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Author Topic: Credit Card Debt Pay Down Strategies?  (Read 4838 times)
greenleaf
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« on: November 15, 2012, 8:50:49 AM »

Through a number of bad circumstances I racked up close to $30,000. in credit card debt. I'm now in the first year of a tenure track position and for the first time in a while have a steady income with funds available each month to pay down the debt.

I'm wondering if there might be personal loans available at reasonable rates that I could exchange the credit card debt for as a plan for repayment and be able to budget that each month and still be able to pay all of my expenses as I go, including having some reserve for unexpected car, medical expenses etc.

I've been transferring to 0% cards when I can, but that's getting harder at this amount and usually there is a transfer fee to do this. Interested to hear others experience with this and suggestions on strategies to pay off this debt. Thanks.
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anon99
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« Reply #1 on: November 15, 2012, 10:33:03 AM »

I'm not familar with options (guessing you are in the US), but many others will be. 

Assuming you new salary is higher than your previous salary, keep living off the lower salary and use the 'extra' to pay off your credit card debt. If the cost of living is lower in the new place, also stash that extra money.  Some people will tell you to pay off the on with highest interest first and others will tell you to pay off the one with the smallest amount, so you have one less bill to look after and you see that you can do it.
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hesitant
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« Reply #2 on: November 15, 2012, 11:45:28 AM »

OP, this is what my husband and I did when we had to pay off the 50 000 dollar credit card debt he inherited from his first marriage. However, we did not know better at the time (euro transplants to the US) and we got a loan from evil mega bank at a not so good rate, to put it mildly. I now know that it is better to get such a loan from a credit union.

May be people can give you more information on the amount. There might be limits. We were able to get  15 000 dollar loan from the bank, and another 12000 dollar from a friend (we did pay it back with interest that made this mutually beneficial). I guess having well to do friends helps as well... We used all of that money to pay off the highest interest cards first and dealt with the rest simultaneously, as we were paying off the loans.
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clean
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« Reply #3 on: November 17, 2012, 3:06:29 AM »

There are 72 pages of ideas in the Into the Black thread!

There is no easy way, but all ways require you to live on less than you make.


I graduated with more debt that that.  I lived on my 9 month salary and used every dollar of summer pay to pay off the debt.

If you want to try a consolidation loan, the first place to start is the Credit Union!   
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mclower
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« Reply #4 on: November 29, 2012, 6:55:34 PM »

Definitely talk to a credit union about consolidating.
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ncaro
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« Reply #5 on: December 11, 2012, 3:13:51 PM »

Another good option is something like Lending Club, where private investors take on your loan.
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jamesmahan01
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« Reply #6 on: December 12, 2012, 7:54:41 PM »

I have counseled many on the appropriate strategy.  The Credit Union is a good place to start, however a few parameters need to be in place before you consolidate if that is what you end up doing:
1)  Never, ever charge anymore on your credit cards than you will be able to pay off at the end of the month;
2)  Only use the card for extra stuff, (mostly the non-necessities of life);
3)  Never use it for food or groceries.  It is a bad and may lead to a reduction in your credit line;
4)  Always save at least 10% of your take home pay for a rainy day fund and then only use it for emergencies;
5)  If you have a retirement program where the university matches your contributions, make the maximum contribution you can do legally.  The amount will double quickly with the matching funds and you will thank me when you are ready to retire.
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greenleaf
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« Reply #7 on: December 14, 2012, 4:49:46 PM »

Thanks for the advice. I am currently not taking on any new debt, credit card or otherwise. Not using credit cards at all. Saving the max that will be matched for retirement. Trying to keep some emergency funds and funds to travel to visit sick parents 2,000 miles away from time to time.

What I am trying to sort out is a strategy for paying as little interest and as much principle as possible. I have close to $30,000. in CC debt. I can pay $1,000. a month most months. The interest on the 3 cards is 12 - 13% currently. Checked in with the credit union and it seems to be from a best case scenario of 9.5% to around 12% for various loans or lines of credit. Currently in faculty housing which is $500. a month but will need to find another place before fall semester 2013. I'm in the arts and salary is modest compared with many other fields.

Very happy to have the job and salary, want to see an end to this debt on the horizon so I can focus on other priorities.
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flyingbison
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« Reply #8 on: December 14, 2012, 4:52:39 PM »


3)  Never use it for food or groceries.  It is a bad and may lead to a reduction in your credit line;


Um, why?
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melba_frilkins
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« Reply #9 on: December 14, 2012, 7:23:41 PM »


3)  Never use it for food or groceries.  It is a bad and may lead to a reduction in your credit line;


Um, why?

That used to be a thing about 20+ years ago. (I don't know if it held any water or was of the urban legend variety).  Very few grocery stores even took credit cards back then.
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clean
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« Reply #10 on: December 14, 2012, 8:19:07 PM »

Im not sure why it would reduce your credit line, except that it would be using your credit line.  If you are managing your credit score, then the ratio of used credit to available credit will be higher, and that tends to lower your scores. 

It is a bad idea because you are less likely to stick to your budget (and your list).  IF you are restricted to cash, you are more likely to buy extra things that are not really "needs" .... like cookies, pie, cake, ice cream, or whatever your weaknesses are are. 
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minimimi
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« Reply #11 on: December 14, 2012, 9:34:20 PM »

Yeah, jamesmahan01's #4 has me wondering, also. I use my credit card everywhere, especially at the grocery store, where I can get a whopping 6% cash back. But it's also important to shop with a list and coupons. And of course, I'm not everyone, and one reason I used to have debt was that I gave into impulse way too often. It was the proverbial death by a thousand cuts. Ultimately, the "danger" of using credit at the supermarket varies by person: if nothing else, personal finance is personal.

Indeed, where I most disagree is with #3. When you're determined to dig out of debt, it's best to avoid all "non-necessities." Spend only on needs, not wants, and before you know it, that $30K will be nothing.
« Last Edit: December 14, 2012, 9:36:38 PM by minimimi » Logged
minimimi
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« Reply #12 on: December 14, 2012, 9:38:55 PM »

PS: congratulations on the tt job, OP. I hope you've had a rewarding first term. Good luck with the payoff(s)!
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quantmeister
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« Reply #13 on: December 20, 2012, 2:55:11 PM »

Check with your local consumer credit counseling service. They are funded (largely) by the credit card companies, but they offer very attractive debt management plans. They can arrange to get your interest rates substantially reduced, and then they can give you a once-a-month payment that's way the heck more attractive than what you're probably paying.

The downside is that you're pretty much shut out of credit for the duration of the program. But, if you are up to your ears in credit card debt you're probably all but locked out of it anyway.

Make sure it's a legit one, not one of those that takes your payments and THEN promises to work with your creditors. Try this link (http://www.nfcc.org) as a first pass.
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