Have any of you wonderful mamas done a bill consolidation loan? We are currently paying $250 at about 24% a month just in the minimum owed, we do pay more on the cards but that is what the minimum is monthly. The consolidation will take us to $160 at 6.99%. We plan on paying at least $250 a month to pay it off quicker. The loan is through our credit union. I have not signed the papers yet I am a little nervous about taking another loan. The bills are from our dd getting sick over summer we just payed the bills with the card every dr trip. And before you ask about having the dr lower the amount due it already is at a discount through our ins.
I have never had to do a consolidation before so I just want to make sure this is the way to go. We are planning on getting rid of the cards except for 1 or 2 for emergancies.
We have done the Dave Ramsey way and the interest just kept eating us alive. If we pay the $250 a month we will have it payed off in 2 yrs as opposed to 3 doing it Dave's way. And the thousands in interest we will save is good too.
Everything will be paid off, Like I said we will get rid of the cards except for 1 or 2 that has the lowest line of credit and rate. I have already figured it out that we will have over 1200 a month freed up by doing this. And we already plan on applying our tax return and hubbys bonus to it next year. that will chop it down big time also.
Yes I have contacted the cc companies and I was given a lower rate for 6 months then it would go back up to the original rate, if we were lucky enough to have them lower it. And yes the credit union is cutting the check to the cc company itself but they are not making us close out the acct that is left to us. And yes we have very good credit just shy of 800 and we are still treated like crud with the cc companies.
The credit union did not offer a shorter lower rate. We will not be penilized for paying it off quicker, in fact she said if we can, do so to save on the interest.
Ok just to be clear we are taking out a personal loan to pay off all of our debt, we are not paying a company to manage our accounts, we are not required to close out our cards but we are going to anyway.
I'd read the fine print on the credit union loan before you sign. If you are getting a loan for the full amount of the balance on all the cards, then I don't see what the problem would be. The cards would be paid in full and you'd pay down the debt with a lower interest rate. If the loan is only for a partial amount and the credit union will try to settle with the cards, then I wouldn't do it. Too much of a chance of something going wrong.
Ouch. The only thing I can tell you about debt consolidation is realize why you are doing it.
It took me five years to pay off debt from my 25 year marriage. I have sworn off credit cards. I had considered doing a debt consolidation loan but we did that when I was married...we ended up charging the credit cards right up again.
With the Dr? Call them. Tell them you are paying cash - they usually discount by 30% for cash paying customers. They will work with you on terms as well. They would much rather get paid than not. It's a win-win for both of you. Even IF this is extra from the insurance. They will work with people to get paid.
If you know you will NOT be using the credit cards again - then do it. If you are keeping cards for an "emergency" you need to define very clearly what an "emergency" is...my ex-husband thought that a carton of cigarettes was an emergency....or lunch because he forgot to make one before he left for work...before we knew it - the card was back up to $2K...so think long and hard before you do it. Set ground rules and boundaries and define what constitutes an emergency!
Only do a debt consolidation loan when you agree to cut up and close all credit cards. it's a vicious cycle. credit cards can be like a drug and addictive....
Use this to create your own emergency fund....don't rely on credit cards for that.
Bob and I paid all of our debt off in 1997 when we married....when he separated from the USAF...we went into our home with ONLY having the mortgage...then we used the credit cards again...urgh....3x we paid off and swore them off - the last time was 2006. We took EVERY SINGLE credit card and canceled them. Paid them in full and only have the house as debt. It was hard. Like I said - credit cards can be like an addiction. However, you really start to realize what is a NECESSITY and what is a "want"...
That you want to keep 1 or 2 for emergencies? Tells me that you might be back in this position in a couple months to a couple of years....get rid of them all.
no....No.....NO! Don't DO IT!
Do Dave Ramsay's debt snowball.
Do it yourself as quickly as possible.
Whatever debt you consolidate must be closed or it will not work. Don't kid yourself, you will use open credit. Oh well we have the money but it would be nice to pay it off next month.....then you have it ran up again.
If you are not going to close the cards then don't do it or you will be in a bigger hole!
The new loan would be used to pay off the credit card with a 24% interest rate correct? So although you will have a new loan you will have paid off the loan(s) with the higher interest rate. If this is the case then yes do it. It definitely makes sense. Just make sure you do not run up the balance again on the high interest rate cards. Personally, I would get rid of them and get a credit card with a lower interest rate if you want one for emergencies.
I would strongly recommend NOT to do this. My experience in doing this (stupid tax) was that we ended up with another emergency situation and then put that on the credit card that we had just freed up with out 2nd mortgage (which is what this loan through the credit union probably will end up being as they put a lein on your home/car). So then, we were in worse shape than before. The biggest problem is that by moving the debt you feel like you are doing something, in reality you are dragging out the pain of repayment. My family has made every poor decision we could have, this being one of them, and I look back realizing if we would have just buckled down and paid it off at that point we wouldn't be digging out of such a big hole now. We started selling everything we could including tools, extra drywall, clothes, furniture, etc. to get this debt paid off quicker. We have paid over $7,000 off in the past 6 months this way. It is HARD! My christmas budget for 3 children this year was only $100. And I rocked it with a final bill of $94 leaving me $6 for stocking stuffers. (and their gifts are awesome! It just took some extreme shopping/money management to make it happen). I also coupon as much as possible saving us on average $40 a grocery trip. Every penny that I can squeeze out goes right to the debt. I want to be out from under the curse of this credit card!!!!! We even rented out one of our barns to get extra income. I am working 3 part time jobs (around my kids schedules) in order to get this done. Only you can make the best decision for your family but I hope my experience will at least make you reconsider your choice. Blessings to you!!!
You are taking on debt to pay off debt. There is no need -- you can do this on your own. See if the credit union is lowering your interest rate by extended the term, or the length of time. I think you need to take the advice of a trained financial adviser and get your monthly income/expense in order. I do not recommend taking on more debt (and I am a trained financial coach)!
I've taken out a home equity loan and a personal loan that I have used to pay off other debt. Based on your post, it sounds like there is no reason why you shouldn't take out a loan at a reasonable interest rate and pay off the higher ones. However, I'm not sure what your definition of "bill consolidation".
It sounds like your taking out a personal loan with the intention of using the funds to pay off debt, but your not under any legal obligation to do so? OR is this a true debt consolidation, where the credit union will be sending the payments directly to your creditors and you will need to close out accounts?
I would also check with the credit union because depending on the type of loan it may not be just as simple as paying the additional $90 month. Also, if you can afford to pay $250 a month, then why aren't you taking out a loan for a shorter period of time where the monthly payments would be in that range? (taking out a $8,000 loan for 60 months vs. $8,000 loan for 36 months) Chances are since the loan is for a shorter period of time, you'd get a better interest rate.
Also, it sounds like your paying the doctor/medical facility directly. They should not be charging you any interest.
What is your credit score like? It sounds like you may have a decent credit score and have been making timely payments, but you just have a lot of debt. Have you tried contacting the credit card companies and reducing your rates?
I did it....make sure you read the fine print...because after paying off the consolidators....They were still taking $60 out of my checking.....Had I not been paying attention they would have been doing this from here on out.
When I called to find out what was going on.....She informed me that it is in the contract...When I went back and reread it...sure enough...one six word sentences summed up, that they would continue to charge for their services... after the debt was paid. I am not even sure what other things they offered out side of consolidating...
they refunded me the money they had taken...but that was after we had to fight them for it.
Was it a worth while thing...yes...because we paid off all of our Credit card debt in one full swoop. And it only took a bit over a year.
Just research who you use first. And make sure you have someone explain the terms and condition in real people terms.
In your case, I think the debt consolidation loan is the way to go, absolutely.
We did Care One debt relief - and while it may not work for everyone, our credit scores are higher than when we started, and in less than three years they are almost paid off. If you look at the statement, the credit card company is now required to show you how long it will take to pay off your card, and it is amazing that if we didn't go this route, we'd be paying on these cards forever.
