23
Mar

Overwhelmed with Credit Card Debt

Hi I am new and joined because I am overwhelmed with my credit card debt. I pay my bills ontime, and make the minimum payments, but I am not getting out of debt. I don’t have any money in savings, it is all going to pay the bills. Should I use a company to consolidate my debt?

As many on this forum will tell you, unless you cut up your credit cards and swear off them for good, you should not get a CON-solidation loan. The reason is, it is a con. You conned yourself. You will find yourself a year or two later, overwhelmed with new credit card debt plus your CON-solidation loan.

Many here follow the Dave Ramsey method which calls for getting $1,000 in the bank for true emergencies. Then pay minimum on all CCs except the one with the lowest balance. Find someway to pay extra and get rid of it. As Dave says, have garage sales. Sell so much so fast the kids hide thinking they are next. With the first one gone you start snowballing up.

Amy I just touting Dave, no, I conned myself 3 years ago. I rolled 90% of all my CCs into a home refi. Now, I just met with a realtor and probably cannot put the house on the market March 1st as planned. I owe too much on the house, the market here is down about 8% and I have $22k in CC debt. I paid off 3 last year. The snowball is rolling Best of luck to you.

We are using CCCS and so far it’s working. They got our finance charge down and late fees stopped too. With our case we will be paid our debt off in less than 4 years. The way we were going it would be 15 years or more by just paying the minimum. I don’t know how much debt you have and it may take longer or not as long to get out of it this way but at least there is a end in sight! I personally think consolidation is not a good way because you still have a high finance charge, but that’s just my opinion. Good luck!

I was in the same situation, and went to a CCCS agency to look into consolidating my debt. Since my interest rates weren’t through the roof and I was able to pay minimums, they said that going through their service would actually *hurt* my credit. So much for that idea.

What it came down to for me–and I don’t know the details of your finances–was I just had to spend less and have more income, and have a plan. I used Mary Hunt’s “Debt Proof Living” and that helped a lot. I didn’t agree with some of the religious tone to it, but the basic advice is really good.

The main thing is to try to look at your budget, see what you can cut, and see how you can get more income. Even a small amount of savings and a small amount over the minimum payment will help (and not spending on your credit cards, which can be extremely difficult).

There are other personal finance authors out there: Dave Ramsey, Suze Orman, Liz Pulliam Weston. Try doing some research and some planning, and good luck!I have used CCCS in the past and they are not a consolidation…. All they do is take one amount from you and then they send it to all your creditors. They don’t really do anything more than what you could do for yourself… When we did use them, they were able to get B of A down to 0% interest and stop the fees and such. That was good, but I learned I can do the same with a little aggression on my part too.

And CPT_TOM is very right – the real problem is not the credit cards, but the lifestyle. First, get the lifestyle under control. Get the emergency fund in place, start living on what you make. Then, you can pay on the cards and slowly but surely it will all sort out. Otherwise, you can go through CCCS and then find yourself right back in trouble again.