Credit card trouble

[ClicheGuevara]

I sometimes catch myself falling into this type of spending..It's an addiction like anything else, I paid off my credit cards and closed them all. ..Now I pay all my bills first out of my checks and treat myself last..I usually have  less then 200 bucks in the bank at all times, but I'm not in debt anymore. My girlfriend and I just got a 50inch HD tv, but we paid for it out of our tax return money.

[theTwiz]

This is actually an area I consider myself to be quite knowledgeable in.  I have been a Debt Analyst for a debt settlement company, and trained to be a Financial Advisor, including getting my Group 1 Texas Insurance license and Series 63 license.  AlP, I actually have a wealth of information for you to share with your friends, but there is no way it would work in a single forum post.  I'll try my best to summarize below, but PLEASE PM me and we can set up a way I can help better if you'd like.

Regarding High/Low Interest rate cards and the snowball method: This is getting really into a single method of paying off your credit cards, which is paying them off as agreed, on the cards they are currently on.  This method works, but by getting into this you are automatically ruling out several other options for paying off debt.  Wait until you've made the decision to just pay the debt as-is before getting into the finer points of what to pay how much and when. To settle the debate though: yes you should pay highest interest, but also lowest balance first.  There is obviously some grey area here depending on the situation, and the best plan of action can only be determined by actually amortizing your debts out in an amortization table to figure out what will get everything paid off the fastest.   i know

Regarding what i_am_i said about them selling off accounts: there's a good reason i_am_i said "I'm won't say any more than that." there is a method of paying your debts that involves using the system to your advantage in a way that some people say is unethical. there is a lot of debate over this issue. i personally believe that this method has it's rightful place in debt management, but this is NOT something I'm going to go into in a post that can be read by anyone.  this method involves extremely careful consideration of your entire situation, not just the debts you owe. PM me if you really want to know more.

Regarding securing your unsecured debts to get a lower interest rate: STUPID STUPID STUPID STUPID STUPID STUPID STUPID STUPID ok sorry i got a little carried away.  clearly, there are some situations where this might work, but in most cases it makes no sense to risk your assets by putting them up for collateral on a new loan that you probably won't pay off anyway and BOOM repo men in theaters march 19th.

Regarding refinancing cars to pay off credit cards: This is incredibly dangerous as you put assets at additional risk, you could easily get screwed on the new loan, it doesn't really fix the problem (new payments won't be that much better), and it is also illegal in some states but banks don't care. Also, see above.

Regarding Dave Ramsey/Suze Orman: Don't even get me started. They do not give you any advice you cannot get on your own.  That and Suze Orman's show is owned by a bank.

Gah this is getting really long. Sorry for raping everyone's eyes with a giant wall of text.

TOO LONG DIDN'T READ: There are just as many dangers and pitfalls getting out of debt as there are getting in, especially if you don't do your research. AND ESPECIALLY if you read advice that was given in a blanket manner (this includes my own). The only real, good advice will be custom brewed to your situation. Cookie-cutter is how you get into debt in the first place.

P.S. Consumer Credit Counseling Services (i.e. debt consolidation in some places) is viewed the same as a Ch 13 BK on your credit report to many lenders.

P.P.S. If you don't live in the U.S. disregard everything I just said.

[AlP]

Interesting, theTwiz. I can really only talk in generalities because I don't know the full details of their debt situation, just that they have 6 cards, one of which is 22% and that they have enough income after other expenses now to start paying them off. These friends are not a hypothetical me by the way. My finances are fine.

Can you give me an example of a scenario in which it would make more sense to pay off the lowest balance cards first? I can't make the arithmetic work. Is it maybe the psychological benefits of closing those accounts? Or there being less temptation to put more debt on lower interest rate cards?

Is it possible to transfer debt from a higher interest rate card to a lower interest rate card? Does that make sense?

I think I found the unethical approach to lowering one's debt. It's a search away. I won't say what it is because others don't seem to want to talk about it.

[theTwiz]

Interesting, theTwiz. I can really only talk in generalities because I don't know the full details of their debt situation, just that they have 6 cards, one of which is 22% and that they have enough income after other expenses now to start paying them off. These friends are not a hypothetical me by the way. My finances are fine.

Only two things here: 22% seriously sounds like a default rate, which if that's the case then it may not be long until other cards start spiking in interest rates,too.  Also, I believe you when you say it isn't you Google search away. I won't say what it is because others don't seem to want to talk about it.[/quote]

Yeah it's pretty easy to find. Not as easy to pull off.  The reason I won't talk about it is because the last thing I want is some looney going to her local news station about an "Internet Scam" that offered her "Financial Advice" about how to get rid of credit card debt, but this "Advisor" was nothing more than a "Satan-Worshipping Atheist Community"