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ryanrap1
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Financial Question / Input

Thu Apr 01, 2021 11:19 pm

I have a question and not looking to get beat up financially on here but I’ve had a very rough two years. Covid , medical, etc and really want to start taking better control of my finances.

Here’s my question ;
If I were able to take out $15 k loan for 3 years with good credit interest and pay off about 7 debtors. Only leaving me with 1 major credit card would you consider that financially the right thing to do?
 
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TheFlyingDisk
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Re: Financial Question / Input

Thu Apr 01, 2021 11:32 pm

If the debt consolidation loan interest is less than the 7 debts you're clearing off, then it's okay, I feel.
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ryanrap1
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Posts: 474
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Re: Financial Question / Input

Thu Apr 01, 2021 11:40 pm

Was hoping to clear off all these different accounts and diff interest rates and have much fewer payments .
Wanted to boost credit score any paying off older accounts.
 
ryanrap1
Topic Author
Posts: 474
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Re: Financial Question / Input

Thu Apr 01, 2021 11:45 pm

ryanrap1 wrote:
Was hoping to clear off all these different accounts and diff interest rates and have much fewer payments .
Wanted to boost credit score by paying off older accounts.
 
NIKV69
Posts: 14390
Joined: Wed Jan 28, 2004 4:27 am

Re: Financial Question / Input

Thu Apr 01, 2021 11:46 pm

Dave Ramsey is the only person you should ever listen to about these matters.

https://www.daveramsey.com/blog/how-to- ... -card-debt
90 Day Fiancé has taught me that Russian woman are excellent.
 
johns624
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Re: Financial Question / Input

Thu Apr 01, 2021 11:57 pm

TheFlyingDisk is correct but I would add that nobody needs 7 credit cards. You also have to mentally change so that you don't just charge the cards back up. Never charge more than you can pay off every month. I have three cards...one Amex, one Visa and one Mastercard. I keep the first two on me and the third in a safe place in case I lose the other two.
 
alfa164
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Re: Financial Question / Input

Fri Apr 02, 2021 12:14 am

ryanrap1 wrote:
I have a question and not looking to get beat up financially on here but I’ve had a very rough two years. Covid , medical, etc and really want to start taking better control of my finances. Here’s my question ;
If I were able to take out $15 k loan for 3 years with good credit interest and pay off about 7 debtors. Only leaving me with 1 major credit card would you consider that financially the right thing to do?


A low-interest loan is a great way to pay off credit card debt - as long as you don't go back and pile-on more debt on the now zero-balanced cards.

I don't think you should close 6-out-of-7 card accounts simply because they are paid off, though; having "open" credit on the accounts means you are using a smaller percentage of your available credit, and that is one of the biggest boosts to your credit score. Just don't use those cards... or hide them from yourself... or even cut them up... but keep the accounts open. That is the best of both worlds.


NIKV69 wrote:
Dave Ramsey is the only person you should ever listen to about these matters.


Dave Ramsey is a bible-thumping proselytizer; that doesn't mean his financial advice is all wrong, but it is always simplistic and obvious. As they say, "even a broken clock is right twice a day"; I would put his advice in that category.

Of course, the other bible-thumping, dogmatic wingers love him...


:roll:
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ryanrap1
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Re: Financial Question / Input

Fri Apr 02, 2021 2:31 am

Best rate I could get is 15% but credit card is 24.99%
 
NIKV69
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Re: Financial Question / Input

Fri Apr 02, 2021 3:02 am

alfa164 wrote:

Dave Ramsey is a bible-thumping proselytizer; that doesn't mean his financial advice is all wrong, but it is always simplistic and obvious. As they say, "even a broken clock is right twice a day"; I would put his advice in that category.

Of course, the other bible-thumping, dogmatic wingers love him...


:roll:


What does his religion have to do with this? He has the best advice for managing money.
90 Day Fiancé has taught me that Russian woman are excellent.
 
alfa164
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Re: Financial Question / Input

Fri Apr 02, 2021 3:45 am

ryanrap1 wrote:
Best rate I could get is 15% but credit card is 24.99%


15% is a high rate in this day and age. Check Marcus by Goldman Sachs; they specialize in consolidation loans.

You could also watch out for a new credit card offer, often with a 0% interest rate for a year or so (although there is usually a fee, maybe 3%, to do the transaction) on balance transfers - an excellent option if you can pay off the balance in that period of time. Although this would lead you to having an 8th credit card, you could then dispose of a couple of them and still keep most of your credit "ceiling".

There is some very good general advice available (thebalance.com and themuse.com come to mind) but, like most non-individualized advice, they offer general rules that most anyone should be able to figure out on their own. Still, if you need a "nudge" to do some things, they give you mental back-up - and more peace of mind.
I'm going to have a smokin' hot body again!
I have decided to be cremated....
 
Alias1024
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Re: Financial Question / Input

Fri Apr 02, 2021 3:54 am

ryanrap1 wrote:
Best rate I could get is 15% but credit card is 24.99%

That's huge! If you can lower the interest rate by 10% that will make it far easier to pay off as more of your monthly payments go to principal instead of interest. As others have said though, be sure not to give in to the temptation to run up balances again on the cards. If you are confident you can avoid adding new debt to those cards then you absolutely should consolidate at that lower interest rate.

NIKV69 wrote:
Dave Ramsey is the only person you should ever listen to about these matters.

https://www.daveramsey.com/blog/how-to- ... -card-debt


Dave Ramsey is great for people that are way out in the weeds financially. For people drowning in debt his advice can be a real life saver and he has surely helped a great many people get out from crushing financial burdens or avoid them through his show.

Just don't ever listen to him when it comes to how to invest once you've stopped hemorrhaging cash and are running a surplus.
It is a mistake to think you can solve any major problems with just potatoes.
 
NIKV69
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Re: Financial Question / Input

Fri Apr 02, 2021 3:34 pm

Alias1024 wrote:
Dave Ramsey is great for people that are way out in the weeds financially. For people drowning in debt his advice can be a real life saver and he has surely helped a great many people get out from crushing financial burdens or avoid them through his show.

Just don't ever listen to him when it comes to how to invest once you've stopped hemorrhaging cash and are running a surplus.


Oh I would never use him for investment stuff I got a couple of good people for that.
90 Day Fiancé has taught me that Russian woman are excellent.
 
bennett123
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Re: Financial Question / Input

Fri Apr 02, 2021 4:05 pm

Apart from involving a lower interest rate, the key is to use the loan to pay of the existing debt. A lot of people spend the money on something else and wind up deeper in debt.
 
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Aesma
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Re: Financial Question / Input

Sat Apr 03, 2021 6:29 am

With interest rates so high in the US I've loaned a US friend some thousands and he pays me back with about 10% interest. I feel like a loan shark but he says it's much better than he could get from financial institutions.
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GalaxyFlyer
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Re: Financial Question / Input

Sat Apr 03, 2021 1:36 pm

Aesma wrote:
With interest rates so high in the US I've loaned a US friend some thousands and he pays me back with about 10% interest. I feel like a loan shark but he says it's much better than he could get from financial institutions.


You are a shark, my two banks are charging 3.75% on home equity loans. Car loans are essentially free.
 
Alias1024
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Re: Financial Question / Input

Sun Apr 04, 2021 6:59 pm

Along with Marcus, SoFi does a good amount of debt consolidation business. They’re known for student loan consolidation, but they do other loans as well.

Another possibility is a local credit union if OP is already a member. A lot of the smaller ones frankly suck at underwriting.
GalaxyFlyer wrote:
Aesma wrote:
With interest rates so high in the US I've loaned a US friend some thousands and he pays me back with about 10% interest. I feel like a loan shark but he says it's much better than he could get from financial institutions.


You are a shark, my two banks are charging 3.75% on home equity loans. Car loans are essentially free.


1) Those are secured by the asset, home and car respectively, greatly reducing risk to the lender of total wipeout loss. That’s why they’ll loan at those rates.

2) OP mentioned boosting their credit score. Depending on their current credit score and income to debt ratio, 15% may be right around what’s available for an unsecured loan.
It is a mistake to think you can solve any major problems with just potatoes.
 
NIKV69
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Re: Financial Question / Input

Mon Apr 05, 2021 11:56 pm

bennett123 wrote:
Apart from involving a lower interest rate, the key is to use the loan to pay of the existing debt. A lot of people spend the money on something else and wind up deeper in debt.


Funny how simplicity is always correct
90 Day Fiancé has taught me that Russian woman are excellent.
 
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casinterest
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Re: Financial Question / Input

Wed Apr 07, 2021 2:21 pm

ryanrap1 wrote:
I have a question and not looking to get beat up financially on here but I’ve had a very rough two years. Covid , medical, etc and really want to start taking better control of my finances.

Here’s my question ;
If I were able to take out $15 k loan for 3 years with good credit interest and pay off about 7 debtors. Only leaving me with 1 major credit card would you consider that financially the right thing to do?



Will comment a bit late on this. But just wanted to point out the benefit of the math you presented in the thread.

Assuming you had the 15K load for 3 years at 24.99%
[list=]
Equal Monthly Payments:$596.32
Total interest:~ $6450.[/list]

If you can consolidate the cards and other debt onto 1 payment of 15%, then you will do much better.
Equal Monthly payments: $519.98
Total Interest: ~3720

Savings over CC : $2730


In addition , I would use the first payment( 596.32) on the lower interest to help bring down the debt quicker.

Don't forget to reevaluate after a year. If you can get your debt under management it will reflect in your credit score, and you may qualify for even lower interest rates to help save money.


The below sites are good resources

http://www.nerdwallet.com :
NerdWallet does a good presentation of available deals on financial products , especially credit card deals by need(Bad credit, 0% Transfer, Points).

https://www.bankrate.com/calculators/mo ... lator.aspx

Loan Calculator:
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain
 
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Pellegrine
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Re: Financial Question / Input

Sun Apr 11, 2021 2:39 am

If you have a good payment history with your CCs the first thing I would do is ask them to lower your interest rates.
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