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So we've had a rough year and I've burried my head in the sand for a few months because the only thing that could fix the problem is to get rid of our credit card completly and consolidate our debt. With no credit available and more money in our pocket we should eventually see the light. I've mentioned getting a consolidation loan to my husband 2 times in the last few months and he just shot down the idea but this time around there are no other options and he will just have to push his pride asside. We have more bills then the money coming in so no choice.

I will keep writing what I do here so to keep myself acountable.

Today I will do:

Apply for a consolidation loan at the bank.

Cancel our gym membership. (me and my daughter were going there because she needs to socialise with other kids. I will need to be creative and find other ways. Ideas?)
 

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My advice ... DO NOT get a consolidation loan!

Getting a new loan to consolidate your debt renews the timeline on your debt. Did you know that almost every state in the USA, debt becomes uncollectible after 4 years? If you get a consolidation loan you reset the clock at day zero.

Now, I'm not saying you should skip out on your debts, all I'm saying is you can't borrow your way out of debt.

And guess what, if you have no more credit available, the bank will want to "consolidate" your unsecured debt by securing the loan against any equity you might have in your house. DO NOT put your house at risk!

What to do ... call Visa. Tell them you need help. What they will do is freeze your account, lower your interest rate (to about 8% - perhaps even lower) and put you on a payment plan that is far less than your current monthly payment.

DO NOT use that line of credit any more. Pay off the car or sell it. Put $1000 in an emergency fund FIRST or else you'll be tempted to borrow money (use credit) any time a little bump in the road comes along. If you still have a gym membership, I'm going to bet there are other places you can cut back, too. Keep track of every single penny you spend then decide where you can cut back further. Trust me, items that seem like needs now quickly become wants when you don't have the money to pay those bills anymore. Lastly, go to irs.gov and calculate how much money you should be withholding for federal taxes. If you're going to get a refund, adjust that withholding so you get a smaller refund. You need the money now, not later.
 

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I agree with cookie. We played the consolidation game twice in years past. Guess what? It didn't help. Only thing that helped is cutting back, using a budget, stopping with credit and paying down the debts ourselves.

Don't roll it into your mortgage. Don't use your home as collateral on a new bank loan. If your interest rate is really too high ( only logical reason to consolidate) consider a new lower rate/0% cc. But only if you're actually ready to deal with this debt.

You have to change our mindset on borrowing money/budgeting or you'll have the same problem, just bigger.
 

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Discussion Starter #5
My advice ... DO NOT get a consolidation loan!

Getting a new loan to consolidate your debt renews the timeline on your debt. Did you know that almost every state in the USA, debt becomes uncollectible after 4 years? If you get a consolidation loan you reset the clock at day zero.

Now, I'm not saying you should skip out on your debts, all I'm saying is you can't borrow your way out of debt.

And guess what, if you have no more credit available, the bank will want to "consolidate" your unsecured debt by securing the loan against any equity you might have in your house. DO NOT put your house at risk!

What to do ... call Visa. Tell them you need help. What they will do is freeze your account, lower your interest rate (to about 8% - perhaps even lower) and put you on a payment plan that is far less than your current monthly payment.

DO NOT use that line of credit any more. Pay off the car or sell it. Put $1000 in an emergency fund FIRST or else you'll be tempted to borrow money (use credit) any time a little bump in the road comes along. If you still have a gym membership, I'm going to bet there are other places you can cut back, too. Keep track of every single penny you spend then decide where you can cut back further. Trust me, items that seem like needs now quickly become wants when you don't have the money to pay those bills anymore. Lastly, go to irs.gov and calculate how much money you should be withholding for federal taxes. If you're going to get a refund, adjust that withholding so you get a smaller refund. You need the money now, not later.
Thank you for the info. I will call Visa to see what they can do. We can't sell our car since we only have one and my husband works 25 minutes away. thanks again
 

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Discussion Starter #6
Just got off the phone with Visa and there is nothing they can do for me. So the consolidation loan is the only option.

It will be for 4 years and I will pay extra whenever I can. And also in the mean time I will not be getting more debt because there will be no open credit available to us.

Also I did cancel our gym membership.

Other places to save money would be groceries. (Not by much because I already cook soo much from scratch and stock pile.)
Staying home more to save on gas.
...
 

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Discussion Starter #7
Oh forgot to add that no the house is not being used as collateral and we aren't adding it to our mortgage.
 

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And also in the mean time I will not be getting more debt because there will be no open credit available to us.


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Does that mean you are cutting up or freezing your cards? This is where most people who do get consolidation loans screw up. They get the loan, pay off the cards and in the mean time run the CC debt right back up. Make certain you don't fall into that trap.
 

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Does that mean you are cutting up or freezing your cards? This is where most people who do get consolidation loans screw up. They get the loan, pay off the cards and in the mean time run the CC debt right back up. Make certain you don't fall into that trap.
Oh, btw. Myself is included in this category. Although it was many years ago.
 

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Discussion Starter #10
Does that mean you are cutting up or freezing your cards? This is where most people who do get consolidation loans screw up. They get the loan, pay off the cards and in the mean time run the CC debt right back up. Make certain you don't fall into that trap.
I dunno I might find an even more creative way of destroying the credit card. haha no more for us. If we ever need a credit card again we'll be using prepaid cards instead.
 
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Call Visa back and tell them you need to speak to someone about their "debt assistance program" or "hardship program". Have ready your current income - especially if it is much lower than the income you had when you applied for the card, an explanation about the hard year you've had, and roughly why you need assistance. For instance, you're at the limit of all your credit lines and can't get approved for any more. Have a good idea of your budget and how much you have to spend for utilities, food, and housing. They'll review your statements and reply in a few days with an offer.

Here is more information: Information on credit card company hardship programs

In our case, when my husband was laid-off, Chase lowered our interest rate to 8% and fixed our monthly payment to $100 which was more than half off the minimum payment we were making. Bank of America voluntarily wrote off HALF the debt (and didn't send us a 1099!) because it was more than 4 years old.

Keep calling until you get someone who helps.

When I said sell your car, I meant sell it and buy one with cash.

Like I said, a consolidation loan is a horrible idea. It renews the "age" of your debt. On your credit report it looks like a whole new debt - even if the other debt is paid off! Even more, your husband is against it. Both of you need to be on the same page with how the debt will be paid off. You can do it without a consolidation loan. Really, you CANNOT borrow your way out of debt.
 

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Discussion Starter #12
Call Visa back and tell them you need to speak to someone about their "debt assistance program" or "hardship program". Have ready your current income - especially if it is much lower than the income you had when you applied for the card, an explanation about the hard year you've had, and roughly why you need assistance. For instance, you're at the limit of all your credit lines and can't get approved for any more. Have a good idea of your budget and how much you have to spend for utilities, food, and housing. They'll review your statements and reply in a few days with an offer.

Here is more information: Information on credit card company hardship programs

In our case, when my husband was laid-off, Chase lowered our interest rate to 8% and fixed our monthly payment to $100 which was more than half off the minimum payment we were making. Bank of America voluntarily wrote off HALF the debt (and didn't send us a 1099!) because it was more than 4 years old.

Keep calling until you get someone who helps.

When I said sell your car, I meant sell it and buy one with cash.

Like I said, a consolidation loan is a horrible idea. It renews the "age" of your debt. On your credit report it looks like a whole new debt - even if the other debt is paid off! Even more, your husband is against it. Both of you need to be on the same page with how the debt will be paid off. You can do it without a consolidation loan. Really, you CANNOT borrow your way out of debt.
Again great info but if I were to call back Visa I would need to ask them to lower our minimum payments by 8x in order for us to be able to afford it. All of those debts are 2 years old or younger so I don't think we could get them to take it off. Does it matter what time of day I call? Will I get the same service in the evening as I would in the morning? I'll have to try again. Maybe let them know that otherwise I'm paying it off with a consolidation loan and they will lose my business. haha
 
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