Paying off Debt

A year ago I read the book by Dave Ramsey, Total Money Makeover. We are following his steps and we are making real headway in our debt. Our credit card was $11,300 a year ago and we paid it off in September. The first step is to save $1000 in savings, so if you do have an emergency, use that money instead of using your credit card. List your debts in order from smallest balance to highest balance. Pay minimum on everything except for the lowest balance debt. Put a budget into place and pay any extra money you have towards debt #1. When debt #1 is paid off, take that minimum payment from debt #1 and put it towards debt #2 plus any extra money you can find in the monthly budget. Keep doing this "snowball" and by the time you get to your last debt, you are putting a huge amout toward that debt and it will be paid off in no time. If any time an emergency comes up and you need to use the money in savings, stop the debt snowball and pay minimum on everything until your savings account reaches $1000 and then continue on with the debt snowball. I recommend you read the book as there is a lot of other financial information in the book. Personally I myself wouldn't use a debt counselor because it would affect my credit. Also check out www.daveramsey.com for some information. I bought on his website his personal finance software and it has lots of forms on it and our favorite thing we use on is is the debt snowball. (https://beta.daveramsey.com/shop/downloads/software//prod... ) You can list all your debts, the interest and the term and it will tell you by using the debt snowball when you can be completely debt free! Ours says the year 2020, 14 years sooner than if we were not using the debt snowball! We are living proof that this system works!! Good luck in whatever path you choose:)

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I saw someone else who recommended cccs, and I can't tell you how wonderful they were. There were no hidden fees! They negotiated with the credit card companies and reduced all rates (except Sears, who wouldn't go for it!!!???).

Once I paid everything off, my credit was stellar. The mortgage company was impressed.

Here is the site for MD and DE, and they list other locations. http://www.cccs-inc.org/about/locations.html

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J. I am a financial consultant. Be careful with some of these companies. Most of them have hidden fees. Sometimes you will be paying more than you already are. Also if the debt is old, like over a year, it probably has been written off by the creditor and you really don't owe it.

Consumer Credit Counseling is the worse program you can get into. Not only do they add an extra 10% a month to your present debt, once you pay your debts off, it shows like you filed Bankruptcy on your credit report.

Best Wishes.

J.

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J.--

I know you have to beware with many of these companies. I have heard great things with the consumer credit counseling of Atlanta, GA. Here is what a website says about them:

About CCCS of Atlanta
Consumer Credit Counseling Service of Atlanta is a nonprofit, community service agency dedicated to empowering people to achieve a lifetime of economic freedom. CCCS Atlanta provides free, confidential budget counseling, community and personal money management education, debt management programs, and comprehensive housing counseling. Contact CCCS Atlanta by phone at 1-888-771-HOPE (4673), or visit the Web site.

I have heard great things about them, particularly.

Also, I have found Dave Ramsey, Mary Hunt(www.debtproofliving.com) and www.crown.org to be great resources to help with budgeting and debt elimination. My hubby and I got married 4.5 years ago, and we had between us $24K in car loans, and $8K in credit card debt. We now have paid those off entirely, have a good emergency savings account going, and have the tools necessary to live within our means. It takes work, but it can be done. Good luck on this journey.

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Hey J.! I would first beg you to call a guy we know very well. His name is Chad Carlstrom and he works for a company that has very similar plans and ideal as Dave Ramsey. They are wonderful people and its a great company. I believe he will meet with you for free and tell you the best route to debt elimintation. HIs # is ###-###-####

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What a huge red flag your post raised up before my eyes!! Lots of companies out there, more popping up every day, only take advantage of people who have poor credit. They are only predators looking to rip off people who don't have enough financial sense.

First, stop using your credit cards. In this era of high interest rates, maybe you should phone your credit card companies and close the accounts so they do not raise your rates even higher. Most of the companies will allow you to pay off the debt under the present agreement. You just cannot charge on the account any longer.

Another thing is that you can often negotiate rates with credit card companies. While I carry a balance on my cards because I went through a rough patch, I pay each month on time and when my credit card companies wanted to raise my rates, I called and said I'd rather close the account than pay higher rates. They dropped the rates to keep my business.

If you do decide to work with a credit counseling service, I recommend ONLY Consumer Credit Counseling Services. They are reputable and honorable, not predators out to rip you off. The credit card companies actually pay to keep this organization in business. I've never worked with them, but I know people who have done so and they have only positive things to say about them.

Those companies that offer to "repair your credit" are to be avoided at all costs. They are the predators' predators.

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If you want to control your credit card debt throw away your credit cards right now. You may want to look up Dave Ramsey as well http://www.daveramsey.com/, He has helped millions get out of debt.

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What I have found that worked the best for my family was the following. Choose your debt that has the highest interest and work to pay it off first (say a credit card at 15% interest) pay your minimum payments on everything else. Pay at least 2 times the minimum on that highest interest one (if minimum is 25 then send at least $50 but send as much as you possibly can). Once that card is paid off then you pick the next highest interest building debt. Take the amount you were paying toward the card you just paid off and add it to the amount you have been sending for this card. For example if you were sending the minimum $25 for the 2nd card and $50 for the first then when the first is paid off you would start paying 75 to the 2nd (or if you have been sending more you send more for the second). You continue doing this until all of your debt is paid off. To continue once the 2nd card is paid off you take that entire amount ($75) and add it to your next card. So if you are doing the minimums like in my example above then you would send $100 per month for the 3rd card and $125 by the time you are paying off the 4th one. As you pay off each card also you should close them and cut them up. No household needs more than 1 or 2 credit cards to fall back on in emergencies. This method can also be used to pay off car loans or even house mortgages. Once you pay off the higher interest debt then add that amount to your car or house loan. Hopefully that makes sense to you. You will really be surprised how quickly you can get things paid off doing this method. Don't fall into the pit of well now that I have one card paid off, that is extra money I can buy stuff with. Make your money work for you not against you. I got this method from a booklet called "One for the Money" It is put out by the LDS church. If you need more information about it (or want me to send you the pamphlet) just let me know.

Oh and by the way, you can negotiate with the credit card companies just like the debt counseling places do. Don't ruin your credit and let someone else be in charge of your money when you can do it yourself and be independent!

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J.,
I work in a bank and really you might want to call the credit card companies directly first to see what you can negotiate. They want you to pay and not have to send you to collections because it costs them more money. If you work with a financial company it may go against your credit scores and be counter productive. Find out what credit card is the oldest one and keep it and then plan on closing maybe only one or two depending on how many you have. Remember that if you close the oldest one it changes when you started to establish credit and that too will be negative to your score. You can also do roll up pay. Do what you can to increase your payments on the card you owe the least amount of money on and pay it first. Then when that is payed off take that money and add it to the payment of your next lower amount owed. If you do this then you will be paying things off faster without changing the amount money you are currently budgeting for your credit card bills.
Hope that helps.

N.

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Good for you - we did the Dave plan and it took us 22 months to get rid of $50K in debt.. now we only have our house to pay off and a 6 month emergency fund! The total money makeover changed our lives- our marriage- our future.
If you go to the website and listen to his show- on computer while you work (I like to fast forward the commercials) you can hear people call in with stories and he walks them through step by step- and it is free!!!! OR
In our area he is on radio from 1-4pm- check hi site for nearest radio station. I cannot tell you enough how much we love this plan- oh we also took the FPU course at our church for $100- it rocks- he talks real estate- investing- life insurance- we leanred about so much more than just getting on a budget and paying off debt. Totally worth the $100!!! Check him out LIVE too if you get a chance!? We just bought a used mini van with cash last FALL and let me tell you we are excited about the market right now- we are investing in stock at garage sale prices- it will come back - we won't need the $$ for 25+ years anyway!? Think about it-- THIS IS THE BEST TIME TO BUY A HOUSE!!! If you can do it right - with 20% down to avoid PMI and then keep a 15 yr note only and work to pay that off as fast as you can?! Dave has a saying, maybe you have heard it," You know what you can do if you don't have any payments.. NONE?? About anything you want!" I am so lookign forward to real vacations paid with cash (we are saving for Disney next year) and vehicle purchases with cash for th erest of our lives! It is about more than just paying the debt- it is about taking control of your family's future and changing it forever!! I think this budget/ save/ spend plan of Dave's could seriously change our whole society!!

If only there were a CONGRESS edition... hmm..

BLESSINGS to YOU And your family! K.

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Hi J.,
My name is C.. I just wanted to let you know that I am also working on paying down my personal debt. I work with an international wellness company who is debt free so when I began with this company they encourage all of their employees and Marketing staff to become debt free. They even hosted seminars with Dave Ramsey and encouraged their people to take the Total Money Makeover challenge. I would suggest to you the book by Dave Ramsey as well as his website www. totalmoneymakeover.com. It has really helped me by giving me simple strategies to help myself get out of debt.
By the way if you ever want to work at home and work for a GREAT team and Company check out my website www.momvision.org.
Also if you ever have any more questions you can email me at ____@____.com

Have a great day

C.

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I have one friend who did this successfully and another who is in the middle of it and having trama after trama. I have personally pulled myself out of major debt three times. My biggest was over $20K. After that, I catch it before it's so out of control. I've read Suze Orman quite a bit and I agree with her theories, but the one who gave me GREAT advice and actually gave me step by step instructions was David Bach whose first book, Smart Women Finish Rich was my financial salvation. It takes a long time and you have to be smart about your finances forever, but it's so worth it. I've also started using YNAB (You Need A Budget) to keep things under control. You can preview it at www.ynab.com

I'd be more than happy to PM about this topic, too.

Best of luck.

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congratulations on using Dave Ramsey!!!! suggestion: cut up all but one credit card and then NEVER let it go beyond one month....always pay it off in that month! Be sure to include your kids in all the financial decisions. It will be like a "classroom" for them. You will be the teacher AND the learner. Then make them do the same with their money. Also, besure you are giving to your church EVERY month. If you are not familiar sith tithe....read up on it. IT WORKS!!!! God bless your family.

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J.,
My mom used work for a company that does this. In Montana its called Consumer Credit Counseling Service. They help!! I have never heard one bad thing about CCCS but am unaware of where you are located in Idaho. http://www.cccsnid.org/
There is the link to the website that I could find for you. I know that they are the same company maybe they could direct you to the one closer to your area if this doesnt work. Good luck.
J.

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I've heard so many bad stories about those places. Maybe you could look into other methods? Like Suze Orman's books or something.
I found this online, and it's only good until tomorrow, so hurry and download it. Oprah's website is offering a free Suze Orman eBook about finances.
http://www.oprah.com/article/oprahshow/20081119_tows_bookdow nload

There are other links to Suze's advice, like how much to save every month, and how to get out of debt faster. check it out!

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Hi J.,
DON'T DO THIS! First of all, you can negotiate with the creditors themselves, and most importantly go over your finances and create a budget so your money is spent on paper before the beginning of the month! Have you heard of Dave Ramsey? He has a radio show, web sight and books( Financial Peace is the first and best book for starting out). There is also "Financial Peace University" offered through churches, even if you are not Christian the priciples work for anyone. First save up 1k in an emergency fund so you don't have to use your credit card if you have an emergency! Than do the debt snowball, smallest debt first, when that is paid off use the money from the payments on that one and apply it to the next. And so on... Do this yourself, learn to manage your money, my husband and I did this and it works!

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When I was faced with credit card debt my mom gave me a book called "Debt Free and Prosperous Living". I read it and paid off $18,000.00 of debt in a little over one year. What I did was take out a loan against my car title at my credit union for $3000.00 @ 3.99% interest. I also took out a $6000.00 signature loan @ 9%. I paid off my smallest credit card first. All of my cards were between 19% to 22% interest. Then I took what I was paying on the on the first credit card and combined it with the payment on the next credit card with the smallest balance and paid as much as I could on that each month. In the meantime, I paid the minimum payment on the car title loan and the signature loan because the interest rate was so low. After the second credit card was paid off, I took what I was paying on the first two cards and combined those payements with what I was paying on the next card. I did this until they were all paid in full. This totally works and I now pay off my credit cards in full every single month. It just takes discipline. At the time, I closed all of my cards except for one. I know you can do this. Just give yourself a time frame and go for it. K.

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Hi J.,
I did not read all the responses, but just thought you'd like to hear form someone who successfully uses Dave's "debt snowball" plan. We do not use credit cards, so that was not the issue for us, but we had student loans from college, car payments and a home equity loan to pay off.

I know Dave recommends living on beans and rice, cutting out all the fun stuff and putting every penny toward your debt, but we did what I call "Dave Ramsey Lite." We did not significantly change our lifestyle and we actually bought a new car in the middle of the process (which Dave would NEVER say is okay). I was doing stupid stuff, like investing in my 401k at work, and trying to have savings accounts for my kids (for college), all the while paying interest on all my debt that was canceling that out. So now, EVERY extra penny we have (even the ones we find in the couch cushions) goes to paying our debt. I am very frugal, spend very little on myself, my kids, clothes, food etc. I have gotten a couple raises at work over the year we have been working on that, and that is just more that goes toward the debt.

It really is a GREAT feeling when you can see each month how much you are reducing your debt. We are almost done, and then all that money will be extra in our pocket and our investments in the future.

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My house and credit card debt was scheduled to be paid off in 10 years, but I found a program that is helping me pay off everything in 4.6 years. I didn't have to refinance my mortgage, my household budget has barely changed, AND my 750 credit score has gone up 58 points since May when I started. It's the highest it's ever been at 808!!! At first, I thought it was too good to be true, but it's working like a charm! Get in touch with me if want to know more.
Good luck! C.
P.S. There's a great article by Jean Chatzky (another financial guru - Money Magazine, Today Show, Time Magazine)in the Feb. issue of Success at Home Magazine. She has step by step, easy to follow methods to 1. get credit card companies to lower your interest rates, 2. to free up additional cash to pay down debt faster, and some other great money saving ideas.

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I know everyone is trying to pay bills right now, and I found a way to help my friends a little bit. I have a jeweler coming to my house friday night for a gold and silver party, he weighs it and writes you a check right then and there for whatever you bring to sell. I had one a few weeks ago and my girlfriends made anywhere from 150-650 for not a lot of stuff. This time gold and silver prices are even higher. I hope this helps you, if you have questions let me know. LisaM Good Luck with everything!!

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An important part of your situation is missing. What is your goal? Is your goal to reduce your debt obligation by having some of the debt written off? Is your goal to pay down debt while saving your credit rating? Is it that you're so not "a numbers person" that the whole idea of paying bills is a challenge for you? (Some people have plenty of money to pay bills, but still can't seem to get it done.) Is it simply to lower the interest rate? Do you not have enough money to pay for minimum payments each month? And the big one, is one of the parents a spendaholic, so that this problem will never really go away?

If you could rephrase your question by letting us know the exact nature of the original problem, we could much better help you. Generically, I would suggest using credit counselors as a last resort, and personally wouldn't use them at all.

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J.,
Just be careful because when my husband and I went in to prequalify (sp) to buy our first home it was on our credit report as not being able to pay our bills ourselves! We were able to explain and overcome it because ours was mostly dr.s and hospital bills with just two credit accounts. Our mortgage broker said that having gone with one of those companies is like filling for bankruptcy.
I would just ask alot of questions before you sign anything!

Wishing you the best!!

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Dave Ramsey's Total Money Makeover. If you're willing to make some serious sacrifices and changes in your life for the BETTER, then read this. It's AMAZING. My husband and I have had amazing financial peace over the past few years, but it does take some sacrifice. We are debt free, but we have worked hard, scrimped and saved, and it's worth it. I highly recommend this to everyone!

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The Best advice I have gotten is the Dave Ramsey tapes or his radio show on gettin on top of your finances... check it out. If you are looking for a way to possibly bring in more income let me know. I have a wonderful business opportunity at my fingertips. I feel like God has given it to me to share with other Mommies who want to stay-at-home. Being in debt can sometimes feels like you are up a creek with no paddle and NO Boat....:) Let me know what you think my email is ____@____.com. Definitely look into those tapes they are well worth the investment. God bless!

D.

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Hi J.,

I'm just now reading your question and I know you've already heard a lot from others and see that you've chosen to go with Dave Ramsey's approach. I just want to add my testimony of his program. About 4 years ago my husband and I were living like every other American family out there - up to our eyeballs in debt. We were both working and making good money, but we never really knew where it all went. After several years like that and with planning to have another child, we decided that I wanted to stay home and raise our children but we knew we had to do something about our debt before that could happen. A friend referred us to Dave Ramsey's Total Money Makeover and within a month we had a plan and were working at "gazelle" speed to knock it all out. We started with about $80,000 in debt and within 18 months were down to only our mortgage. Now, we anticipate having that gone in another 10 years. I've been retired and home with the kids for the last year and I know that the only reason we were able to do it was because of Dave's program. It is possible to live debt free and life is so much sweeter this way. Good luck with your decision and God bless you for your efforts.

Sincerely,

J. B

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Hi J.!
Before you do that, I would check out Dave Ramsey's resources. He has a few books- Total Money Makeover and another that is part of his Financial Pease University. His steps are easy and will lead you to financial security- which is much better than simply paying off your debt. He lays out for you a simple way to pay off your debt quickly- no scams or gimmicks.
His website is http://www.daveramsey.com/ - this isn't some random guy- he has helping people to get out of debt for years, heis very established and has helped hundreds of thousands of people! He also had a program on Fox Business at 6pm.
I hope you find a solution and financial peace!
H.

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I know you may not be interested in any more responses. But in case my two may help, here I go.

This is info I was given by a financial planner years ago at a college seminar. It has made a huge difference in my debt, while greatly improving my credit score. With credit cards (don't know if loans work exactly the same way) you are charged interest daily. So to keep the interest you pay down, and pay more on your principle, make more than one monthly payment. Personally, I determine what I'm going to pay monthly on a card. I always pay more than the minimum (unless I'm truly strapped that month). Then I divide that amount by the number of Fridays in the month. Then I schedule, through my bank online, to send a payment each Friday (that just the day that works best for me, I pay everything on a Friday). The financial planner explained that anything over your minimum goes towards lowering your principle.

Using this method has helped me pay off 3, almost 4, cards. So, if you utilize online banking already, this in an easy thing to implement. That planner also taught us that once you get it paid off it's good to keep the account open for at least 5-7. Just stop using it. This apparently can favorably effect your score as well. He also mentioned that a consolidation loan, as mentioned earlier, is another great method.

Good luck in getting your debt under control.

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I completely say go to Debt Reduction Services. There is a $75.00 fee that if you take 4 classes, and you can do it online, you will get that $75.00 back. We did this 2 years ago and had about $8,000.00 in credit card debt. Our debt will be completely gone in one more year!! They deal directly with the credit card companies, you don't have to. The credit card companies don't call or anything. We do get a statement from some of the companies and they show it being paid down. It is nice because you can either have it directly withdrawn from your checking account or you can bring in money orders. We chose to do money orders because we closed out our checking account. Anyway, we are excited to say that in 2 years (minus our mortgage) we will be completely debt free! Imagine having all that extra money coming in from the paycheck!! Oh and when we went in with our American Express they got the interest rate down to 0%. We don't pay more than 9% on any card through DRS.

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If you had any questions about credit repair, I would recommend my in-laws in Georgia. They work with people from all over the country, so it doesn't matter if you are out of state. They are VERY reasonably priced and guarantee their work. He worked for one of the credit bureaus himself. It's always a good idea to check your credit report at least once a year with your eligible free report. Tell them C. sent you ;)

Gold Key
Savannah, GA
###-###-####

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If your talking about consolidating your debt, don't do it!!!! Those companies seem to fix the problem, but it only makes it worse. And it ruins your credit. We are also trying to get out of debt and we came across Dave Ramsey's book, Total Money Makeover. It's a great book and many people have gotten out of debt with it. It takes time, but you can do it! We have been able to put money into savings and we are really close to having our credit cards paid off!

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Hi J.,
I would imagine you are overwelmed with the responses to your inquiry. I too am a financial coach and would recommend any sort of program without using any company to do anything for you. You and your family must understand the discippline it takes to reverse the effects of too much debt. A simple debt stacking program is all that is in order. I would argue that Dave Ramsey tells you to start with your smallest debt, and say start with the debt with the highest interest rate. The other thing I might suggest is utilizing a heloc to lower the overall rate on your total debtwhile you are working to pay them off. This will consolidate your payments down to one. It would also be a good piece of advice to change to a simple interest loan on your mortgage. It will help you pay down your principle on your home significantly faster.
Good Luck!!
A.

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I didn't know I was using the Dave Ramsey method. When I paid my car off, I applied that payment to a loan and was able to pay that off in 2 months. I was able to pay 2 credit cards off last year using the same method. It is such a great feeling to pay them off. Lots of luck to you and your family.

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Hi J.. We had to take a 1st time home buyers class when we bought our 1st home. Part of the class talked about your situation and the person strongly advised that we not use any of these companies. He said that if you need someone to help you get out of debt there are several non profit organizations that you should look for. I would suggest going to your bank to see if they have a list of such agencies. Good luck!

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If you have not got it yet from previous posts, do not do this and check out DAVE RAMSEY! You can do this. It will take sacrifice and with 5 kiddos, it will take alot. Do not go with the companies they are a rip off and hurt you more in the long run. Go to www.daveramsey.com and you can email questions and get copies of the books. This is the best way to get rid of debt. IF you are serious about it, how old are your kids? If they are in school, get a night time job stocking shelves to make some extra money to go towards debt. You and your hubby have to be on the same page and willing to "live now like no one else, so later you can live like no one else". It will take work......If your willing it is worth it!

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Do not use one of these companies! Everyone I know that has done this has gotten into bigger trouble because these companies do not pay on time if at all! I agree with everyone else that says to try Mary Hunt, Suze Ormand, etc. You can do it much better yourself. Good luck.

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I did not read all the other responses, so this may be redundant.
We looked into using a credit reducing service and decided against it because the first 3 months of payments they receive goes directly to them and none of it goes to your credit cards. The way they get the credit companies to reduce or drop your interest rate is to let your payments get 3+ months late. Then they have negotiating power to lower your rates, but this damages your credit rating. If you are already several months late on your credit cards than this might be a good idea, but if you are like us and are (barely) paying everything on time it is not a good idea. I would suggest that you look into a debt consulidation loan instead. You can get one of these even if you do not have a mortgage loan to refinance.

Whatever you do, ask questions... as many as you can. If they get irritated with your over interest, move on. It is your money and you do not need a salesman telling you how to spend it on their salary. I found that when I was a little more informed and could debate their suggestions with them, they became much less pushy and alot more helpful. Some even offered me suggestions to try without using their services.

Good Luck : D

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From what I've heard you can just do it yourself and save a lot of money. Have you called your credit card companies and asked them to lower your rates? My husband does this every so often. We have also transferred balances to a no interest or low interest on balance tranfers card. If you are a member of a credit union they may have resources for debt consolidation too. You might be able to get a loan through your bank or credit union with a lower interest rate to transfer your balances to. the trick is to get rid of your cards after you do it.;)I would research it and see what you can do for free, before paying somebody. I am definitely not an expert, but I know I've heard you can do this yourself and save a lot of money.
Good luck!

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Search MSN Money. They have some great information/articles under personal finance that talk about this and what to be aware of.

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If you decide to go through one of these companies, please make sure to do your homework. Check with the local Better Business Bureau or chamber of commerce for references. It is probably smarter to go with a company in your home town, or close that you can sit down with personally instead of using one of the companies that advertise nationally and don't have a representative in your area.

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J.,
that is TOTALLY awesome that you are doing the Dave Ramsey program! He is amazing! We did this at our church. We wrote on little cards individually how much we owed in debt. We didn't put our names on them. it was all added up and there was over $700,000 in debt. There were 20-25 people in the group. In the 13 week program that we did (did ours on Sunday evenings) we paid off $60,000. I myself had $30,000 and i'm only 25!!! I had 3 credit cards that bit me in the butt. I had a personal loan which I was a slave to for 3 years...i would get it paid off and then take it right back out again. All I now owe is on my car and student loans. It was such a relief to get this stuff taken care of and out of the way. A few times here and there i get carried away with my money but I catch it before it gets outta hand. Anyway, I'm so happy you found a way to get rid of debt! It'll be great to call Dave Ramsey's show someday and scream/shout/whichever you prefer I'M DEBT FREEEEEE!!!!!! Hahaha, well J., you have a great day! and good luck with this program...it really does work!

In Christ,
A.

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J.-
I looked into a couple of these about 18 months ago when things were really bad for us - the problem I found with them is that you have to let your credit cards go into default (not pay them for a couple of months) and then the service negotiates payments with them.

It's all good -until you check your credit and it's shot because you were late on all your cc bills AND, if they write off any of the amount, it's not been "gifted to you" and you have to claim it as income on your taxes (the cc companies will send you the statement) -at least when we negotiated with American Express ourselves that's what happened!

Talk to the companies yourself - sometimes they'll work with you on the payment, interest rates.. if you can give them a lump sum to pay off the card, even if it's 1/2 the amount. If you can pay it right then, they may take it and you are done with that card (they will close the account).

Good luck - we're all there or have been!
C.

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depending on the amount of debt you have, you may consider pulling out a signature loan instead and just paying off the cards altogether and getting rid of them. this gives you set payments each month, you can't continue to spend on the signature loan like you can re-add to your debt on a credit card and the interest rate is set (and usually better than what you'll get with your credit card). you'll also have the comfort of knowing that your credit will be completely paid down in THREE years!!!! good luck. this worked for us, but we had a plan in place and got rid of our credit cards completely when we did this.

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I know you've received the responses you were looking for, but I just have to suggest Suze Orman also. I have heard great things about Dave Ramsey, but Suze Orman literally changed my life! Her books are so down to earth and they EXPLAIN things so you can really understand your finances. She also gives information about investmants, life insurance, mortgages, etc, as well as credit card debt. For all of those looking for help with their finances, please Google "Suze Orman". You can do it without those credit counseling services...best of luck to you and your family!

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Hi, I know it's tempting to pay off the smallest amount first, because it feels good to pay a debt down to zero. However, it makes more sense financially to pay off the cards with the highest interest rate. It's like you've got a bunch of rats eating your chunk of cheese. You want to get rid of the rats that are taking the biggest bites first. You can still pay off all your debt in the same time frame, but you come out ahead because you pay less interest. Good luck!

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Hi J.

I wouldn't do it. They say it is okay for your credit but it is not. In order for them to start helping you, you have to stop paying on your bills for like 90 days so that they can make a case that you cant pay them well that doesn't stop the phone calls and reports on your credit. Also there are always fees and you usually pay the fees to them for the first year to then pay off the debt in 3 years so you pay them like 5k of your settlement. Why dont they charge a one time fee of 300.00 bucks and be done because that could be another 5k knocked off what you owe. Nobody does anything for free and the ones who wind up hurting is us. If you think there is no other way then really research it call the news channels and make sure but if it sounds to good to be true it usually is. I have just cut up all my cards and dont use them. Pay more then the minimum owed and slowly chip away at them. Then as my balances go down so do the interest rates and as my balances go down and my minimum payment goes down I just keep paying the original budgeted amount to chip away at it faster and if you are not using them at all then you will see the balances go down and you save your credit because you dont know what the future holds and when you might need that especially in a bad economy your good credit will help. Good luck I know how hard it is but we choose not to go the easy route but to learn the hard way and budget not use the cards and pay extra.

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I have not used them myself but had a friend that did. You need to be careful. The company didn't send the payments on time at first but my friend had been told to stop making payments to the credit cards and they would take care of it. So her FICO score went down b/c she was never late on a payment and the company was. I think a lot of the companies won't help you unless you have a certain amount of debt, are late on payments and you many times you have to close your accounts. They normally take your debt amount and set up a plan so you have payments over 5 years to pay it off. Have you tried to call the C.C. companies on your own to see if they will lower your interest rate? Tried balance transfers with a low interest rate?

I know there are good companies out there, just do your research and ask lots of questions. It might be the way to go. It never hurts to call and see what they can offer!

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This is a good route to take if you feel you are really in the weeds and need someone elses help. Keep in mind though that when you use one of these places it will be recorded on your credit report....meaning....in the future (probably for the next 7 years) anyone who runs a credit check on you is going to see that you went to a "credit resource center" to get your bills paid off. Many times that will put you into a higher risk category in the eyes of most lenders. If, however, you are in a situation where your credit is going to be affected by your debt no matter what, then it is deffinately in your best interest to seek help in getting those bills lowered. The most important thing I can say if you are planning on using one of these companies is to DO YOUR RESEARCH!! Try to use a local company where you will be able to talk to a representative face to face, rather than an 800# that is very impersonal. You'll have a better idea of what's expected of you that way and you can ask about any fees up front. I hope you find the solution that's right for you. Good Luck!

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I am just starting the Dave Ramsey method. I have heard so many great things about using his system.

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My only advice is to find out what it is going to do to your credit score when all is said and done. Sometimes these things can have a negative effect on your score and then you are worse off than you were, well, you won't have debt, but you won't be able to get any other credit when it really counts too. Just really, really..... do your homework!!! All the best to you and you family, sounds like you are on the right track.

S.

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I did InCharge Debt solutions a few years ago. They definitely helped, giving me a five year plan to get it all paid off vs twenty five years!
They reduced the interest rates, worked with all the creditors and it was one monthly payment. I believe it was a small monthly fee of like $15 or something like that. I got a full statement of how it was broken down and distributed to each creditor each month.
It will effect your credit but minimally, it is better then late payments and does take about five years to be completed.
Make sure whomever you choose you check them out thoroughly on Better Business Bureau too.
It is a lot of paperwork at the very first, but they just deducted each month, like $225 a month from my account and it saved me $400 a month from what I was having to pay out to stay on top of my credit cards.
Good luck and do a background check on whomever you choose.

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I had to do this several years ago and used Debt Reduction Services. I did my research and they were very reputable and only charge a nominal fee per month to cover their overhead (I don't remember how much it was now). If you can get into Consumer Credit Counseling, that's a great program too.

You shouldn't pay anything upfront to any agency and if there are any fees, they should be nominal at best. Also make sure there isn't a penalty for paying your balance off in full early.

Good luck!

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Ultimately, the financial planning company will ONLY work if you are willing to stop spending on credit. Period. Once on those plans, you are not supposed to use your cards anymore. If you can do that, and begin ONLY using cash or a debit card, then they can be a postive way of paying off debt. If you can't do that, then don't, it won't work out, and you'll have a much bigger mess than you started with. Good luck.

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I would check the company out very thorough as there are many that have been known to destroy your credit rather than help, check with better business and licensing to see if they are approved and if any complaints have been filed, this is one of those situations that can have bad consequences if you are not careful. I have known many people who have tried several of these companies only to end up in more debt and bankruptcy.

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Be careful - the debt counseling companies and some credit counseling companies can actually hurt your credit rating. You might want to consider meeting with a financial coach/educator before signing up with a consolidation company. They can put together a plan for you that is confidential, customized and complimentary. If you are interested in learning more, contact me directly.

J.

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I would like to warn you about these so called helping companies - I too had debt and looked into 2 companies & they made it sound useful but in the end I had more financial trouble from them. They have you list your income and expenses and the first payment does not go toward your bills it goes to the "helping" company so then there you are another month behind. Then they give all your information to the places you owe money to & they start calling you and bugging you about where you can cut expenses from your income/expenses report you have given to the "helpers" - they sound helpful but they need to make money too & they really aren't in it for your best interest - if you can control your expenses & buckle down on your own you would be way better off in the long run - stop using your credit cards & pay as much extra as you can on the one with the highest interest rate and when that one is caught up then move the extra money on down to the next bill with the highest interest rate, slowly but surely you will see the light at end of the tunnel of debt. Good luck!

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J.,
I go to Consumer Credit Counseling Service. They are truly great. They stopped all the calls to my home. They even got the interest rate down. (And if for some reason I can't make a payment they are truly understanding, and ask that I make it up the next month.)
I would definanetly go. I pay them 5 dollars a month for admin fees. The rest of my payment goes to the Credit companies. I have paid two cards off with them and am working on the 3rd. Best wishes.
S.

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Hi J.! I did this several years ago and I would recommend it, as long as you do your research. The company I used charged me a month's payment up front, while I still had to pay the minimums on my cards. I was unable to do this so I still have derogatory reports on my credit from this. What I learned later, is that you shouldn't be charged up front like I was. Just do you research and find the best company. It did help tremendously but there were repercussions. American Express has a pretty low toleration for debt consolidation, so if you have AmEx, check into that as well. And when you're finished with the program, STAY AWAY FROM CREDIT CARDS. I speak from experience! Good luck!

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Houston River Baptist Church will be having another seminar on Dave Ramsey's course. I just finished it in the fall and it was an eye opener. It offers a wealth of information and how to's.
Call HRBC for more information.

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As a CPA, in general, I would avoid the consumer credit counseling type things like this. They often result in problems with your credit in the end from what I've heard and the money you spend on them would probably be better spent somewhere else.

I would suggest you begin listening to Dave Ramsey's radio show and reading his books (The Total Money Makeover is an excellent resource). They provide easy to follow straight forward advice that makes sense and helps you get back on track (even if you're not a CPA). :)

Good luck!

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I would highly recommend Consumer Credit Counseling. They are legitimate and helped us tremendously when we were first married. There may have been some fees, but if so, they were reasonbable and legitimate - I don't remember exactly so they must not have been too bad!.
(Doing this might temporarily hurt your credit until you can demonstrate financial recovery and responsibility, but they will talk to you about the ramifications and you can decide if you want to proceed. It is usually worth it to get back on track.) Good luck!!

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I have no idea where you are but my church is hosting the Dave Ramsey Financial Peace University starting Feb 15 in Plainsboro NJ. I just picked up my kit on Sunday ($99.51). I like that I will be able to watch the DVDs and that there will be small groups for accountability each week. It's a way to get outside help through the Dave Ramsey course.

You might be able to find a class close to you.

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J.,

Not only should you pay off the credit card taking the biggest bite first, You NEED to call to have your rates reduced!

You can ask to reduce your rates, you can ask to remove all fees to 'hold' the card, you can ask for a lot of things.

You can ALSO transfer any offenders who won't oblige you! TELL them that!

I am so glad I saw your post! You want your money for your family, not for these moneychangers who just stick it to you for everything they can.

Most will very obligingly change your rates without even a second question. Some will make you go through a couple of hoops, sometimes if you ask for the manager/supervisor, you can get somewhere. Those you don't you tell them you have tickets/checks to transfer your balance somewhere else. If they don't - then do it! (if you can...if you can't, an empty threat doesn't mean anything to anyone, just make it!)

BUT absolutely, pay more off on the card that takes the biggest bite of your $ - some go up as far as 32% interest! Pay the minimum on other cards until these cards are taken care of. You might be done in LESS than 18 months!

Good luck!
M.

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I've been a huge Dave Ramsey fan for over 10 years now. Was glad to see someone had suggested him to you. I think he's got a lot of common sense and knows where people are coming from as he was there too.
Don't know if anyone mentioned, but you can listen to his radio show online. You can either listen to him live, or listen to the archives. One day a week I work cleaning and I usually listen to his show. He's also on Fox Business channel, if you get that. We don't, but I wish we did.
Am so excited for you!
K.

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I haven't read any other responses, but I would highly recommend Dave Ramsey. He has a web site DaveRamsey.com and you can also buy his book at any bookstore and there are also classes held and a radio show. This guy knows his stuff and will teach you how to deal with your debt and finances and bring yourself back to floating after a short time. Good luck

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