Consolidate debts or not, any advice, prefferably from rich people...

We went to see a very convincing financial speaker who said, among other things, that it would be better to take your smallest debt, say 1800$ and put as much extra as you can on that to pay it off quickly (while still making the other payments of course) then turn that extra over to the next higher one (maybe like a 2600$ or whatever...am I divulging too much info here?) Well that's all the numbers I'll give out for now... but needless to say there are is one more we would like to throw in there, a much bigger. When I thought about it he sort of made sense, he explained to the crowd that things get paid off much quicker that way. the roll over way, like in a couple of years instead of four or five... or more. Trouble is... the bigger one is a credit card I can't seem to get rid of even with the cutting up, freeze in a jar, la la la, ya know, and the interest, holy cow!! We practically have to live off of some of it once making the monthly payment because it robs us of so much monthly income! Wouldn't consolidation be better? Like just pay it all off, make the monthly payments going out of the house lower and that will be less stress, and that way hopefully avoid another credit card...no? yes? I have to learn my c.c. lesson, I know. I need major shopping addiction rehab, I wish there was more help for that, any good books you guys know of for that too? (the boobs where worth it though)

If I was in your situation (which I have been)
I moved the big high interest card to a lower interest loan (then cut up the card)

yes by paying all your debts each month and any extra onto the smallest you will pay that one off quicker and can then use the money not paid on that to pay off the next highest debt

IF you consolidate all your loans together be very very careful to read the small print as many of those loans are secured on your property


IF you are really really having problems with your debt then contact the companies and see if they can make some arrangement for you

good luck

Thanks girl, good advice.

i would recommend NOT using one of those financial debt consolidation places-- they charge too much and dont help you as much as they should.

calling your credit card can be a great way of helping with the debt.  if you have been a long time good customer, they will often lower the rates-- or freeze your card with very little interest while you pay it down.

a consolidation loan is ok... better is an equity loan.  the consolidation loans shows up as such on your credit report and lowers your credit worthiness.

and the financial speaker is right-- if you can pay off the smaller debt fast enough to clear the interest the other is accruing.  work the numbers and see what you get (6 mths, 12 mths, 2 yrs) to find out if it will cost you more or less to pay down the small debt first.  to be honest, i pay off the highest interest first or try to transfer all or part of it to a low interest card. if your credit is decent, you maybe able to get a card that is 0 percent for a while... that can make a big diference.

What I was told/read is this: pay off the debt with the largest interest rate first while still paying the minimums on the others.  DO NOT consolidate with a loan since they can't take your house if you have credit card debt but they can with an equity loan.  Sure the interest rate is lower, but is the risk really worth it?

Definately call your credit company and see if they'll lower your interest rate.  It worked for me.

First things first, I have had a credit card balance for YEARS and have not paid a red cent in interest! I consistently transfer my balance to other companies who offer the introductory 0% rate....you know how you get those offers in the mail? Take them! I have even extended the 0% rate period before with 2 companies just by telling them that I was considering transferring my balance out.

If you dont or wont get approved for any reason, I agree with tiamat_the_red who says to pay all the minimums on everything, and any $ you have left over should go to the one with the highest rate.

The speaker's advice is effective and the most cautious.  His goal is not to make payments on the current debt lower short-term, it is to get rid of the debt permanently through teaching behavior modification techniques.

The problem is that most people stuck in debt got that way because of bad habits and a quick consolidation does not enable them to learn new habits. So they get right back into credit card debt again - now they've got cc debt and the equity loan and they're worse off than before.

And if you default on your credit cards, you don't lose your house unlike if you default on a second mortgage. It can cause a world of hurt.

Following the debt payoff snowball technique is a longer process - but it builds discipline and healthy new habits. It really is a lot like weight loss.

If you incurred debt because of a few incidents you lacked savings to cover and you don't have a behavior pattern of using credit on impulse or to buy things that you don't truly need, an equity consolidation loan might be right for you.  But be careful, because a debt consolidation can backfire on you just like a crash diet.

I believe in the theory of paying off the smaller amounts owed if they can be paid in full within 3 or 4 months.  Then taking that money toward your highest interest rate card.  But I have to admit that I also played the game of the 0% introductory rate many times.  I finally got all my cards paid off in full and the only thing I owe money on now is my house.  I even made extra payments on that at one point because I wanted to refinance it and wanted the principal amount in a lower loan bracket before I did it.

Learn your lessons quickly.  If you are not making enough to survive, change jobs or get another one.  When I was a single mom I worked 3 jobs, yes it sucked but we had a roof over our heads and food in our stomachs and every minute we spent together when  I was not working was treasured.  Finally I paid off enough that I could cut back on work and save the money on child care.  The only way you end up in debt is if you spend more than you make.  Other than medical bills and emergencies QUIT letting it go on.  I do understand that some things are out of your control, but the newest designer jeans are not one of them.  (don't know you so that was not personal)

Good luck  & check out Susie Orman on tv she seems to have some very good advice and has many books available at the library, also free.

Be VERY careful if you decide to go with debt consolidation.  I have heard many horror stories about it and there are so many consolidation companies out there.  They are in business to make money.  Do alot of research if you do go this route.  One of the main points against consolidation is that there are often creditors that won't work with these companies.

This is just advice so take it for what you will.  There was a time when hubby and I seriously considered this and also were talking about bankruptcy.  We did much research and decided the best route was to buckle down, make a budget and stick with it, and do like the financial speaker said... pay the smaller stuff first and roll over.  We are in much better shape 9 months later and are able to not sweat it so much from week to week.

Hope this helps.

Did you see D R?  (I will just use his initials)  I really want to see him in person.  I am doing his program right now and I am on babystep two.  Down to one credit card bill and my home equity loan.  I cut three of them up so far.  
I  am on as tight a budget as you can get, and I am succeeding, little by little.

I don't have time to read all the other replys, but I was a junior broker for a mortgage broker.  I would say to consolidate all of your debts into one lump sum payment.  If you own a house, and are eligable, refinance it to get cash out, and then take all of your debts roll it into one, and pay on that every month.  As much as you can.  

Can you not get IVA's over there? We have them here, debts over £10K and they arrange it so you are debt free in 60months and freeze the interest and can write off up to 75% of the debt. Consolidation loans aren't worth it. You need to speak to the people you owe and explain, most would rather get something each month than nothing. 

Hi y'all, You are all so great with so much loooooovely advice. We talked to one bank (not our credit card one) about consolidation already, a different one because they gave us a car loan for 11,000 once no questions asked, that is actually paid off now, yay! OK, so to be very forthcoming, my c.c. is at 12,000$!!! I know, sick. No scolding please, I already feel bad enough, (except for the boobs). That is the big thorn in the side. So the other bank refused us because we have a big student loan too, (which we never have to pay, I don't know how it works in all your countries but here in Canada, if you have kids and make under something like 60,000$per year you can keep applying for interest relief and no payments, after like 5 or 10 years or something it's all forgiven) but that with the c.c. and the second car we need at around 5000$(we just wanted a used crapper that runs good for me and the kids so we aren't trapped)and one small under 2000$ one is too much. We have no accepts (spelled right?) except a truck, we've just been working poor students who dress like we're rich and rent nice houses, we don't even own. Everyone just thinks we're well off, but believe me we don't let them think that if they say anything. I think allot of people are in this boat, I promise not to go to any consolidation companies, I'm pretty suspicious of people and thats why I'm asking allot of people's opinions, even more than on the internet. Our interest right now is 10 or 11% and I remember getting them to get it down to that from like 18 before, but we will be talking to that specific bank I think about a loan just for that card alone, since that is the kicker, or a way low interest, I really like the 0% idea allot, but I just don't know how keen they would be to take our load on, I'm pretty sure we're stuck with it and have to pay it off with them...but husband just got new job with raises on the way often and I'm staying part-time so hopefully.... anyone feeling generous? Ok, just kidding, sort of...