Consolidating credit card debt 101

Start on Chapter 7

Step #1 -- Cut up your credit cards.

1. Stop spending

2. Earn more-get a part time waiter/bartender/hosting gig

3. Pay off the highest interest rate card first- make minimum payments to others

4. NEVER let this happen AGAIN!

I guess it was intentional, (not from an older generation)

Step 1: Ad on rentmen.com ...

It is wise to pay off the highest interest rate first. If you have several cards that are around the same rate, you may want to pay off the smaller balances first. It helps psychologically to have one less bill come in the mail. Rinse and repent.

repeat

Call Greenpath Debt Solutions. They are online and a national nonprofit that helps with these things. They are government aporoved. Talk to them.

OP, this is important: Do not pay the full amount you owe. Call the credit card company and tell them your situation. If you owe $8000.00 offer them $3500. Repeat. I did this and I was very surprised at how low some companies were willing to go.

R9, my understanding is that CC companies will only cut you a break if you are already behind in your payments, if you are current they are not going to cut your debt just because you ask. Unless your experience is different.

I'm poor and I'm about to quit my dead end job for a life of uncertainty. But I'm proud to have never been in any kind of debt in my life, not just credit card debt, but even owing a friend like 20 bucks. I'm terrified of debt.

R11, I understand your feelings but you do need some debt if only so you can have a credit rating, which helps you get apartments, cars, and even a job. I'm like you that I don't like debt either but I do have it and a good credit rating so I can navigate the things I need in day-to-day life.

Also, please find another job first before you quit your current one. I hate my job, too, and looking but won't quit first because they're just too hard to find.

What worked for me was to:

1) Pay only the minimum on all your cards EXCEPT the lowest balance card. Pay as much as you can on that card until it's paid off. That way, you'll eliminate one bill and feel like you're accomplishing something.

2) Move to the next lowest balance card and do the same. Keep going until you're down to one card.

3) Here's the hard part: While you're doing all this, DO NOT charge anything new. Forgo trips, purchases, gifts, etc. Take all the cards out of your wallet. If you live in the city and don't need your license to drive, leave your home with just cash and your transit card. Impulse purchases will kill you. Set up a budget and stick to it. Pay cash for everything (or ATM card). Eliminate superfluous items. Do you really watch Showtime and HBO? Cancel them. Daily trips to Starbucks? Buy a single-cup pour-through Melitta cone for the office. Saving $5 a day on coffee = $25 a week. Every Friday take that money and make a credit card payment electronically. Money left in your account on payday? Don't go out to a fancy dinner, instead make a payment on a credit card. (When I did this, back in the '90s, you had to mail a check, now it can be done in minutes online).

4) Enlist your friends' help. You don't have to tell them a dollar amount, just say you're skipping gifts until you get your finances under control. If they're really your friends, they'll understand. If you want to give them somethime over the holidays, bake cookies. They'll enjoy those more than something that'll get shoved into a drawer somewhere and forgotten.

5) Be patient. It took you years to get into debt, and it may take you years to get out (it did for me). But it's worth it.

If you still have good to excellent credit, OP the most economical way to consolidate is to transfer current card debt to a "0% interest for X months" account at another credit card company.

R11, debt can be your friend if you know how to manage it correctly. The richest people in the world incur debt.

However, incurring debt for something that is not going to generate more income than the debt plus interest is insanity. This is basically all of consumer debt. Don't do it. Don't buy something unless you can't pay in cash, with of course a few exceptions (high ticket items you literally NEED but can't pay for in cash such as a car or house).

Wish there was an edit button. unless = if of course.

You might try a Debt Management Program through a reputable sources like CCCS or NFCC. They'll offer you a free credit counseling session and will devise a plan within a set number of years to have your debt paid off. They will negotiate with your creditors to lower your APRs and/or agree to a pay off amount. CCCS will calculate a set monthly payment to remit to them (including a small fee for their services) and then they will pay each of your creditors monthly. You will still receive statements from the creditors each month as you normally would so you can monitor the monthly payments made on your behalf. The catch is that you can no longer use those cards and they likely they will be closed when the debt is paid. This would be an option to pursue before considering bankruptcy if you can still afford to make monthly payments. Granted, this does have an impact on your credit scores in the short term, but it's nowhere near as damaging as a bankruptcy.

Yes, R16. We're all going to digging to find where "unless = if of course." belongs.

R11 apparently plans on never owning a house.

Never just pay the minimum, this is a flag to the credit card companies that you are in trouble and they will cut your credit limit. Always pay ten or twenty more than the minimum.

CC companies usually will not negotiate with you on debt. They have nothing to gain by cutting the debt before you're behind, after all they can't ding your credit report till then.

If the amount owed is under 10 thousand, that's a second job. If it's between 10 and 20 consider bankruptcy. If it's over 20K definitely look into it. Don't be ashamed of bankruptcy, it's just a tool. Corporations use it all the time even if they don't need to really.

R15 What could you go into debt for that would make you money?