.
August 13th, 2009 at 3:41 am
Franklin
don’t worry there are online sites which solves your debt problem by getting you enrolled in online program and the entire process can be handled from the comfort and convenience of your home or office.you can always speak with one of helpful account specialists who are standing by to assist you with any questions that you may have. thanks.
August 13th, 2009 at 3:20 pm
Robert
Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. There is a better way.
A. Have a garage sale and sell anything that you no longer need or want.
B.Get a temporary part time job, if you have one, get another. The holidays are coming and there will be plenty of temporary jobs available. It is better to have a no fun year or two than a no fun decade.
If you make only $500 per month at the part time job, that will pay off your credit card in about 4 months and then you can pay off the car loan.
Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.
2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment
Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment
Debt #1: paid off
Debt #2: paid off
Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.
You can do it and it isn’t as hard as you think. Just follow the plan.