help with credit card debt
my fiance is about $8,000 in credit card debt, basicially from being stupid in his younger days and then a stretch of almost a year when he was unemployed and had no other form of payment for neccessities.
He is OBSESSED with getting these 2 cards paid off completely before he makes any other moves in life -- getting married, buying a house, etc, etc. Now I understand that this CAN be a good thing because he doesn't want to get even further into debt, but he is paying about $300-$500 A MONTH on these cards and it's getting him nowhere fast.
He claims he's tried getting loans but he can't get approved because he doesn't own anything. I can't understand this because his only other debt is his car, which he only has about 2 more years to pay on. I mean, people who don't own anything get loans all the time!
He also claims that he doesn't qualify for debt consolidation plans because his debt doesn't exceed $10,000.
We are both getting really frustrated because it seems like no matter what he does, it doesn't help. And I can't understand the whole loan/consolidation thing because I have always been very careful with money and have NO debt what so ever except my car.
Does anyone have any experience dealing with this? We really need advice. I don't want him to go with some cut rate company that's going to screw him over.
~ and if i'm flying SOLO at least i'm flying FREE ~ Wicked
~ to days of inspiration/playin hookey/makin somethin outta nothin/the need to express to communicate/to going against the grain/going insane/going mad...to being an us for once instead of a them...la vie boheme~ Rent
~ Great spirits have always encountered opposition from medicore minds ~ Albert Einstein
Does he continue to add expenses to these cards, or is the "$300-$500" paying off existing balance? I.e., has he cut up the cards and is no longer using them?
You should be OK without having to resort to debt consolidation or loans, unless the interest rates on those cards is astronomical. The only benefit to debt consolidation/loans is that you now make only one payment instead of making several, and hopefully you're making those payments on a locked-in interest rate.
There are several debt calculators online that can help you estimate payoffs based on interest rate and amount. It may or may not be beneficial to make minimum payments on one card and work to completely wipe out the debt on the other card first. If the minimum payments are high on both cards, you may be running in place and not gaining any ground.
It is a very good idea to try and pay these off ASAP, though. Your fiance is absolutely right when he's obsessed with paying them off before getting married or buying a house. Check out some debt calculators to ensure you're paying the interest wisely. The bigger the chunks, the better the payoff.
"Nobody said it was easy, no one ever said it would be this hard, take me back to the start"
People get loans for stuff like cars and houses, which is used as collateral for the loan. This would be unsecured (unless he has something to put up as collateral), so if he got one it would be at an outrageous interest rate, and I donít think banks are giving out unsecured loans like they used to.
Originally Posted by GreenwithEnvy
He is smart to get the cards paid off ASAP. He is really paying $300-$500 a month and its getting him no where? Can he get a part-time job? What about some in the family to loan him the money?
I guess he could always add $2000 to his debt so the he qualifies for consolidation.
"A person is smart. People are dumb, panicky, dangerous animals"
Wow, the interest rates must be pretty ridiculous if $300-600 a month isnít making much of a dent.I would be very careful with debt consolidation companies, though. There are a lot of scammers out there that are just there to milk you and don't care how they trash your credit.
At one point in my early 20ís I had over 10k in credit card debt from general stupidity and plugging lifestyle gaps while in college (and living with someone who was not in school and didnít want to live like she was) so I know the frustration. I looked at a lot of options, but ended up using my research and recent track record to convince a family member that I was not a terrible investment risk (which wasnít easy, actually). They loaned me the money at 10% and I made payments for almost 2 years.
Iím not a disciple, but Dave Ramseyís Total Money Makeover book has helped a number of people I know get serious about becoming debt free. Thereís a lot of information on how to aggressively (and intelligently) attack these problems. I didnít find that until well after my own debt crisis, though, so I can't personally vouch for it.
The truth is, we know so little about life, we don't really know what the good news is and what the bad news is. - Kurt Vonnegut
My spouse had credit cards like these, and it took him about a year of significant payments to get these paid off. What he did was pay the minimums on each, while saving up the entire principal amount on each. He paid the minimums on each for about 11 months, and then in the 12th month, he called each company, got a payoff amount quote, and sent that amount in to fully pay off both cards.
What he can do is try to negotiate lowering the apr. I remembered that everytime I tried to cancel my credit cards, they asked if I would change my mind if they reduced my apr. You might want to dig more into this as lowering the interest rates will go a long way.
The world is not enough.
Does he have money in savings that he could use to just pay off the debt? Maybe keep the bare minimum he needs in the event of some kind of emergency, but otherwise, just throw everything towards the debt.
Then start from scratch in building up savings again.
This is what I have done in the past, and I believe this is the similar thought that people like Dave Ramsey have spoken about.
I really enjoy listening to his show. Don't necessarily follow his ideas, but he's interesting to listen to.
Originally Posted by winneythepooh7
"Now I am become death, the destroyer of worlds"
I love the Dave Ramsey show! I've been a listener since 06 and have my finances in order, because of his podcast!
Originally Posted by Krishna
My debt is higher and pretty scary right now, you're not alone in this. I pay above the minimum each month but it's not going down.
First, you are not alone in this, and you are doing the right thing by wanting to tackle the problem. I agree with the post above that it might be worthwhile to call the companies and see about a lower APR, especially if he is making that kind of payments each month. You want to free up as much extra money as you can from your payroll check so that you can put a dent in these. Debt relief is a tough thing to face, but keep your head up!
Last edited by ontheedge26; 10-03-2011 at 06:18 PM.
Best option is to apply for a new credit card that has 0% balance transfer APR and transfer all the balance to the new card
which means you will pay no interest on whatever balance you transfer (usually for 12 months).
That should really help knock down that debt since there will be no interest