What is the best way to lower my debt?

I have a consolidated student loan that's about 12,600 dollars. I also have credit card debts totalling around 9500. I have considered getting a loan from Primerica in December (that's when they will have a loan for people like me that don't own a home). I have also considered opening another credit account and moving all debts from other credit cards to it. My third option is getting a loan from a bank. I'm not sure what to do, since my friends don't seem to like Primerica all that much and I don't know much about bank loans or balance transfer on credit cards. My debt is not really that high, just over 21,000 total. However, I am having trouble paying bills, credit card minimums and part of my student loan minumum payment each month (I never have enough to pay the minimum all at once, so I'm behind). What is the best way for me to lower my debt without being severely poor each month?
Additional Details
Let me clarify: I am not living beyond my means because that is what got me in trouble in the first place. I am just trying to figure out what would be the better of the three choices I asked about. I can live paycheck to paycheck, but I'm trying to figure out if it would help me to consolidate my debt or not. I'm thinking balance transfers to a credit card is out, so which would be better, getting a loan from a bank or getting a loan from a financial service like Primerica? Or should I stay away from loans?

The risk with taking on new loans is that often, they end up costing you MORE than the loans they replace because of the term of the loan. (The other risk is that if you pay off a credit card, you're at risk for running it back up again and being worse off than you are now.)

You should only consider taking on a consolidation loan if both of the following conditions apply;

1 - The interest and the monthly payment on the new loan are both significantly lower than the interest and total payments on the loans/debts it replaces; AND

2 - There is no penalty for paying off the consolidation loan early.

If those conditions are both met, then you may be ahead by trading your existing debts for a single large one. However, to make this work, you need to pay more than the minimum on your new loan so that it doesn't end up costing you more, over the life of the loan, than you are currently paying.

However, you should also know the classic way to get out of debt as quickly and inexpensively as possible:

Rank all your existing debts -- your credit cards, student loan, car loan (if any), etc. -- according to their interest rates, with the highest rate as #1. That's your most expensive debt. (As an alternative: if your highest interest rate debt also has the highest balance, consider paying off your debt with the smallest balance first, as that will free up your monthly budget sooner.)

Then, do whatever it takes to modify your current expenses so that you can pay as much extra to debt #1 every month -- the object being to pay down this loan as quickly as possible. With luck it should only be for a short time, so consider even modest temporary hardships, it's for a good cause. On every other debt, pay just the minimum (or as much of it as you can).

Once you've paid off this debt, add that amount onto the monthly payment for debt #2 and pay IT down to zero. Then when it's gone, put that amount toward debt #3, etc.

Get the idea? For example, let's say you have four credit cards with minimum payments of $20, $25, $30 and $35, and that's the order in which you want to pay them down. You've also decided that by giving up one Starbuck's a week you can put another $15 a month into reducing your debt.

So this month you pay $20 + $35 to debt #1, for a total of $55. You keep paying just the minimums on the other three, as soon as you can. In ten months you've paid $550 on your debt #1; for the purposes of this example, let's assume that you get this card down to a zero balance, so it's time for debt #2.

If you recall, debt #2 has a $25 minimum payment. But you have $55 a month that you have been paying to debt #1, which is now at your disposal. So you pay $25 + $55, or $80, to debt #2. Maybe that's a larger amount, let's keep the math easy and say it's $1600, so it takes you 20 months to pay it off. But you do, and now you have that $80 at your disposal (not to mention any raise you hopefully have encountered in the next two and a half years).

Debt #3 has a $30 minimum, so you now have $110 to throw at it. And when it's gone, you can take that $110 plus the $35 a month that debt #4 requires and pay it off at $145 a month.

Get the idea now? From a long-term strategic standpoint, you're always best off to pay your highest-interest debt first because it's the one that costs you the most over time. However, you should be able to see from the example that paying your lowest-balance debt first may be better from a tactical standpoint, because it frees up that debt's monthly payment sooner. This gives you more to throw at your second and subsequent debts.

As another recommendation, if you don't already have a savings plan, consider this: after you've paid off debt #1, use only half of what you were giving it every month to pay down debt #2. With the rest, set up an automatic deposit into a savings account. Just have it put right into savings before you even see it, and then try to forget that it's there.

So in our example, you had been paying $55 a month to debt #1; when you pay off debt #1, consider putting half of that (oh, let's call it $25 a month) into savings. (It's even better if you have access to a 401(k) program at work, because you pay with pre-tax dollars and your employer usually matches you to some extent, but that's another topic altogether.)

The other tip: use personal finance software (I use Quicken) to manage your expenses. Not just for keeping track of what you've already spent -- the real power in a program like this is that you can enter future transactions as well. The program will update your balance as far into the future as you want to make entries, so you can see when you need to adjust a date or whether you can add a little more into a debt this month to pay it down faster. (And Quicken also has a debt reduction planner which will work with your exact figures for balance, interest and minimum payment, and it tells you exactly how much sooner you'll be debt-free if you can follow its recommendations.)

In any event, the main point behind this classic debt-reduction strategy is that you pay down one debt as quickly as possible, putting whatever extra money you have into that one account while just staying current with your other debts. Then you repeat this with the next debt, and the next, until at last they're all down to zero. Don't try to pay more than the minimum on more than one account per month; that only prolongs the agony.

Go to Oprah's website and check out her Debt Diet! It has some great information and plans on how to lower and get rid of debt.
http://www.oprah.com/money/debtdiet/money_debtdiet_main.jhtml

For the sake of your financial well-being, PLEASE get your head out of whatever hole it is in and REALIZE that you ARE IN FACT LIVING BEYOND YOUR MEANS. Reread what you, yourself are saying......... 1) you have credit card debt around $9500.00, 2) You are having trouble paying bills AND 3) you are having trouble paying the "minimum" credit card payments. Girl.... you ARE LIVING BEYOND YOUR MEANS.

You should sit down and write out a budget and LIVE BY IT. Include the very minimum payments that are required by each lender. Any "additional" money that you may have left at the end of each month (no matter how little it may be) MUST go towards paying off your highest interest account.

Call your student loan provider and ask if they can either rewrite your loan at a lower rate OR defer it for 12 more months. Do the same with the credit card companies.

Stop eating out. Cook more at home. Stay away from the dry cleaners. By yourself a good iron and start ironing your clothes. Limit your outings/entertainment to one Friday or Saturday night a month. You'll be amazed how much you WILL save. Possibly get yourself a part time job working evenings and/or weekends. Do all of this for 9-12 months and you will be amazed how quickly your debt will get paid down. Once it is paid off, DON'T use your credit cards UNLESS you know you can pay the balances off each and every month. And oh.... get yourself down to ONE credit card. Period.

Honestly, I can't stress enough how farrrrr beyond your means you ARE living.

mb

Can't you get them to lower your student loan payments? You can stretch that payment plan way out, so that your monthly payments are very small for a while, etc. Have you talked to your loan consolidator about that?

Don't borrow any more money. Try to go to a credit counseling agency in your city.Better one that is in your city.
I am in the same boat. They can lower your interest payments and combine all your accounts. You will then send a payment every month and they pay all your bills. You can't get out of debt by establishing a debt.

take on an extra job, cut your spending in half, and handle the small bills first then work on the big ones but make sure you cover rent and utilities first.

If you can't even make the minimums, there are two options. First, stop living beyond your means. Be poor and pay your debts. The other option is bankruptcy. I recommend adopting a lesser standard of living, pay the minimum to each one except the debt with the highest interest rate. Py as much as possible to that one until it is paid off, then go to the next highest rate. The problem with new cards and such is that the introductory rate will expire, and with most cards if you are late even once, the introductory rate ends and you end up with an even higher interest rate.

cut up your credit cards, stop spending, pay cash if you dont have the money for what you want right now save your money up then buy it if you get a loan your just putting your self deeper in debt

First call your credit card companies to get your interest rate lowered. If you threaten to cancel the card they will automatically offer to lower the rate.
Next transfer credit card balances to another credit card you already have which offers deals for transfering balances (like 0% financing on all balance transfers).
Once you are down to 1 credit card or just a few more than the minmum each month. Also stop using credit cards all together until debt is 0. This means do not buy your lunch, eat out at all, or even buy coffee or snacks. Do not carry any cash around and restrict yourself to only buying gas for your car to get to work or subway tickets to get to work. Take public transportation if you can (bus, subway).
Bring your lunch to work. Buy a small amount of food at the store and plan your week accordingly.
Dont buy any new clothes or shoes until your debt is gone or almost all gone.
Start being strict with your spending habits and pay off the credit cards as much as you can after you pay your rent, heat, etc.

Not to get you upset, but it sounds like you need to stop charging & pay off the old debt, because the interest will kill you alone.

I highly suggest you pick up a couple of books on finances. There is an excellent one out there called God's Plan for Your Finances. It will help you straighten things out. First of all you choose the smallest balance you have and start pecking away at it-paying the minimums on everything else-until it's paid off...then move to the next highest balance and so on. Really sit down and see where your money is going every month-you may be surprised at how much you "should" have left over.

No more loans get a second job!!!!!! Apply for scholarships everyday fastweb.com.!!!!!!

It depends on the interest rate of your cards and loans. First pick one credit card. One with the best interest rate, and use only that one. I would get the smaller ones paid off or put them on the credit card you want to use. Credit cards are a curse! If used wrong.
Your student loan should have the best interest rate/ if it does, don't transfer it or get another loan. After getting the others out of the way, you can make larger payments on the principal on your student loan.
I hope this helps

I know that my student loan place has options if you are having trouble paying them, call and find out what your options are. You might get a deferrment and while your student loan is in deferment, you can decide what the best way to handle your credit card debt would be without having to worry about the other loan. Plus you can pay more on your credit cards in the meantime. Thats what i would do anyway.

I think you need to go to legimate consumer credit counseling.

It has excellent various program . It will help to waive your fees and write letter to creditors to allow you to lower debt.
You can write a budget letter. You can apply credit union for helping you with consolidated debt . I am pretty sure that you will implement for better pay off debt. Try to sell stuff for garage sales, use coupons, discounted bargains. YOu neea diet debt, that's all.

know your income.
plan money management.
reduce unnecessary expenditure.
pay loans first , then go for savings.

do side jobs, increases income, lowers spending. Coupon shop, sell items you don't use regardless of attachment. I think it ultimately will come down to a lifestyle change. You can also transfer some debt to new cards with no APR on Balance transfers. Make sure you keep your oldest card active for credit reasons, but send some of that money to a new card, and pay it off while its there, as oppose to using the card for spending purposes. Good luck, I FEEL YOUR PAIN!!!

can u do a second job? I did for 2 years after my divorse and got all paid off. I would put the whole thing on one credit card at a time ;beginning with the lowest and then when all credit is paid put it all on the student loans, if the 2nd job not for you see a loan counselor, not conected with a bank,

The last thing you need now is MORE debt! Consolidate all your plastic and you'll probably wind up paying for half that.Two regular payments ( the student loan plus the consolidated plastic) are MUCH better than another loan!And the second after you consolidate the plastic lock it up and stick with your debit account. Pay for overdraft protection and keep up with budgeting. Peace and GOOD LUCK.OOOOOOOOOOOOOOOOOOOO

Vin

PS: if you have any jewelry or instruments or anything of serious value you have no personal or family attachments to and can sell,any collectibles, whatever, do so after you consolidate, get it paid off quicker.

I hope you will have a bright and success full future because we all deserve it. You will get great information from a person who cares and knows their stuff. May you reach the pinnacle of success and be kind to those less fortunate then you.

get rid of your credit cards and try to rebuild your credit. then once things are better you can bring a couple back into your life.

I was in a similar situation a few years ago; credit counseling was unable to help because I was too far into debt (about $27000) and was being sent court notices. Mine was all credit (no student loans) so I ended up getting a lawyer and filed Chapter 13 bankruptcy - that's where you pay back a fraction of your debt. Since you have a student loan, that will not qualify for bankruptcy but the credit cards do. Maybe you aren't too far into trouble and a credit counselor can help you by reducing the interest rates on your credit cards. It's worth a shot!

Shop around for a loan. Make sure that your terms are fixed and a lower APR than your credit cards - if not, forget it - it won't be worth it.

Ok, here we go....There are a few credit card companies out there that have SUPER rates for balance transfers. Some offer you 3% until you pay it off. I've received offers of 1% until it's paid off. That is for your credit card debt. That should help you gain some control over them.

Now, your student loans are another story. You have to make sure that you can get really good rates before you consider consolidating.

I know that isn't what you're looking for. You're looking for a consolidation. Remember this, when consolidating you're stretching out the payments of your credit card debts too. By finding the best credit card rate, separately you have a better chance of paying those off and getting those off your plate.

Good Luck.

quickest way to lower debt is to get a better paying job or marry a rich man.

you can get another loan with a lower interest rate; however, you still have to pay the loan.

think about how long it will take to pay off your $9500 loan. Even if you paid $100 per month, it still will take you 10+ yrs to pay it off.

Call Take Charge America. You should be able to find their number using 800 directory (1800-555-1212). They will charge you a monthly fee, but they will work with your creditors to lower your interest, lower your payments, eliminate late charges, and pay off your debt in a set time period. Here is what it does to your credit: while you are in the program, it will show up on your credit report as being in a debt reduction program. However, once you have paid everything off, that notation comes off your credit report. I did it and my interest rate went from 27% to 7%, which enabled me to be debt free in four years.

Paying off the bills worked for me. No morgage, No, car payment, No extras. . . . . Pay them off and you will be all set.

I would do a bank loan and get rid of the credit cards.

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.034
Copyright (c) 2011 Financial Crisis Sunday, May 27, 2012 - Terms of use - Privacy Policy