Paying Down Debt. Any Suggestions?
I make about $50K a year & have the following debt I'm trying to pay down. I have about a 640 FICO cause of a 4 year old BK7.
CC#1 - $4400 balance (27%) - limit $5,700
CC#2 - $2,600 balance (9.9%) - Limit $3,300
I can't seem to get the CC#2 to raise my limit or CC#1 to lower my int rate. I've tried calling. Any suggestions would be VERY welcome.
I'm paying down as fast as possible
Someone told me that if they tell you no, try back next week and next month. You will get ahold of a different person but dont speak to them, speak to their boss or their bosses boss.
I think with a 640 FICO you can get another credit card. Show a couple of paystubs if you have to, but I doubt it.
Get one of those Credit Card offers with balance transfer. And transfer that high interest one.
or get some money and pay it off at all costs.
good luck,
N.
Since we don't know your whole financial or debt situation, you'll only get very basic info here.
However, the best method for paying down debt quickly is extra payments. For example, if you're paying $200 a month combined on both cards, and the minimum payment on the low interest rate card is $25 do this. Pay $50 on the low interest and put the rest on the other card until it is paid off.
If you have any savings, use it to pay off the debt. Unless it is earning more than 27% interest, at this point a savings account is costing you money.
Until your debt is paid, you must learn to budget ALL of your spending, in order to put more money toward the debt.
Roger
Thank you all for the suggestions. I WILL try them all.
I appreciate it!
I have read several articles about paying every 14 days as a way to lessen the effect of interest and therefor paying off the balance earlier. THere are formulas out there that explain this and why it works. Might be worth a google search to see if it can help.
Thanks Booba. I'll look into that
Have you asked the low rate card if they will let you transfer the high rate balance to their card?
I have been in this situation before. With your cards maxed out it may be hard to get a new lower rate card. So you need to get your balances down.
Do you have insurance or other BS fees on your cards? If so get rid of them.
I had to cut my spending I was surprised how much I was spending without thinking. Stop going to convenience stores. (For disclosure I do own stock in 7-11.) Plan your spending. If you drink coffee in the morning buy a can from the store and make it yourself. Do you have free coffee at work? Drink that. Three bucks at starbucks or one dollar at 7-11 adds up over a month. Think like this for all of your spending.
Next increase your income. I was able to work lots of OT but not everyone can do this. You may need to get a part time job. Deliver pizzas for a few hours on the weekends.
Now take all of this extra cash and put it on the card with the smallest balance. On the card with the highest balance make the minimum payment. Before long you will get a letter in the mail saying that if you transfer a balance you can get a very low rate. It may be only for six months but it will cut your interest.
After that go after the high interest balance.
Also check out this good info at Bankrate. http://www.bankrate.com/brm/search/story-credit-cards.asp
http://www.bankrate.com/brm/news/credit-management/debt-home.asp
Ouch! 27%...I'd stop spending all discretionary money until that puppy was paid off. Eating out would be a thing of the past until that was wiped out. Now if you can't do that, and it's hard, you could try this:
If you have a 401K tap into that. You'd have to pay a 10% penalty for early withdrawal but unless you are making 27% a year on yor 401K you are losing money. Talk to a financial advisor about this approach.
Also, call a non-profit debt consoladation group. They usually have programs to consoladate debt to a lower interest rate.
From what I read I assume that you have gotten your credit card spending under control and once they are paid off you won't let them accumulate again. If not, start working on that aspect of it too.
Good luck,
Q
Quote:
Also, call a non-profit debt consoladation group. They usually have programs to consoladate debt to a lower interest rate.
Stay away from these guys if you want your credit to stay intact!
For crdit this is the same as a chaper 11.
I'd try everything except opening another credit card. Bankrate has a calculator that helps you figure out how long it will take to payoff a credit card if it's at a certain percentage, and gives you a schedule. You make pretty good money so it shouldn't take more than 6 months to be done. Just don't put it off. Credit Counseling could be the worst option. They are a crooked business. They charge you for what they claim is free, make late payments, don't tell you the truth about what is actually going on with your accounts, and if you ever buy or refinance your house, it will hurt you chances for a good rate. Just my 2 cents.
The reason "NON PROFIT" credit counseling is a joke is that those companies are owned by credit card companies.
They negotiate all right. they may even get your rate lowered, but you are paying them, so you are paying the credit card company.
My earlier suggestion is not dangerous. If you get a new card and transfer debt, YOUR ACTUAL DEBT hasnt changed one bit.
You can keep that 27% card open but empty.
Since you will THEN be borrowing a lower percent of your debt available, your credit score actually improves.
This, of course, assumes you have the self control not to run up the 27% card again.
You could close the card too.
But at least you have options.
gl
N.
Thanks so much for all of the responses. I have been paying down as much as I can each month on the lower balance card. I have myself on a pretty strict budget & started a business as a Notary which should bring in some extra $$. I just wanted to see if there were any quicker options.
THANKS AGAIN!
Hello.
Do you have any equity in your primary property?
If so, you could quite feasibly, get a lower interest HELOC with check writing privileges and pay off the credit cards. Any interest you pay on the HELOC is tax deductable as opposed to credit card interest.
Once you get the HELOC, start to use it for your expenses and then every pay day, send the full amount of your paycheck to the HELOC.
That way, every thing that you make will go into the "pot" to reduce your overall debt, not just the extra amount of money you happen to have left over. Interest is calculated daily on a HELOC, so the lower the balance is day to day, the less the interest charge.
Once you pay off your HELOC, write a large check to your primary mortgage from the HELOC and repeat the process until mortgage gets paid off.
If you can send one extra payment per year to your mortgage and it will save 6.5 years, what would happen if you put everything towards it?
You'd pay that mortgage off in about 10 years.
Oh well, just my two cents.