topic Re: Should I pursue a debt consolidation or do debt snowball? in Rebuilding Your Credit

Should I pursue a debt consolidation or do debt snowball?

CryptoWI — Tue, 21 Mar 2023 15:38:27 GMT

Situation:

Combine household annual Income: $190K

Debts: $55K

NavyFed CC= $22K

BFSFCU= $15K

Amex Plat= $18K

Experian score: 695

Goals: Buy home in 1-2 years

Considerations: I work in tech an layoffs are a thing this year. I feel safe but you never know.

Re: Should I pursue a debt consolidation or do debt snowball?

FireMedic1 — Tue, 21 Mar 2023 16:30:57 GMT

Knock on wood it doesnt come down to any layoffs. The only way a debt consolation loan would work is gettting it paid before sitting down with a loan officer. Yes you'll save some $ from interest. But lenders what $0 debt come home time. Cut back on all that you can and set a tight budget. It can be done. Take some discipline. Welcome to the forums.

Re: Should I pursue a debt consolidation or do debt snowball?

JoeRockhead — Tue, 21 Mar 2023 16:33:12 GMT

If you're planning on purchasing a home within the next year or two and can't have it (loan) PIF by the time you apply for a mortgage, I wouldn't recommend a debt consolidation loan. That's quite a chunk to qualify for first of all, and secondly, the rates are likely to be not all that favorable. Add to that, what happens if/when you have balances on the cards again? Then you have more CC debt, and a loan for CC debt.... it would be best to be disciplined in your spending, and snowball the debt you have. Might not be a terrible idea to look into a 0% BT card to alleviate at least some of interest of one of your current cards.

Re: Should I pursue a debt consolidation or do debt snowball?

Horseshoez — Tue, 21 Mar 2023 16:35:48 GMT

The only benefit I can see is if you can land a loan with a significantly lower interest rate. I'm thinking if you can swing it, just blast those cards with payments (the bulk going highest interest card first), and work it down as quickly as you can before you start shopping for a mortgage.

Re: Should I pursue a debt consolidation or do debt snowball?

CryptoWI — Wed, 22 Mar 2023 00:58:22 GMT

Thanks much for the inputs everyone.

Re: Should I pursue a debt consolidation or do debt snowball?

ForwardLooking — Wed, 22 Mar 2023 04:05:24 GMT

Outside of a 0% intro APR balance transfer card, it is going to be hard to find a loan with a lower interest rate than what you already have with the credit unions. The Amex card is a little different story, but I don't think it will be enough difference to warrent a loan for it. A 0% card may be a little hard to get if your revolving credit utilization is high though, kind of a catch 22.

I would stick to the snowball (lowest balance first) or avalanche (highest interest rate first) strategies to keep things simple. Your balances are close enough, either strategy will work well for you. You could try for a Discover (or similar) balance transfer card, but don't transfer more than you can actually pay off during intro period because the interest on the remaining balance could be higher than what you are paying today.

All of us techies understand your concerns on layoffs. I survived a round myself and had to restrategize my own debt reduction and credit rebuilding plan to not eat into my savings as I had originally planned to do earlier this year. The good news is my persistance has paid off. I am down to my last $7k that I am agressively paying off, which will leave my car as my only debt after that (it has a low payment and interest rate, so I am not in a big rush to pay it off right now).

Re: Should I pursue a debt consolidation or do debt snowball?

CryptoWI — Wed, 22 Mar 2023 04:44:39 GMT

congrats and thank you.....7k seems soo far away, but I will throw the kitchen sink on the debts and hopefully get there soon