Need advise on what to do next
I am so glad to have found this forum. Thank you so much for being here.
Here is my story guys. I am in sales making $110K a year, with $110K in credit card debt (about $90K of it) and $20K in two car payments. For the past 20 years I have never had any derogatory entries in my credit, as I have always made payments on those credit cards/car payments on time, even though it has been the minimum balance. For the past two years I have been borrowing from my credit cards in order to keep paying my minimum balances on time each month. I am running out of money on what is left of my credit cards, and I am afraid within two months I won't be able to continue to make payments on time. Most of the credit cards are around 12% interest rate, and the reason why I continued to borrow from my credit cards was because I am trying to avoid having my interest rates jacked up.
I can't continue this vicious cycle and seeing that most of my payments are going to interest rates. Most of the cards are closed now, and I have an american express which I have open, and pay monthly, as I use it for my business travels. I can't afford to lose that credit card, unless I go ahead and save $5K and put it on my debit card and use my debit card as my business card. I have called the credit card companies and have explained that I need for them to bring my interest rates down in order for me to make a dent on my balances, but every single one of them have declined to do so. What advise would you give me in order to get out of this debt. I am making mortgage payments on my home and I am not moving anytime soon. I also don't see us buying any other cars, so with those two big issues laid out, what advise would you give me. At this point, my credit scores have taken a bit of a hit due to most of them being maxed out, but no 30 day late entries. I can't keep up with this, though. I truly need your advise. I am open to anything that would bring me immediate relief.
Thank you so much in advance.
Clearing off debt
If you have a mortgage and your house is worth more than the mortgage, then it can be a good option to consolidate your debt by re-mortaging to pay off your debts. This usually means that you pay less each month, but may mean you pay more over the life of the loan. A big mistake many make when they do this, however, is to build up their credit card debts, etc again. If you can hold on to your other expenses, consolidation may be your answer.
If you don't have a property, then consolidation is more tricky - you'd usually do it through an unsecured loan and the difference in what you pay could be marginal: check it out though.
Another way how you could gradually pay off your debt is by using a technique called snowballing. Pay the minimum on all your debts except the most expensive one - and pay back as much as possible on that single debt. Once you've dealt with that one, move on to the next debt and so on. Your debts can disappear months earlier than they would otherwise.
If you can move some or all of your debt onto another card using a 0% balance transfer then do. But, be aware that if you don't make payments on time your preferential rate will disappear and be replaced by one that may well be higher than that which you are paying now. I found great information I could use on a site called mycreditdetail.com that really helped me out of a similar condition.
It's usually not a wise decision to use a secured property to pa
It's usually not a wise decision to use a secured property to pay for unsecured debt. You run the risk of losing your home if you fail to make that mortgage payment! Just be sure that if you do refinance your house, that you can make the payments.
$110K is alot of money to put on your mortgage.
Submitted by desperatelyseekingsanity on Tue, 09/09/2008 - 07:24