hey all - good friend of mine came to me over the weekend for advice and i had little to offer. you all seem pretty intelligent so i thought i'd ask here...

over the past few years, he accrued a good bit of credit card debt (roughly $10k between 2 credit cards). he has other payments for college and a car loan as well, and he mentioned that between getting hit with the APRs and unexpected costs each month, he is getting tired of having that much debt.

he asked if i have ever used a credit union or debt consolidation deal before. i've never had the need and no one else in our close group of friends have either.

does anyone have any experience with a local credit union? or a bank that will help a customer get out of CC debt? any recommendation would be cool as i trust you all.

from what i know, he has decent credit and a solid job ($45k/year +).

thanks -

porter

 

not debt consilidation, but if he got a signature loan it would probably reduce the interest, but he would have a pretty high payment for 10000.
First thing is to stop using them all together. Then do a budget to figure out how much he can put toward them and stick to it until they are down.

just an opinion as I do not know about debt consolidation either

 

Debt consolidation usually falls in one of two categories; either you have equity in your house or something else for collateral and take a personal or equity loan against that, or else you sacrifice your credit score by working through one of these debt relief services.
A third option is -if you can- to float the balance between low interest "introductory offers" for a while.

But the bottom line does come down to stop using them, even in a zero-percent consolidation scheme you still need to be paying them more than you are charging, its just that much more so with interest in the picture.

 

DONT do the debt relief, it is exactly as psoper described.

My recommendation (this works well).

Take your highest interest rate card. Pay it off as fast as possible while making minimum payments on the others. Once its paid off, move to the next one.

Oh, AND STOP USING CREDIT CARDS.

 

debt consolidation is essentially a loan for the amount owed on the cc's at a much lower interest rate.

What he'll want to do is call each cc and negotiate the rate down to a fixed low rate. you can read many articles online of how to do this. Most of the time, simply threatening to leave will have them lower and fix the rate.

Then start by paying off your smallest debt first. people commonly try to put a dent in the biggest first. Get rid of all the small debt and then go to work on the big.

other than that and budgeting...

 

if he's a student, can he apply for student loans? aren't interest rates on those significantly lower than what a credit card will rack up at?



i have very little knowledge on this topic as well, as i usually pay off my cards within the grace period time. just trying to help out

 

+1 on this, the CC companies will always negotiate and have the loaner pay off their balances then just charge them off. If he can afford paying large chunks of the payments have him negotiate a 3-6 payment plan w/o interest; this goes a long way in saving.

-1 on this especially if the smallest debt has a low interest; pay off the highest interest rate irregardless of balance. Since he only has 2 this should be fairly simple.

If your friend can get a loan large enough to pay off both CC balances at a lower rate that's the best way to go as long as he can afford the monthly. Also have him accelerate the payment more than the minimum as it also applies more to the principal balance along with lowering the amount of time for payoff. There are calculators for Office and online that he can use to do this.

 

Consolidating with a loan lower interest loan is the best way, but he MUST cut up the cards for this to work.

Pick up a 2nd job. The increased income will help when paying off. Not much other than that.

I had HUGE debt, still do to some degree, but only because I finished school and increased my income by a very large margin have I been able to pay down so much debt. By the end of the year I will be 100% debt free, and I definitely don't abuse the cards like I used to. It was painful learning experience, but I don't regret it. I learned some big lessons.

 

First stop using them like others have said.

Then call the CC company, tell them you want to close the account. They'll beg you to stay and give you a very low rate for 6-12 months. Take it and start paying.

Or takeout a personal load with CU payoff CC and start paying off the load.

 

stop using the cards, and pay off the dept one by one. like they said.

 

He could also try calling the CC company and asking them to apply his balance to the premium and that he'll pay off the interest afterwards. Cause they won't charge you interest on the interest. So you pay off the premium, there will be less interest accumlating and then pay the interest at the end.

 

Tell him to hit up the local sperm bank. It's a good source of side income. An extra $50 every two weeks can go a long way.

 

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You gotta be under 36 years old and over 5'8"!!!!!

Damn, I've only got 2 good years left! With all those soiled tissues and socks I could have been rich!!!!

 

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