So, I messed up in my 20s, and now I’m stuck with $30,000 credit card debt. My credit score is okay at around 670, and we’re staying current on our $185,000 mortgage. With a new baby, we really need to sort out our finances. We’ve set a budget and cut back on spending, but the interest is killing us.
We’ve got 5 accounts:
- CC 1 – $8,300 at 29%
- CC 2 – $7,000 at 18%
- CC 3 – $5,500 at 29%
- CC 4 – $2,800 at 29%
- CC 5 – $4,400 at 25%
I’m paying at least the minimum each month, totaling around $800, but $650 is just interest.
We don’t have much extra cash to throw at the debt. I’m trying to avoid going bankrupt or using debt negotiation companies like National Debt Relief.
I’ve looked into a personal unsecured loan from an online lender. There’s an offer for $30,000 at 11% fixed for 48 months with $750 monthly payments.
My questions:
- Any downsides or hidden things to watch out for with the personal loan?
- Are there better options out there for us?
We need to make some choices soon. Even though I’m on time with payments, my credit score is taking a hit from high credit utilization. The longer I wait, the less options we’ll have. Would really appreciate any advice or info you can give.
edit: My monthly take-home is $5,000. After bills, we only have $500 left.
Farewell, Seeking Solutions
Response from THE MONEY MINDER:
Hello There,
Congratulations on the birth of your baby, and I am sorry to hear about the financial challenges you are facing. It’s admirable that you are taking steps to get your finances in order. Your situation with credit card debt can indeed be overwhelming, but there are practical steps you can take to tackle it.
Considering your monthly net income and expenses, it seems like you have around $500 left for debt repayment. The personal unsecured loan you mentioned could be a viable option to consolidate your credit card debt and lower your interest rates. Just make sure to carefully review the terms and conditions, including any origination fees or prepayment penalties. Ensure that the monthly payment of $750 fits within your budget to avoid further financial strain.
Another option to explore is a balance transfer to a credit card with a lower interest rate. Some credit cards offer promotional periods with 0% interest for a specified period, which can help you save on interest costs. However, be cautious of balance transfer fees and make sure you can pay off the balance before the promotional period ends.
You may also consider reaching out to your credit card companies to inquire about hardship programs or lower interest rates. Some creditors may be willing to work with you, especially if you have a history of on-time payments. Exploring all possible options and finding the best solution that fits your financial situation is key.
In the long run, focusing on a debt repayment plan and sticking to your budget is crucial. It may require sacrifices and discipline, but getting rid of high-interest debt will ultimately improve your financial health. Remember, every payment you make brings you closer to financial freedom.
If you have any more questions or need further guidance, feel free to ask. THE MONEY MINDER is here to help you navigate through these financial challenges.
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