Debt consolidation company recommendations please

[arakboss]

It makes little sense to not lower your borrowing cost if possible. Sure you can do all the other things like working extra jobs, selling your stuff, eating rice and beans, etc. You can still do all those things and lower your borrowing cost at the same time.

Let's say you're struggling to buy groceries every month. You call Dave Ramsey for help and he tells you to get more employment income, sell your stuff and eat less. You mention you found an option to buy groceries elsewhere for less money. Would he say no don't switch to a cheaper grocery store, just do all the other things I told you to do? Probably not.

Don't pay higher interest cost, if you can avoid it.

 

[Jay Walk]

It's almost perfect, but it's not exactly for everyone. For example, I was telling my friend, they have a household income somewhere between $150k and $175k, that the Ramsey method, similar to what you just espoused, doesn't necessarily apply as much if you have higher income.

For example, I can make more off of investments than I can paying off my house early.

Making $150,000 you can pay off the house early.
It's math.

The interest spread is what people use to justify debt.

Debt has been normalized and even celebrated.

 

[Member 24198]

Making $150,000 you can pay off the house early.
It's math.

Depends. With most people, myself included, when you make more money, your tastes increase.

 

[Jay Walk]

Depends. With most people, myself included, when you make more money, your tastes increase.

How very true.
Been there, done that.

 

[Member 24198]

How very true.

That said, my rate is 2.75%, and I pay $800 more than the minimum each month, which will cut off about ten years on a thirty year note.

 

[VinnieBoomBah]

The advise you get from folks like Dave Ramsey and Suze Orman is tailored for a very narrow section of the population, folks that have enough money to pay off their debt but need to be yelled at before they do the right thing but also like buying stuff from people that yell at them
If you don't fit in that group the advise will likely not be the best choice for you

 

[Member 24198]

The advise you get from folks like Dave Ramsey and Suze Orman is tailored for a very narrow section of the population, folks that have enough money to pay off their debt but need to be yelled at before they do the right thing but also like buying stuff from people that yell at them
If you don't fit in that group the advise will likely not be the best choice for you

You don't have to buy his stuff to take the lesson to pay off your debt to heart.

I didn't know this until recently, but some people make snowballs by starting with big to make bigger.

 

[joeyou]

My advice is this: Don't take advice from broke people. Dave Ramsey's method is sound. Consolidating debt or taking a home equity loan is stupid and puts your house at risk. By the way, I am 100 percent debt free and far from broke.

 

[Alexx1401]

Look at their government role model....

I have said for a while that is a BIG part of the problem. People watch the gov spend like there is no end no matter what. Between that and how easy it is to just walk away from debt if it gets out of hand. So few really feel much pain from doing this.

 

[joeyou]

The advise you get from folks like Dave Ramsey and Suze Orman is tailored for a very narrow section of the population, folks that have enough money to pay off their debt but need to be yelled at before they do the right thing but also like buying stuff from people that yell at them
If you don't fit in that group the advise will likely not be the best choice for you

Not true at all. Most people don't live below their means. You either have to earn more, or spend less, or both. Dave Ramsey's advice works for all people - unless your'e like 75, disabled and unable to work, and deep in debt.

 

[gtivan]

Okay, going to offer advice rather than a personal story as I did before. We dont have enough information for advising on the best option for consolidation. Nor should we. For that, what is gross income, how much is your debt, across how many cards, and how much extra can you put to it. Without those variables and a few more, no one can say what a good route is.

Your thoughts on "too much" could be $5k where mine is $50k. 2 very different scenarios on how to handle.
Based on the amount and how long it will take top pay off, a home equity loan may be the best route.
Or just one of those zero interest credit card offers for a year..... It is up to you to verify and run the numbers. Run the numbers on all scenarios open to you and whatever results in the quickest pay off is the route you should take. It may not be the lowest interest rate, and it may be a loan that you have to pay a fee for to acquire. Just get the numbers and play with your options and choose what you are most comfortable with. Leave room in the payment plan just in case life happens again. You can always make extra payments, but if minimum payment is the mandatory amount of your flexible income then you have no room for life putting you on your head and fewer options to recover.

Like you said, this is a 1 time occurrence. So dont be afraid of a home equity loan if the numbers show that is the best route.

btw, tax hint since you said a portion was medical.
i have used this a couple of times for friends when i do their taxes. It is unfortunate when it happens, but life happens, ya know?

https://www.irs.gov/pub/irs-prior/i1040sca--2023.pdf

You can deduct only the part of your medical and dental expenses that ex- ceeds 7.5% of the amount of your adjus- ted gross income on Form 1040

 

[Jay Walk]

The OP states that he (they) currently have a "Good monthly income"
I take that to mean there's more money each month than bills.

I did the home re-fi in 2009 to lower monthly bills while wife quit her job and went back to school.

Everything worked out, but I would not recommend this as sound financial advice.


Everybody's situation, goals and risk tolerance is different.

Debt is risk.

 

[BAC19]

I was stupid and got in credit card debt some years back. I followed the Ramsey plan and paid off debts smallest to large until the only thing I had was my home mortgage. I did the beans and rice thing, sold what I could, and worked extra hours.

I've been there and there is nothing more freeing than getting out from under that debt. I wouldn't recommend a HELOC (home equity loan - your home is your biggest and best asset and you're just trading debt for debt). Ramsey has a website you can peruse for free. I don't agree with him on everything but paying it off, starting with the smallest to largest worked. It's encouraging to see it get whittled away.

I'll keep you both in my prayers.

 

[arakboss]

I am not trying to talk the OP out of paying off his debt as quick as possible but I hear this often:
"I've been there and there is nothing more freeing than getting out from under that debt."

I have accumulated debt, paid it all off, accumulated debt again, paid it all off, many times. I never felt that exuberance of freedom that others have. Same story with weightloss for me.

If I was making three times as much money at my current job, that would give me a greater sense of freedom than paying off the $6000 of total debt I have left.

If I was on Dave Ramsey's show to do a debt free scream it would probably go like this. Whoopee-do I am debt free again.

 

[joeyou]

I am not trying to talk the OP out of paying off his debt as quick as possible but I hear this often:
"I've been there and there is nothing more freeing than getting out from under that debt."

I have accumulated debt, paid it all off, accumulated debt again, paid it all off, many times. I never felt that exuberance of freedom that others have. Same story with weightloss for me.

If I was making three times as much money at my current job, that would give me a greater sense of freedom than paying off the $6000 of total debt I have left.

If I was on Dave Ramsey's show to do a debt free scream it would probably go like this. Whoopee-do I am debt free again.

With the Ramsey method, the whole idea is to never go into debt again. That is a huge feeling of freedom...trust me, I know.

 

[hongkong2]

That said, my rate is 2.75%, and I pay $800 more than the minimum each month, which will cut off about ten years on a thirty year note.

Do you make two separate payments and note that one payment goes towards the principal only?

 

[Member 24198]

Do you make two separate payments and note that one payment goes towards the principal only?

I "push" money from my checking account to my mortgage. It automatically gets added to the principal.

 

[crstrode]

Borrowing money to get out of debt . . . that is really rich.

Perhaps you could invest in some Florida swamp land.

 

[Koda]

Borrowing to get out of debt is a symptom of a larger cause. Best thing to do is hunker down and pay off the high interest debt separately, then use those funds to build an emergency fund to handle those unplanned expenses that life throws at us, a years worth of mortgage payments including utilities is a good buffer to keep around. This addresses the underlying cause of getting into higher interest debt in the first place. And your house investment will be less at risk of going upside down if the market changes. Never borrow against your house.

 

[Jay Walk]

I never felt any different paying off debt, not even the mortgage, my life did not change. I was just on to the next thing, like chimney repair, pad the savings, increase investments etc... we spend less now than ever. Wife is different, she was super stoked to get the home loan done and was thrilled to pay off her new car when it hit 1,200 miles on the odo.