If you or your wife has a car payment, you could consider trading down to a vehicle without a payment.

OP - could you share your income and monthly budget with us? It would help a lot to know what you have to work with...

fvfquaker said:if you credit sucks just file BK, majority of not all will be wiped out since it's all medical. keep the lowest balance card open so you can rebuild your credit after you file bk. ch.7 should do, credit / score will be crap for first year then it will rebound. let this be a lesson to you not to spend so much. good luck

First let me say thank you very much to everyone has responded thusfar - I am a first time member of this forum and to get such good advice up to this point is very welcoming - as for the one-liner responses and the not-so-helpful, that's just the internet being the internet and kudos to upping your post count by 1.

I have thought about BK... my parents actually went through BK twice, and they now have come out of it very well (through a combination of my father landing and advancing in a great job and keen spending habits), so while this option is not attractive on the outside, it's certainly something we wont at the very least consider. I may be wrong, but I thought I read that recently BK has changed to where you can't just use it to come out from under debt like this (debt where you have the means with which to make minimum payments or slightly more) - I dont know the specs on BK so if this is incorrect, please correct me.

The HELOC idea from the parents may be a good idea as well, significantly reducing minimum monthly payment (obviously I'd be making much more than a minimum payment each month to satisfy the debt sooner than the lengthy HELOC repayment requirements i've seen <15 yr+ again correct me if wrong here> - this is more of a 'saving face' issue, as I have trouble asking my parents to bail us out but they would understand given the circumstances.

Again we do not live beyond our means, we do not go out and eat fancy meals every night (or hardly ever for that matter), we try to save money wherever possible via methods like carpooling, leftovers, etc. - the wedding our parents paid for about 85% of, but we put some expenses on the credit cards - the medical thing was at the time seemingly beyond our control, hindsight however is 20/20 as always.

Our vehicle loans are both up in July 08 - we have thought about consolidating but we both are at 3.49% on our loans and being so close, think sticking it out and then ridding ourselves of that payment might work out for the better. I can get back shortly regarding our monthly income/budget right now I am tired and need sleep.

Again many thanks to the forum and keep the suggestions/information coming (especially on the BK/HELOC solutions) - cheers.

NDogg said:what is your income per month?

And you mention being able to make the minimum payments "maybe slightly more" but you haven't specified how much...this would be helpful for those of us trying to point you in the right direction.

Mulligan said:You may want to check out a book(total money makeover + radio show) by this guy, he's a little bit hokey but has sound advice on getting out of debt and changing your lifestyle. Much of paying off debt and understanding how money works is budgeting and psychological. For example paying off the smaller credit cards, while paying your minimums on others, may help you build what he calls the snowball. You kill these cards and cancel them, building momentum.

Good luck with this, my wife and I went through this and when we told our friends that we wanted to live debt free people looked at us like we were crazy. The way we live now we have no car payments, no credit car payments, and just pay our utilities. Making a budget is really important, people might be shocked to find if the add their car payments(+ extra ins for financed car), credit card payments, and other debts together it is a huge monthly number. If they could stop sending that money to other people and keep it for themselves, they can really start building wealth.

yah, not sure why peeps always give me red when I mention someone should go BK! The point here is to rid of his debt ASAP and start saving up for the future. Does filing for BK suck? sure. does it ruin your credit? yes. is it the right thing to do? probably not. will it help you faster then what you'll be able to accomplish over the next 2 years? yes! i'd just file and broom it under the carpet.

mike841 said:Hello Hypersion thank you for the reply - We have a Citi and Discover card, that is the card the 0% until 7/07 is currently on - due to our high balance to credit limit ratio we are unable to open more credit card accounts at 0% at the time - also the two cards at high balances are with Bank of America - we have tried everything to get them to lower the interest rate and they wont budge, saying it's based on our current credit score... so we're kind of screwed in that regard.

Do both you and your spouse have the same credit score? Credit scores are set for individuals not couples. See if one of you is lower than the other, if so you might be able to apply for credit using that individuals SSN.

mst3k said:tcope said:Paying min. on all except the highest interest card is _not_ usually the way to go. If this card also has the highest balance, the min you will pay on a low interest rate card will just be drawn out for such a long time, you'll end up paying more.

What? This makes no sense at all. Ignoring paying down a card to lower your utilization in order to try to attract 0% offers(which is not the reson you give), mathematically paying off the highest rate first will save you the most money.

Can you please show me some of your magic math where the low interest rate card getting drawn out causes you to pay more?

Because every card is maxed out, the OP will not qualify for any 0% offers so they would be best off paying the highest rate first.

I won't get into the long explanation by showing all the math (as there are just too many variables), rather I'll explain it a bit differently:

Card 1 = $10,000 balance at 25% with a min payment of $150
Card 2 = $1,000 balance at 5% with min payment of $25

If you were to pay the min on Card 2 while your paying off Card 1, you'd be paying $25 for almost 4 years on Card 2. Where as if you _aggresivly_ pay off Card 2 (read, quickly), you then can add that $25 toward paying off Card 1 more quickly. It's not the interest your looking at avoiding. it's the ability to _remove_ a min payment amount toward a card that can now be applied to another card (Debt Snowball). By paying off the smaller amount quickly, you reduce the interest your paying toward that card but this is a minor point. You're really trying to free up that min amount.

Again, your not really trying to remove the interest you're paying rather you're trying to free up that min payment amount so it can be _quickly_ applied to another debt. Now you're _really_ hacking away at the higher interest rate card.

This will only work if the person aggresivly attacks the debt and also applies every last cent to paying off the next card.

Better then I can explain it:
Wikipedia - Debt Snowball

It's unlikely that the person will qualify for a 0% card anytime soon. Just paying down one card somewhat will not trigger this. It can take a year or more to get a better deal. if the OP waits around for this or counts on it happening, he's fooling himself yet again.

tcope said:
I won't get into the long explanation by showing all the math (as there are just too many variables), rather I'll explain it a bit differently:

Card 1 = $10,000 balance at 25% with a min payment of $150
Card 2 = $1,000 balance at 5% with min payment of $25

If you were to pay the min on Card 2 while your paying off Card 1, you'd be paying $25 for almost 4 years on Card 2. Where as if you _aggresivly_ pay off Card 2 (read, quickly), you then can add that $25 toward paying off Card 1 more quickly. It's not the interest your looking at avoiding. it's the ability to _remove_ a min payment amount toward a card that can now be applied to another card (Debt Snowball). By paying off the smaller amount quickly, you reduce the interest your paying toward that card but this is a minor point. You're really trying to free up that min amount.


You didn't say what you mean by "aggresively" paying down Card 2.

Let's say you mean, add an extra $100 to your payment, so you are paying $125 a month in order to aggressively pay it off.

Card 2 will be paid off in 9 months.
However, your balance on Card 1 at the end of 9 months will be $10525.
Add the $125 to what you were paying on Card 1 (total new payment = $275/month) and you will pay off the balance in another 78. Total payoff time 78 + 9 = 87 months.

Now, let's do it the other way around.
Add the $100 a month to Card 1 and pay $250 a month.
Pay $25 a month to Card 2.

Card 2 will be paid off in 44 months. At the end of 44 months, the balance on card 1 will be $7044. Add the extra $25/month to Card 1 for a total of $275/month. Card 1 will be paid off in another 37 months.
Total payoff time: 44 + 37 = 81 months.

Difference: 6 months. 6 x $275 = $1650.

Actually, in real life, the minimum payment will decrease each month until it reaches the minimum minimum. That means you could shift more of the payment from the low interest card to the high interest card each month and the payoff would be even faster.

There is, however, one good arguement for paying off lower cards first: Most people who are in serious debt trouble are paying late payment fees and over the limit fees each month. Eliminating extra cards could reduce the number of late and over the limit fees that are paid each month.

Weird that OP does not respond to several questions on the family income. Looks like a thread to get juices flowing through the old FW.

N

My significant other is almost done paying off $20,000 of 26% debt. I made her go to a Debt Consolidator, a real one from the National Credit Counseling web site, paid the $20 and they made her a budget and then created a plan. In exchange the CCC contacted each creditor she wanted help with and got them to either lower or end the intrest rate. Worked great. This isn't a debt forgiveness scam that destroys your credit, you still get to pay back every penny, but at least it isn't growing at some high rate you can never pay off.

Then last year we got her a secured card, about to change to a real card, and I made her a authorized user. Its been about 1 and 1/2 years and she will be done in under 6 mos, and then we can slowly rebuild her credit.

EDIT: since so many people keep PMing me for the company that can help and is legit:

NFCC.ORG

Wikipedia: Credit Counseling

Good luck with your debt, I don't need my intrest rates going up because of deadbeats!