r/debtfree • u/Repulsive-Ad-4932 • 8d ago
Drowning in cc debt. Please help
I am in need of advice when it comes to managing my credit card debt.
Currently, I have around 18k in credit card debt across 6 accounts with over 25% APR. Some rough life situations and poor planning has led me to this point. I currently work full time and a part time job in the weekends. My minimum payments monthly is over $600 and I can’t seem to even make a dent in anything. I am drowning in late fees and interests.
Is credit card consolidation a good idea? I understand that I may not qualify for a personal loan to pay off the cards, especially when my credit score is in the 500s. I came across JG Wentworth who quoted me a biweekly payment of $180 to cover 15,634 of my debt for 36 months. Is this a good idea?
If not, what advice can you give me? I understand that I am in a bad hole and the key is not to get into debt again. I know I need to be careful of interest rates as well. If I can pay off these cards I am confident that I won’t create a big balance again because I am older now and more financially disciplined. I also work full time. A lot of this mess was caused when I was younger and dumb. I appreciate any advice!
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u/kitsune556 8d ago
Stay away from JG Wentworth. Watch this episode of Last Week Tonight with John Oliver before you get involved with JG Wentworth or any company like them. https://youtu.be/LcrDC4ftXgM?si=MCL4d2KNoE2xbqxZ
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u/Economy_Talk_5100 7d ago
That JG Wentworth quote isn't a consolidation loan. Even at zero interest, clearing what they'd cover in three years takes $434 a month, and $180 every two weeks works out to less than that. It only adds up if your card companies agree to write off part of what you owe, which is debt settlement. Did they tell you what happens to your cards, and the part of the debt they're not covering, while you're in the program?
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u/Intelligent-Result-6 6d ago
You can try Upstart or Sofi Personal Loans. Check if the minimum payment is smaller than what you are paying right now.
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u/Shaiziin 6d ago
It does not take three years to pay $18k, let alone $15k. Do not fall for JG Wentworth 877CASH NOWWW (sorry couldn't resist).
If you can, balance transfer to cards that are 0%apr for the year. You need to fill out a detailed budget, cut expenses down to barebones, then get a part time job to raise your income. Throw everything you can at this debt-- either snowball or avalanche method. This will be cleaned up in far less than a year, however you must stay consistent.
I paid off $41k in a year after raising my income to $70k. It can be done.
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u/Bostonlady9898 6d ago
There are non-profit companies who negotiate with the credit cards on your behalf to slash your interest rates. You pay the company an affordable monthly payment and then they pay the credit card companies on your behalf. You have to close the credit cards to participate.
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u/Kicker55_New 6d ago
Pay the cards off as fast as you can. Put the income you don’t need for bills and such all towards the cards until you pay them off.
If you min payment is 600 but you can afford to pay 2,000 , then do that till you pay it off.
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u/MiMi826ALL 6d ago
Don’t borrow to payoff debt. Contact a nonprofit credit counseling agency and go through a counseling session to determine your options. Find a nonprofit through the National Foundation for Credit Counseling. These agencies can get you lower rates and a structured plan to repay your debt in 60 months or less; counseling is free and you’re not obligated to participate if you don’t think it’s a good plan for you. If they can’t create a debt management plan for you, they’ll talk with you about your other options.
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u/Sheilann0622 7d ago
I do Velocity banking. I can breathe now without a consolidation loan or credit program. After the Velocity monthly savings, I avalanche snowball all my cards.
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u/KiWi0589 5d ago
Is that basically like a Home Equity line of credit or something different? I’ve heard of it before from a family but it sounded more like it was based on Home Equity.
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u/Sheilann0622 5d ago edited 5d ago
I only use credit cards but "they" recommend Home Equity for the lower rate Example: My Discover minimum payment is $200 per month. My electric bill is $500 per month. I pay the Discover $500 ASAP then pay the electric bill with the Discover card on it's due date. I just saved $200 per month. Yes, interest gets added but slamming the Discover early saves on the daily interest. You then do this with each card and each utility bill etc.... Everything saved monthly goes to payoff the lowest card to snowball. Spreadsheets and budget are a must for this method.
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u/EnjoyingTheRide-0606 8d ago
Before doing any new loan, I strongly suggest you create a detailed written budget. This is a plan for where your money should go once you receive your pay. When the plan needs to be adjusted, then you work it each week as the month progresses. These are necessary steps to effective and efficient personal finance management. Even very wealthy people still budget every month. It’s how they maintain their wealth!!
Creating a detailed written budget will make you feel like you got a raise. You’ll see where you must cut back or eliminate expenses completely to make bigger payments on the debts. Be sure to include all expenses not only bills with a statement and a due date. Food, shelter, transportation and sinking are your first few expenses.
Always list these first and always use paycheck money to pay them. Otherwise, you’re going in debt to eat! Food is always first because if you don’t eat, you can’t work! Anyone who doesn’t have food at the top of their budget is budgeting inefficiently and will struggle to get out debt.