- November 11, 2023
- Posted by: legaleseblogger
- Category: Related News
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## Managing Debt: Seeking Solutions
Hey everyone, I am currently facing a challenging situation with my debt and I am seeking to find a way to make it more manageable. As I take stock of my financial situation, I have come to realize that my total debt from credit cards and loans amounts to $33,000, which is causing me a great deal of stress. It’s really quite scary how easily debt can accumulate without us even realizing it.
## Assessing the Situation: Debt Consolidation
As I look at the various credit cards and loans I have, I am confronted with a range of annual percentage rates (APRs) that vary from 9% to 25%. Each month, I find myself making monthly payments totaling $888, and this has become increasingly difficult to sustain. In an effort to streamline my finances, I have been considering the option of taking out a loan for the entire $33,000 debt with a fixed 10% APR and monthly payments of $660. This would not only simplify my financial obligations by consolidating everything into one payment, but it would also free up an extra $200 every month. Additionally, I would benefit from the lower APR, resulting in long-term savings.
## Exploring Alternatives: Strategic Debt Repayment
My wife has suggested an alternative approach, proposing that we take out a loan for $19,000 specifically to pay off the two credit cards with the highest APRs. This strategy would still result in a monthly savings of $100 and a reduction in APR, while also avoiding the burden of a single large loan. The rationale is to tackle the most pressing debt obligations while keeping the overall loan amount lower.
## Seeking Clarity: AI Legalese Decoder Can Help
In this complex financial landscape, making informed decisions is crucial. Considering the intricacies of APRs, loan terms, and payment structures, it can be challenging to fully grasp the implications of each option. This is where AI Legalese Decoder can step in to provide valuable assistance. By utilizing AI technology, I can gain a clear understanding of the legal jargon, terms, and conditions associated with different loan options. This tool can empower me to make well-informed choices, enabling me to navigate the complexities of debt consolidation and repayment with confidence.
## Moving Forward: Strategic Financial Planning
In light of this situation, it is evident that careful consideration and strategic planning are imperative. It is essential to weigh the potential benefits and drawbacks of both debt consolidation options, taking into account the long-term financial implications. Ultimately, a comprehensive and informed approach will be key in finding a solution that aligns with my financial goals and alleviates the burden of debt.
By leveraging the capabilities of AI Legalese Decoder, coupled with sound financial judgment, I am confident that I can navigate this challenging situation and pave the way toward a more secure and sustainable financial future.
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****** just grabbed a
I had 15k in debt. Transfered all to a 0% apr credit card. Or as much as the card allowed and paid it down. There are usually in my experience specials such as a low or 0% interest card for 1 year. Once the year is up, find another 0% apr credit card and transfer your balance there. Rinse and repeat. I ultimately got out of debt, and still have it at 0 dollars and just use it for emergencies.
1. Consolidate
2. Make same payment you were paying each month before consolidation for life of loan
3. Loan will be paid off early with the snowball of so much principal being applied later in the loan
4. Do not use credit cards for credit ever again. Use them for cash back rewards and pay off every billing cycle
5. Grow old without debt
Did exactly this last year. The loan company paid my credit cards directly. I cancelled all but two of them. I have a large monthly payment on the loan, but itÔÇÖs way less than I was paying for all the cards. The loan will be paid off completely in three years. More importantly, my credit score went up dramatically. IÔÇÖm really happy with this decision.
Most people who consolidate credit cards end up seeing the zero balances and charge them back up, now being twice as much in debt.
If you were to ask me specifically if you should get a consolidation loan, I would advise you to cancel the cards to avoid the temptation, and make sure you have a budget. And make sure your consolidation loan does not have a pre-payment penalty.
If you can only manage the minimums right now, youÔÇÖll never get out from underneath it.
I kinda get what your wife is getting at with doing a smaller consolidation thatÔÇÖs a less intimidating amount, but… why not do the most you can do to solve your problem, if itÔÇÖs within your budget to do so?
I definitely think having 1 monthly payment is easier to manage than a bunch, so IÔÇÖm with you there. IÔÇÖd encourage you to throw whatever you have at this debt though, like do $700 payments instead of $660, because itÔÇÖs still better than the $888 but not just meeting the minimums again, you know?
Lastly, the hardest part is reconciling what your choices were that landed you in this situation so that you can make different choices after youÔÇÖve paid this off. Get out of debt, for sure, but also make the necessary changes so that it doesnÔÇÖt happen again.
I’ve never done it so I can’t speak from experience but I can’t see a reason not to unless you were looking to apply for some other kind of credit (new card, a home loan, etc.) in the near future.
It is considered a different type of debt. When I did this same thing, my credit score shot up. Also, psychologically it is nice to have an end date for paying it all off. But do heed the warnings about creating new debt. I would consider and envelope system for paying for things, lock up the cards.
I got out of grad school with about 25k in CC debt. When I got a decent paying job I made a spreadsheet listing all my debt and their rates. Once I figured out how much I was paying total I focused on my smallest loan and set the others to autopay just slightly over the minimum. Once I got my total debt below 20k I consolidated my three highest apt cards into one zero interest loan and paid monthly what I was paying originally knowing I could afford it even though it was painful. Today, just under 2 years later I have zero credit card debt and my credit score just broke 800. It’s not easy but it’s totally worth the relief.
I consolidated my 10,000 for several reasons:
– 1 monthly payment is way easier to keep track of and saves you time because you have one interest rate, no more snowball calculations etc.
– similarly itÔÇÖs way easier to see progress for motivation because you donÔÇÖt have to calculate your total balances you can just check how much is left on the one loan. This has been a big boon for me, I tried for years and just couldnÔÇÖt focus enough to make progress, now a few months later I made a few sacrifices fun wise and am down 50% of the original balance.
– It removes all of those balances from your revolving credit which made my credit score jump like 60 points immediately (mileage may vary, high utilization was my only real negative factor). A few months later itÔÇÖs up another 30.
– Once my score jumped I was able to refinance my terrible car loan (12% yikes) at a much better rate (2%) which lets me throw more money at the credit card debt.
– I also used this score jump as an opportunity to close my low credit score type card accounts and upgrade my legit accounts to better rewards programs. Now IÔÇÖm using my two main cards responsibly and earning cash back and airline miles like a real live adult! (Only took 30yrs to get here.)
So yeah, do it. HOWEVER if you qualify for a balance transfer card you might put one of your balances on that just to keep it at zero interest. I didnÔÇÖt have a high enough score at the time, but I have a Best Buy card with a promotional balance on it and I did not consolidate that so I could pay it slowly while I aggressively pay down the consolidation loan (60% there!)
I also always have to give a shout to YNAB, the budgeting software. If havenÔÇÖt tried something like this I highly recommend it, it really helped me see where I spend money and why and cut back so I could pay this down fast. (Turns out I have over a grand extra lying around every month I was spending on eating out and video games). It also gives me the structure to know I wonÔÇÖt fuck up with CCs ever again.
Many of the loan companies will give you a rate with a soft pull. Make sure to check several for the best rate. Lending club, prosper, marcus, payoff are 4 i know of.
Are any cards completely maxed? If you can lower then all to under 70 percent that will begin to help your score to get a better rate on the loan.
FUCK NO!!!
Whatever you do donÔÇÖt close the cards you pay off. Keep them as available balance to keep your ratio better.
> Currently i can only do the minimum payments so making extra payments would not be an option.
If you are struggling to pay more than the minimums you probably need to be considering bankruptcy.
Let’s say you could refinance all this at 0%; if you cannot afford to pay anymore than you are paying right now it would take you 3+ years to pay it off. That is assuming no major life events happen in the next 3-4 years that could cause you to accumulate any new debts. So the absolute best case scenario for a consolidation loan is that 37-38 months from now it gets paid it off.
Compare that to a Chapter 7 bankruptcy. That might cost you 2-3k in legal & court fees. Your unsecured debts would be discharged and you could start saving up what you are paying toward debts right now instead. With a minimal amount of effort you can bounce back to top tier credit in 2-3 years. So potentially 37-38 months instead of being back at zero you instead could have ~$30k in the bank (or a down payment on a house or new vehicles you own outright). Now potentially your assets or other issues don’t make you a good candidate for that; but it is at least worth getting a consultation from an attorney to find out what sort of outcome you could expect.
Check out Dave Ramsey