Is this my first step?? New here.....

iVillage Member
Registered: 08-15-2004
Is this my first step?? New here.....
3
Tue, 08-24-2004 - 6:21am
Hi, I have been trying to find someone I can talk to about our debt, it is really out of hand. I am not sure what to do, where to turn, or what will happen. We bring home close to $60k a year, own our home, have one car payment, pay $400 a month for daycare, other typical bills, PLUS we're in close to $16k cc debt.

I've recently found that making just a bit more than minimum payments, is becoming impossible.

Here's my question, I recieved in the mail (gasp, I know) an application from "The Bank of New York". In it, it has a chart of various loan amounts, based on 5 years and what the monthly payment would be. From that chart it says (of course if I qualify) that I can get a $15k loan, for 5 years at 8.6% fixed apr, with a monthly payment of $309. Currently, I've been paying close to $450-500 a month in cc payments and I am NOT GETTING ANYWHERE, due to the vicious cycle of paying more on cc's and then not having enough cash on hand, so I "have" to use the cc just to get by. Can anyone relate to that cycle?

Now, I know not to "trust" anything I receive in the mail, and I also know the old saying that if it sounds too good to be true..... That said, I have to ask, should I do this? I HONESTLY cannot see me/us getting out of the cc debt any faster without something like this?!?!?!?!

Anyone have any advice/suggestions? Please....... (sorry this was so long)

Nancy

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Tue, 08-24-2004 - 9:03am

Welcome Nancy!!

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Tue, 08-24-2004 - 10:00am
I totally agree with Becky. If you keep using credit cards, then you're not budgeting well enough. Common wisdom is "track your expenses for a month and see what you really spend." That will point out real money-wasters like stopping at the convenience store to pick up items you should have bought in your weekly trip to the grocery store, and that's good. But I believe you need to track your expenses for a YEAR to really know what you're spending on and break the cycle of using CCs for "unexpected expenses."

The truth is, almost all expenses *can* be anticipated. Cars break down or need major maintenance periodically. Houses have a whole set of expenses (oil burners, oil, appliance repairs) that arise without warning, and then don't forget paying for the snow plowing during a tough winter! The cost of your vacation isn't just the villa and the airfare, it's also the cost of eating out most days, taking donkey rides into the jungle, or whatever. The point is, almost everything can be budgeted, especially if you have good medical insurance, but it may take a year before you get a feel for what you need to budget for.

Take a good look at that loan offer and see if the rates are fixed. My guess is they are not, which means that late payments, which you can control, and a floating rate, which you can't control, may lead to much higher payments than advertised.

Also, the only way to get out of debt with a consolidation loan is to close every other credit card and line of credit. Are you going to do that? I made the mistake 15 years ago of doing a consolidation loan without closing my CCs, and wouldn't you know it, in no time I had *twice* the debt and it took me years to pay it off! So unless you know for sure that the moment your balances are transferred, you are going to call every single credit card and have your account closed, don't do it.

Kelly

iVillage Member
Registered: 04-30-2003
Tue, 08-24-2004 - 12:03pm

All great advice, and one more thing.


The loan that they are offering you, make sure it's NOT an equity loan. I get tons of those consolidation things in the mail because I used to own a home, and most of them are equity loans. And if I was you, I definitely wouldn't put my house on the line.


Also, great advice about closing down the CC's if you do consolidate. I wish I could get a loan, but I can't. I think it helps, as long as you put yourself on a realistic budget, get rid of 90% of the cards, and learn to fix your habits, otherwise, you could end up with MORE debt than you started.


Welcome and join the crowd.

~Cher




my pet!