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k-diggity
stay classy.......
Member since 6/08 1332 total posts
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: )
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Re: Getting out of Debt...
I made a list of the the cc debt with the highest interest rate 1st and have worked down the list to the lowest interest rate -- paying off the high interest rate cards first is my advice
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Posted 6/23/09 9:40 AM  |
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MarathonKnitter
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Re: Getting out of Debt...
Posted by Christine
Posted by libby2595
think of the highest interest also being on the highest balance, you'll feel like it will take forever before you'll pay that. it can defeat you before you're out of the gate. where if you knock out a few small bills in the first month, you feel like you're winning.
If you can knock out a couple of small bills in a month or two, that's one thing. But it makes NO financial sense to leave higher balances with higher interest rates for last. That is literally giving money away which is counterintutive to paying off debt.
There are spread sheets that you can download that will calculate your total intersest expense based on the order you pay off your debt and there is a difference.
i'm not disagreeing that this makes NUMBERS sense. what i'm saying is that a good percentage of the people who have gotten into debt is because they weren't thinking NUMBERS to begin with. because if that were the case, they wouldn't be in debt. let's be honest with ourselves.
so... if that is the case, getting out from a mountain of debt will feel like quite a feat. just like dropping weight or quitting smoking. people in this position are USUALLY there because of reasons OTHER THAN the "issue". that is why an EMOTIONAL win is more important than a numerical win. at least the proverbial you, in this case, is at least STARTING to work towards a goal. the person can continue to make only minimum payments and THAT would SERIOUSLY be giving money away.
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| Posted 6/23/09 12:22 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: Getting out of Debt...
roll everything to a 0% card and pay one payment a month until it's gone. Don't use any other cards..debit and cash only.
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| Posted 6/23/09 2:11 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Getting out of Debt...
Posted by libby2595
Posted by Christine
Posted by libby2595
think of the highest interest also being on the highest balance, you'll feel like it will take forever before you'll pay that. it can defeat you before you're out of the gate. where if you knock out a few small bills in the first month, you feel like you're winning.
If you can knock out a couple of small bills in a month or two, that's one thing. But it makes NO financial sense to leave higher balances with higher interest rates for last. That is literally giving money away which is counterintutive to paying off debt.
There are spread sheets that you can download that will calculate your total intersest expense based on the order you pay off your debt and there is a difference.
i'm not disagreeing that this makes NUMBERS sense. what i'm saying is that a good percentage of the people who have gotten into debt is because they weren't thinking NUMBERS to begin with. because if that were the case, they wouldn't be in debt. let's be honest with ourselves.
so... if that is the case, getting out from a mountain of debt will feel like quite a feat. just like dropping weight or quitting smoking. people in this position are USUALLY there because of reasons OTHER THAN the "issue". that is why an EMOTIONAL win is more important than a numerical win. at least the proverbial you, in this case, is at least STARTING to work towards a goal. the person can continue to make only minimum payments and THAT would SERIOUSLY be giving money away.
Ok... don't take this personally and I know this Ramsey plan worked for you.
I am simply going to discuss Ramsey's take on this debt snowball.
(ok dislcaimer over)
Sorry but I don't buy Ramsey's concept on this (or a lot of things he "preaches"). A lot of his ideas are really dated, yet he refuses to change his tone or view because it would throw a crack in his armor and make him look stupid. His entire "credit is evil" standpoint is outright ridiculous.
But anyways, you either have the will to get out of debt, or you don't. Ramsey's logic behind this (to put it bluntly) is pretty azz-backward.
The whole point of getting out of debt is to do it as CHEAPLY and as QUICKLY as possible. So you paid off a small credit card for a small mental win. Whoppie freakin' do. What are you going to do when you have that last huge bill at 29.99%? If you are a weak minded person (the type that Ramsey likes to attract), you are going to have difficulty paying down that huge high interest debt anyways. At least if you take a stab at that high interest debt FIRST, you are lowering your total monthly finance charge.
Ramsey says small wins are supposed to boost morale. Big deal. Like I said, you know what boosts morale even more? Getting it paid off quicker.
Everyone says do the debt snowball worksheet. How about do a second worksheet with paying highest interest first and see how much you will save. That money you would save should be morale enough!
Take a look at THIS LINK
Doing it Ramsey's way costs you $1,380 dollars more in this example. That could have been $1,380 dollars more into that emergency fund that Ramsey so loves to promote (which I can agree with).
He wants you to push the emergency fund, but his hypocrisy behind the debt snowball makes his overall "Total Money Makeover" counter-productive.
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| Posted 6/23/09 2:29 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Getting out of Debt...
Posted by Blu-ize
roll everything to a 0% card and pay one payment a month until it's gone. Don't use any other cards..debit and cash only.
Yes and this is the advice I always like to give.
Only problem with this is, a lot of the people that need to get out of debt typically have bad credit that won't qualify for 0% offers. Or if you do qualify for a 0% offer, you never get a high enough credit limit to make it useful.
That's why you need to know about credit line reallocation/consolidation and which banks are willing to do this. If you have a high credit line on Bank Card A... and you apply for a 0% offer with the same bank for Card B and get a low limit... that bank may be willing to move the credit limit to the nice promo card!
Banks that are willing to move credit lines between cards:
Bank Of America (no doubt the best bank for this - every CSR can do it and they even promote/suggest it).
Discover (usually not a problem)
National City (you need to fill out and fax a reallocation form last time I checked)
Barclays/Juniper (call their credit department)
US Bank (I believe they do this but don't hold me to it)
Chase (although I think recently they are starting to NOT do it)
Citibank (difficult - but if you get the right CSR they can do it)
I also recommend getting a business card. 0% business cards are even better than personal cards. You dont need a business to get a business card a lot of times. Just tell the bank its a new business with 0 revenue (do a sole-propritorship).
Most business accounts DON'T report on your personal credit report. So if you have say a 30k CC balance showing on your credit report (and hurting it). Balance transfer that balance to a business card and that balance disappears from your credit report and "hides it" which will increase your scores. Qualify for better loan terms (like a mortgage) this way!
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| Posted 6/23/09 2:49 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: Getting out of Debt...
B of A did that for me. I didn't know about the business account. How do they check your credit if you don't have a legit biz with a tax id number?
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| Posted 6/23/09 3:16 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Getting out of Debt...
Posted by Blu-ize
B of A did that for me. I didn't know about the business account. How do they check your credit if you don't have a legit biz with a tax id number?
Just tell them it's a sole proprietorship and ask them to use your SSN and HHI to get the credit.
Two years ago chase gave me TWO 25k limit credit cards for my "business" that made no money and was just opened. 
They are probably more strict with their credit now, but you can very easily get a business credit card with good personal credit.
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| Posted 6/23/09 5:47 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Getting out of Debt...
Also *some* banks will even let you move personal credit card limits to business cards. But none will let you go business to personal.
I have a Chase business card with a 73k credit limit thanks to some crafty reallocating.
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| Posted 6/23/09 5:50 PM |
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Mommy2Boys
My Boys!!!!
Member since 6/06 14437 total posts
Name:
C
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Re: Getting out of Debt...
Posted by ave1024
Posted by Blu-ize
roll everything to a 0% card and pay one payment a month until it's gone. Don't use any other cards..debit and cash only.
Yes and this is the advice I always like to give.
Only problem with this is, a lot of the people that need to get out of debt typically have bad credit that won't qualify for 0% offers. Or if you do qualify for a 0% offer, you never get a high enough credit limit to make it useful.
That's why you need to know about credit line reallocation/consolidation and which banks are willing to do this. If you have a high credit line on Bank Card A... and you apply for a 0% offer with the same bank for Card B and get a low limit... that bank may be willing to move the credit limit to the nice promo card!
Banks that are willing to move credit lines between cards:
Bank Of America (no doubt the best bank for this - every CSR can do it and they even promote/suggest it).
Discover (usually not a problem)
National City (you need to fill out and fax a reallocation form last time I checked)
Barclays/Juniper (call their credit department)
US Bank (I believe they do this but don't hold me to it)
Chase (although I think recently they are starting to NOT do it)
Citibank (difficult - but if you get the right CSR they can do it)
Chase does NOT move balances between cards. I have had 2 Chase cards for years and was trying to transfer a balance from one card to the other card with the lower interest rate and they turned me down several times. I even spoke to a manager, etc.
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| Posted 6/24/09 9:45 AM |
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dani731
Blessed!!!
Member since 1/08 3355 total posts
Name:
D
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Re: Getting out of Debt...
Posted by ave1024
Posted by Blu-ize
roll everything to a 0% card and pay one payment a month until it's gone. Don't use any other cards..debit and cash only.
Yes and this is the advice I always like to give.
Only problem with this is, a lot of the people that need to get out of debt typically have bad credit that won't qualify for 0% offers. Or if you do qualify for a 0% offer, you never get a high enough credit limit to make it useful.
That's why you need to know about credit line reallocation/consolidation and which banks are willing to do this. If you have a high credit line on Bank Card A... and you apply for a 0% offer with the same bank for Card B and get a low limit... that bank may be willing to move the credit limit to the nice promo card!
Banks that are willing to move credit lines between cards:
Bank Of America (no doubt the best bank for this - every CSR can do it and they even promote/suggest it).
Discover (usually not a problem)
National City (you need to fill out and fax a reallocation form last time I checked)
Barclays/Juniper (call their credit department)
US Bank (I believe they do this but don't hold me to it)
Chase (although I think recently they are starting to NOT do it)
Citibank (difficult - but if you get the right CSR they can do it)
I also recommend getting a business card. 0% business cards are even better than personal cards. You dont need a business to get a business card a lot of times. Just tell the bank its a new business with 0 revenue (do a sole-propritorship).
Most business accounts DON'T report on your personal credit report. So if you have say a 30k CC balance showing on your credit report (and hurting it). Balance transfer that balance to a business card and that balance disappears from your credit report and "hides it" which will increase your scores. Qualify for better loan terms (like a mortgage) this way!
AMEX does this too but each card has to have a minimum limit of $500. I did this a few years back.
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| Posted 6/24/09 11:42 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: Getting out of Debt...
Posted by Blu-ize
roll everything to a 0% card and pay one payment a month until it's gone. Don't use any other cards..debit and cash only.
This is what I did when I eliminated all my credit card debt while I was in law school. I consolidated all my debt onto a 0% interest card, and paid it all off within a year, that way I wasn't paying ANY interest. The key is to not use any of the other cards during this time - only cash and debit.
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| Posted 6/24/09 12:05 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Getting out of Debt...
Posted by jellybean1420
Chase does NOT move balances between cards. I have had 2 Chase cards for years and was trying to transfer a balance from one card to the other card with the lower interest rate and they turned me down several times. I even spoke to a manager, etc.
I am not talking moving balances. I was talking moving credit limits, which they were able to do... up until recently.
I dont know of any bank that will move an actual balance from one card to another.
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| Posted 6/24/09 2:28 PM |
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Erica
LIF Adult
Member since 5/05 11767 total posts
Name:
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Re: Getting out of Debt...
Posted by ave1024
Just tell them it's a sole proprietorship and ask them to use your SSN and HHI to get the credit.
How do you determine your HHI?
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| Posted 6/24/09 9:34 PM |
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jillee03
LIF Adult
Member since 8/05 953 total posts
Name:
Jill
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Re: Getting out of Debt...
I know there was a website posted about (i believe) ramsey plan of getting out of debt, can anyone repost
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| Posted 10/13/09 11:28 AM |
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Re: Getting out of Debt...
If you google Dave Ramsey, you will definitely find his sites.
I posted a blog entry several months ago to explain my views about Dave Ramsey. My issue is not with the economics of it, rather that I feel that Ramsey has been a hypocrite, speaking out against bankruptcy and then marketing materials for sale specifically to people in bankruptcy and to bankruptcy attorneys. Also, he has filed bankruptcy himself. Most plans to get out of debt will work if you stick with them and cut spending. If you keep accumulating more debt, most plans will fail. Sure, some ways of getting out of debt are more costly than others but if you find a way that you can stick with, it is great to give yourself a fresh start. My BLOG
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| Posted 10/13/09 1:38 PM |
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