Debt consolidation company recommendations please

[Kruel J]

Just to add, when I say heloc, I am being generic. There are many home equity programs out there. Interest and fees/penalties/terms is what I would look at. Some helocs really lock you in so do your homework.

 

[Koda]

Damn, math really is hard I guess

I went to public school, go easy on me...

 

[Kruel J]

At the end of the day debt is debt. Nothing will make it go away or somehow be "better". The only thing anyone can do is find the best interest rate with the best terms possible. If he can borrow it from "himself" at a good rate and pay it off before selling the house then its a win-win. Debt paid in full for the least amount of interest should be everyone's goal.

 

[MichaelH]

Because your home is an investment and borrowing against that reduces the investment. Its a very poor financial move. You want to pay your home off as early as possible.

I tend to agree with you, BUT it's because I've seen so many people suck equity out of a house to pay off debt and then get right back into debt. If you've got the discipline to do the snowball thing then you have the discipline to get the 20 to 25% interest on credit card balances down to 7% and direct all that was going to principle and interest in the high interest debt to the HELOC debt.

 

[Koda]

So you move your high interest debit into your low interest investment extending the home loan. How many people are going to take that extra cash and add it to the new home loan payment?

 

[Kruel J]

So you move your high interest debit into your low interest investment extending the home loan. How many people are going to take that extra cash and add it to the new home loan payment?

How many people are going to stick to the snowball technique? Or stick to the terms of any loan in their name? How many licks does it take to get to the center of a tootsie pop?

The world many never know.

 

[Joe13]

I understand this is an awkward request and lost of ways to skin a deer so I appreciate all opinions and was mostly looking for a variety of opinions on the subject.

Before the medical issue we were very close to making double payments on our home.

My vehicles were paid for in cash quite awhile ago.

I have only ever financed some tools and a guitar at 0% interest, mostly to help increase my credit.

I do not like carrying debt and am perfectly willing to wait for something I want then to pay for it with credit.

I do appreciate everyones concern though but in this situation, it isn't going to be a consolation and then rack up a bunch more debt.

 

[MikeInOr]

Everything I have ever read about the debt consolidation services says they are scams who's sole purpose is to make money off of you, NOT help you get out of debt!

I believe if YOU make an arrangement with a creditor for them to take a partial payment as pay off it will ding your credit score AND the write off amount will be reported to the IRS as income. I think I would pursue this route of calling the creditors and arranging for a reduced amount pay off when you have the cash to do so. But just be aware that there are some hidden consequences.

 

[aasbra]

Honestly, hard to give you solid guidance or recommendations without a bit more information. Convo started.

 

[Member 24198]

Disagree.
Especially if you have the ability to pay more than the minimum.

That's the Dave Ramsey method. The Dave Ramsey method will cost you more in interest if you pay off the smallest amount as opposed to the highest rate first.

 

[Koda]

That's the Dave Ramsey method. The Dave Ramsey method will cost you more in interest if you pay off the smallest amount as opposed to the highest rate first.

I think theres several ways to do the "snowball "?

 

[Member 24198]

I think theres several ways to do the "snowball "?

The most common one that everybody quotes is Dave Ramsey. Yes, you are correct, you can make your snowball any way you want. That said, the basis of making a snowball is to use small snow to make a big ball. I don't know what kind of snow that you had as a kid, but I found jamming big balls together to not be as effective as gently rubbing it out slowly from a little ball.

 

[Stomper]

Dont take out equity on your house to consolodate.

If your affording your payments you can pay off the debit using the snoball method. Double up on the smallest loan, when thats paid off add that payment to the next smallest loan. And so on. Its a proven method that works.

That's how I did it. I no longer have CC balances, no mortgage, I have over 6 months of take home pay in a high-yield savings account for an emergency fund (my goal is 2yrs of take home pay), I pay cash for everything (or I don't do/buy it), and I live well within my means. My NET worth is now into the seven figures.

The hardest part was just getting started by paring away the "wants" ($10 coffees, buying lunch everyday, subscription services, etc) and HEAVILY (and constantly) evaluating/refining the "needs". Declutter your life as well, sell/give stuff away that you haven't even thought about for 1-2 years.

Develop a budgeting plan with reasonable and achievable goals (with your spouse if applicable) and stick to it! It really is a "multiplication application" that will accelerate over time as you faithfully execute it.

Managing finances isn't just a "simple math" equation, it's also rooted in the spiritual.


Act accordingly.

 

[arakboss]

I would have to "guess" maybe he is scared that those who can take a FAR cheaper loan and just wash away the high interest "may" run up more high interest debt then? Since if you do it the smart way and wipe out that high interest stuff you would still have great credit. So those who offer cards would of course be trying to tempt you to take their stuff. Not sure how much of that really expensive debt is just walked away from but, banks loaning out money at rated that are 5 or 6 times the cost to them to get the money? They have to be making some bank from doing this.

This.

Dave wants paying back the debt to be painful. This is suppose to discouraged the debtor from accumulating new debt.

Imagine you have a 10 year $5,000 heloc at 7%.
And you have a credit card balance of $7000 at 20%.
It would be foolish in my mind to pay off heloc first, while only making minimum payments on credit card balance.

 

[Alexx1401]

This.

Dave wants paying back the debt to be painful. This is suppose to discouraged the debtor from accumulating new debt.

Imagine you have a 10 year $5,000 heloc at 7%.
And you have a credit card balance of $7000 at 20%.
It would be foolish in my mind to pay off heloc first, while only making minimum payments on credit card balance.

Since this math is so simple I am starting to think a lot of people must not trust their will power. It can't be that hard to see how simple this is. So it must be many are afraid that paying off the plastic will just have them run out and charge away again? Does make sense I guess for those who just will not control the urge to keep buying stuff they don't have money for

 

[arakboss]

Since this math is so simple I am starting to think a lot of people must not trust their will power. It can't be that hard to see how simple this is. So it must be many are afraid that paying off the plastic will just have them run out and charge away again? Does make sense I guess for those who just will not control the urge to keep buying stuff they don't have money for

Been there, done that. I wish I could blame my debt on medical bills and a job loss. For me it was simply living beyond my means.

 

[Alexx1401]

Been there, done that. I wish I could blame my debt on medical bills and a job loss. For me it was simply living beyond my means.

Dude you are FAR, FAR, from being alone there. When banks started giving out plastic to damn near everyone a crap ton of people just could not handle it and get in trouble. Some smart ones learn from the mistake and don't let it happen again. So if you learned from it? Call it a win.

 

[arakboss]

Dude you are FAR, FAR, from being alone there. When banks started giving out plastic to damn near everyone a crap ton of people just could not handle it and get in trouble. Some smart ones learn from the mistake and don't let it happen again. So if you learned from it? Call it a win.

We'll see if I learned from it, once my wife cuts me free to run my own finances again. That is at least a year away.

 

[Member 24198]

Since this math is so simple I am starting to think a lot of people must not trust their will power. It can't be that hard to see how simple this is. So it must be many are afraid that paying off the plastic will just have them run out and charge away again? Does make sense I guess for those who just will not control the urge to keep buying stuff they don't have money for

Look at their government role model....

 

[Koda]

The most common one that everybody quotes is Dave Ramsey. Yes, you are correct, you can make your snowball any way you want. That said, the basis of making a snowball is to use small snow to make a big ball. I don't know what kind of snow that you had as a kid, but I found jamming big balls together to not be as effective as gently rubbing it out slowly from a little ball.

My guess is it could even be ran backwards, start with the largest debt bill, it would be very slow progress for a long while but the trade off is once the largest bill is paid off and those payments moved to the next smaller one the "snowball" starts rolling faster than the opposite direction. Regardless, the idea is you end up paying off the higher interest rates faster than just living with the minimum payment negating the interest rate.

I feel like there's a large part of your quote that would be fun to take out of context but Im not one to say...