Good afternoon everyone and hope you all are having a great Monday. 
Anyway, I'm seeking some advice on behalf of my boyfriend. I've been on the rebuilding journey for the past year now with some wonderful results and I'm in the garden until 2017 so, I feel as if I'm pretty much planted in regards to my credit. I wish I could say the same for him. I've always known about his credit card debt and I've been trying to figure out possible ways to help, but I really can't seem to come up with anything. He was considering bankruptcy, but I've talked him out of it as I see it as credit suicide. I'll get straight to the point with his credit cards and balances.
Wells Fargo CC: $16000 CL, currently carrying a $16100 balance so, he's actually $100 over the CL with a 12.70% APR.
Chase Amazon CC: $500 CL, currently at $507 with a 22.94% APR.
Discover IT CC: $1000 CL, currently at $900 range with 0% Intro APR, but changing to 22.99% APR next month.
AMEX Delta Gold: $1000CL, currently at $900 range with 19.24% APR.
So basically, he's maxed out on every card and he's only been making the minimum payments each month. Problem is, after making the minimum payment he will go out and spend what he just paid off on coffee, gas, or diabeties supplies. As far as I see it, everything except that monstrous WF card should be easy to pay off with some dedication and economizing. I've been paying both of our mobile phones and I've started paying for groceries 100% and other household expenses (we used to split this 50/50) in order to help him out in every way I can. We have separate bank accounts which will never change. Luckily, he just recently started a better paying job.
My main question is this, what's his best course of action to pay down his credit card debt? He originally got into trouble with that WF card, because he used to spend a high amount of money taking care of his father when he lived back home. He has decent (not great, but average) credit with scores in the 660-680 range. Any ideas with how I can help in any way would be greatly appreciated! That WF card is a huge problem.
I would also suggest making an budget so he can sort of control his spending so hes not always spending more than hes making. Once you have done that then you can decide how you want to start paying off those bills.
He's actually been receiving letters in the mail from debt consolidation specialists. I believe Wells Fargo also offered to give him a personal loan in order to do a BT off their credit card with a 5 year repayment term. Once the increased income starts rolling in from his new job, paying off the Chase, Amex, and Discover shouldn't be too hard - but that WF card is the elephant in the room.
He did previously try to obtain a personal loan from LendingClub after receiving a pre-approval offer in the mail in order to pay off the WF card. Unfortunately he was instantly denied (which is frustrating after receiving a pre-approval). Anyone have any personal experience in dealing with these types of companies?
@Gunnar419 wrote:Do you think he's motivated to get these cards paid off? You're completely right that the three of them could be whacked down in short order, which should be a very encouraging start! If he's only paying minimums then going out and charging the cards back up with trivial purchases, though, he doesn't sound as if he's as serious about fixing the problem as you are about helping him.
Budgets, payment plans and so on are great if he's willing, but is he?
I hope he is, because he's always discussing about how worried he is about his finances with me. I just don't think he knows where to start and he's very cautious about changing anything in fear of "digging a deeper hole", which is not really possible at this point. I mean once you hit the bottom you can only go up! He's never had any financial guidance before so, I'm trying to offer any advice I can. If we sit down and figure out a solid repayment plan together while I can assure him of solid results - I'm pretty sure he'll be on board.
BUT, I've never had $18K in credit card debt before - not even remotely close so, even I'm a little lost in regards to where he should start.
In one of your posts you said your boyfriend is "worried" about his credit. Worrying about it is a good start...but it won't change anything...it takes ACTION to change the situation.
Like you said the three small balance cards should be easy enough, so pay them off first and then start tackling the big one. If he got a new job making more money that's great...now he needs to get a part time job at night and/or on the weekends to help pay down the debt. Sell stuff he dosn't need.
If you or your boyfriend haven't heard of him already Dave Ramsey is great at getting people out of debt. And listening to his radio show and hearing other people that have gone through similar situations will help motivate him. I'm not in debt but I listen to him often because I enjoy hearing how people have overcome their debt problems.
And above all he has to want this...no matter how much you want it for him the situation won't change unless HE wants it to.
Good luck!
Fox
He doesn't need debt consolidation. What he needs is to care about his own credit as much as you do and a swift kick in the arse about his spending habits.
#1-First take his cards away and put them in a safe place. No more debt spending. No cash in the bank to cover the expense, no charge unless bonafide emergency.
#2-Clear the over limit balance on the WF card. Keep paying the minimum payment.
#3-Since the other 3 cards are about the same interest rate pay the smallest one off with every spare penny he can muster.
#4-Start paying off the next highest balance high interest card using the former minimum payment of #3 to put towards this card.
#5-Rinse and repeat for the last high interest card.
#6-Throw everything he's got at the WF card until it's paid off.
He can do it if he wants to. Personal advice: don't get married until you both are on the same page about finances and credit.
Current Score: TU: 674 | EQ: 722 | EX: 717 | Last Inq. 2/16/15...Locked Up in The Garden
@kjel wrote:He doesn't need debt consolidation. What he needs is to care about his own credit as much as you do and a swift kick in the arse about his spending habits.
#1-First take his cards away and put them in a safe place. No more debt spending. No cash in the bank to cover the expense, no charge unless bonafide emergency.
#2-Clear the over limit balance on the WF card. Keep paying the minimum payment.
#3-Since the other 3 cards are about the same interest rate pay the smallest one off with every spare penny he can muster.
#4-Start paying off the next highest balance high interest card using the former minimum payment of #3 to put towards this card.
#5-Rinse and repeat for the last high interest card.
#6-Throw everything he's got at the WF card until it's paid off.
He can do it if he wants to. Personal advice: don't get married until you both are on the same page about finances and credit.
This is wonderful advice, thank you so much! I'm going to sit down and have a long talk with him about this and ask him to fork over the CC's. I have a locking jewelry box that allows me to stow them away in a safe place. Problem is, he see's these CC's as available money - like some sort of extension of his checking account that he can freely use to pay for things until... oh crap I've hit the CL. Then he's hit with the reality of "Oh crap I have to pay this back...with interest!" Then because of this maxed out high limit WF card, a nice portion of his monthly income goes to paying the minimum monthly payment of that alone.
It's funny, because he notices me using different CC's for a lot of my every day transactions. I explained to him the key difference though - being that after using my cards, I pay them off in full - every single time. The only time I carry a balance is when it's part of some interest free promotional period, and even then I never let it stick around for more than 2-3 months (depending on how large the purchase is). CC's just have better purchase protection while some offer rewards. Still, the main element here is having the self-control and the ability to budget your available funds wisely. If I don't have the money in my checking account to pay off the purchase on the CC - I simply do NOT purchase the item in question. After explaining this to him, he became more motivated to take control of his money.
I also introduced him to MyFico and the forums. These forums have helped me on my rebuilding journey so much - I've added 100 points to my FICO scores just after a year of following the advice mentioned here. Once again, thanks so much for the help everyone. I know that if I support him and continue to offer him any advice/motivation he needs, he can start to make some great progress on paying off these debts.