I’ve got about $12k in credit card debt spread across 5 cards. My credit score is usually between 650-700. I’m currently paying $420 a month to cover the minimums or a bit more. I’ve been living in a van or with family for years to save money but will need to start paying rent soon. I don’t earn much—around $20k in a good year—and I’m okay with that since I value my work-life balance. I’ve heard about debt consolidation and bankruptcy but don’t know if they’d help in my case. I just want to make my payments easier to handle without giving up my lifestyle. Any advice?
You’ve got two options: spend less than you earn or earn more than you spend.
Riley said:
You’ve got two options: spend less than you earn or earn more than you spend.
That’s straight to the point.
Riley said:
You’ve got two options: spend less than you earn or earn more than you spend.
It’s not that simple. I’m asking if debt consolidation or bankruptcy are better options. Times are tough.
@Tan
Debt consolidation and bankruptcy only help if you also fix your spending or earning habits. Otherwise, you’ll end up back in the same situation.
Riley said:
You’ve got two options: spend less than you earn or earn more than you spend.
I’ve actually been living within my means lately. I just want to free up a few hundred dollars in my budget so I don’t have to rely on credit cards anymore.
@Tan
So technically, I’ve fixed the spending issue. Most of my debt came from necessary expenses like education, rent, food, and gas. I’m just trying to make my income stretch further now. I get what you’re saying, though!
What’s your interest rate? If it’s low, like 5%, just keep paying the minimums. If it’s higher, try refinancing to get a lower rate. If you can’t, focus on paying it off.
Winter said:
What’s your interest rate? If it’s low, like 5%, just keep paying the minimums. If it’s higher, try refinancing to get a lower rate. If you can’t, focus on paying it off.
My rates are terrible—between 18-28%. Any recommendations for refinancing? I’ve never been offered anything below 5%.
@Tan
Look for 0% APR cards with a promotional period. Transfer your balance and keep rolling it over until you pay it off. Inflation eats into debt over time. Just avoid paying high interest.
Winter said:
@Tan
Look for 0% APR cards with a promotional period. Transfer your balance and keep rolling it over until you pay it off. Inflation eats into debt over time. Just avoid paying high interest.
I’ve been doing that, but my credit limit doesn’t always cover everything. Might still be my best bet, though.
@Tan
$12k isn’t a huge amount to manage. If you get a low enough rate, it’s fine to take your time paying it off.
A personal loan could help you pay off the credit cards and get a lower interest rate. Check out Lending Club or similar options.
Zara said:
A personal loan could help you pay off the credit cards and get a lower interest rate. Check out Lending Club or similar options.
Thanks for the tip! My current rates are awful, so this might be worth looking into.
@Tan
Credit unions are another option. They often have better rates and are more willing to work with you. Navy Federal is great if you qualify.
Zara said:
@Tan
Credit unions are another option. They often have better rates and are more willing to work with you. Navy Federal is great if you qualify.
I have a card with Liberty FCU but only a $500 limit. I’ll check with them though!
@Tan
It’s a good starting point. Credit unions value relationships, so if you’ve been consistent, they might approve you for more.
Zara said:
@Tan
It’s a good starting point. Credit unions value relationships, so if you’ve been consistent, they might approve you for more.
Would they consider it even if my direct deposit goes into a different bank?
@Tan
Not usually. You could set up a recurring transfer from your current bank to your credit union to mimic a direct deposit.
Do you understand what bankruptcy involves? You’re usually only allowed about $2000 in total assets, including your car and belongings. Legal fees are around $2000, and they’ll dig through all your financial records. It’s stressful. Your best bet is to focus on paying down your debt. That interest adds up fast.