@twpounds wrote:
Thank you so much for the kind words. Ironic thing is I have degrees in accounting and finance so I should know better than this.
I'm glad to help. I also have multiple college degrees including in Business Administration but managing your own personal finance sometimes doesn't equate to what we learn in the classroom! And many of us have reasons for why we got in over our heads. The good thing is you're recognizing and dealing with it. You'll fee so much better once this is behind you. 
I was going to ask if the personal loan was reported differently. I thought it would be less detrimental, but I wasn't 100% sure.
Yes, installment loans are reported as-such, so you'll see them indicated as auto loan, personal loan, mortgage, student loan etc on your report. For FICO scoring, having a mix of types of credit helps your score. And while credit-charge-revolving accounts are seen as higher risk to FICO and lenders (since you can easily add to the debt), installment loans like personal loans are stable and more predictable. So having some of that debt as an installment loan instead of on a credit card is a great way to mitigate the risk perception to your lenders.
Do you think having a debt to income ratio of 33% would be a deal breaker for a personal loan? I know it's close to the 36% threshold.
While that is fairly high DTI ratio, it may not be a deal breaker. Plus, each lender will have their own cut-off so if one turns you down, you can aways try another. The good news is that if you sit down with a loan officer and explain what you're trying to do, they may be able to work with you. You're not actually taking on more debt (assuming DW's debts are included in that total.) You're just reorganizing them. Even if you were taking on more debt, they might be able to underwrite the loan by directly paying off some of the debts instead of giving you the cash. That way, they control the debt repayment.
Yes, my wife has some $2-$3k debts that I could add as a BT to the Citi card. Problem I keep going back to is that my capital one card has an $18k balance with a 62% utilization rate. It has been high for a few years and I can't help, but think this one needs to be dealt with. If I got a decent loan, I'd put it all to my $18k balance. Should I move a few thousand dollars more of my wife's debt or some of my $18k debt to the Citi card?
This gets into the argument for either the Debt Avalanche or Debt Snowball method. Both are good, but sometimes they can be combined to an extent. While the snowball pays off the smaller balances first, the avalanche pays off the higher interest rates first. So you might consider listing each debt by balance on one list and by APR on the other. That may help you to pick which one is best to tackle first. So yes, if the $18K credit card balance has a high APR, maybe going after it would be a good idea. The trick is finding the "stragglers" in either category, so if have one very high APR or a bunch of easy-to-payoff smaller loans, that tells you where to start. As you proceed, it will become easier to pick a method.
Are you saying I could go up to like a 50-60% utilization on the Citi card through BTs without it haunting me for years? That utilization would probably take 9-12 months to bring down below the 28.9% utilization rate
That's true! Utilization has no long-term memory, so you could run it up to 99% and watch your scores plummet; then pay it all off the following month and watch them rocket back up. I've done that in recent years with high FICOs. I wouldn't suggest doing it that way with lower, riskier profile or if you can't repay it promptly. The risk in running up utilization is carrying it too long so as to alarm your lenders. But 6-12 months should be okay, especially if you're making good progress paying it down.
If you want to see some interesting graphics of my debt and FICO scoring I posted about, see this link and it will illustrate the temporary nature of utilization.
@Aim_High wrote:@twpounds wrote:Thank you so much for the kind words. Ironic thing is I have degrees in accounting and finance so I should know better than this.
I'm glad to help. I also have multiple college degrees including in Business Administration but managing your own personal finance sometimes doesn't equate to what we learn in the classroom! And many of us have reasons for why we got in over our heads. The good thing is you're recognizing and dealing with it. You'll fee so much better once this is behind you.
I was going to ask if the personal loan was reported differently. I thought it would be less detrimental, but I wasn't 100% sure.
Yes, installment loans are reported as-such, so you'll see them indicated as auto loan, personal loan, mortgage, student loan etc on your report. For FICO scoring, having a mix of types of credit helps your score. And while credit-charge-revolving accounts are seen as higher risk to FICO and lenders (since you can easily add to the debt), installment loans like personal loans are stable and more predictable. So having some of that debt as an installment loan instead of on a credit card is a great way to mitigate the risk perception to your lenders.
Do you think having a debt to income ratio of 33% would be a deal breaker for a personal loan? I know it's close to the 36% threshold.
While that is fairly high DTI ratio, it may not be a deal breaker. Plus, each lender will have their own cut-off so if one turns you down, you can aways try another. The good news is that if you sit down with a loan officer and explain what you're trying to do, they may be able to work with you. You're not actually taking on more debt (assuming DW's debts are included in that total.) You're just reorganizing them. Even if you were taking on more debt, they might be able to underwrite the loan by directly paying off some of the debts instead of giving you the cash. That way, they control the debt repayment.
Yes, my wife's debts are included in that total. So far it doesn't look like I'll actually have to sit down with a loan officer if I apply with SoFi as all of that is online. I've also been looking at a company called Happy Money. Never heard of them and they aren't a bank, but they are supposed to facilitate loans. The credit union I am a member of would probable require me to go in and sign, but I also know they won't loan me the full amount and possibly not the $10-$12k that I mentioned earlier. I kind of want to stay away from my credit union because that's where my wife's car loan is at. If it were paid off then I'd feel a lot better, but I really need the loan to come before the car is paid because I won't be able to do that until after the 1st of the year.
Yes, my wife has some $2-$3k debts that I could add as a BT to the Citi card. Problem I keep going back to is that my capital one card has an $18k balance with a 62% utilization rate. It has been high for a few years and I can't help, but think this one needs to be dealt with. If I got a decent loan, I'd put it all to my $18k balance. Should I move a few thousand dollars more of my wife's debt or some of my $18k debt to the Citi card?
This gets into the argument for either the Debt Avalanche or Debt Snowball method. Both are good, but sometimes they can be combined to an extent. While the snowball pays off the smaller balances first, the avalanche pays off the higher interest rates first. So you might consider listing each debt by balance on one list and by APR on the other. That may help you to pick which one is best to tackle first. So yes, if the $18K credit card balance has a high APR, maybe going after it would be a good idea. The trick is finding the "stragglers" in either category, so if have one very high APR or a bunch of easy-to-payoff smaller loans, that tells you where to start. As you proceed, it will become easier to pick a method.
There is a twist to this though. If you remember my wife's situation, she has a ton of cards with very high utilization and low credit scores. One thing you told me a few days ago was that she's drowning and my credit may be the 1 thing that gets us out of this mess. That has stuck and that's why I mentioned moving some of my $18k cc debt to
lower my utilization. My $18k card is actually the lowest APR of any cards between the both of us except 0% promos. So while it's true, I could move more of her debt to my 0% BT card and free up cash flow thus making the snowball bigger. However, I'll be left with a lot higher utilization on 2 cards and still have an $18k balance. Remember $18k card is at 62% utilization and has been for quite a while and the additional BTs at 0% would push me to 60% also on that card if I chose to go that high. I can't help but think that will hurt my chances of obtaining better credit for quite sometime because it's not like they'll be paid off in a month or two. I know the $18k card is out of the snowball order, but would it make sense to lower its utilization a bit by BT to put MY credit in a better position to obtain better offers in the future since hers is basically down for the count for the foreseeable future? Am I thinking about this right?
Are you saying I could go up to like a 50-60% utilization on the Citi card through BTs without it haunting me for years? That utilization would probably take 9-12 months to bring down below the 28.9% utilization rate
That's true! Utilization has no long-term memory, so you could run it up to 99% and watch your scores plummet; then pay it all off the following month and watch them rocket back up. I've done that in recent years with high FICOs. I wouldn't suggest doing it that way with lower, riskier profile or if you can't repay it promptly. The risk in running up utilization is carrying it too long so as to alarm your lenders. But 6-12 months should be okay, especially if you're making good progress paying it down.
If I BT $9,000. $5,200 of my wife's or 6 cards and the other $3,800 from my $18k card. That would put the Citi card with a 58% utilization rate and would take about 7-8 months to get that utilization under 28.9%
By moving $3,800 off the $18k card that would put my utilization on that card at about 50% where it would stay unless I came into some extra money or hit it with some IRA money. This is all assuming I don't obtain a personal loan. Would this be too risky if I intended on trying to get another 0% BT in 6 months or so?
If you want to see some interesting graphics of my debt and FICO scoring I posted about, see this link and it will illustrate the temporary nature of utilization.
That's good stuff! Hopefully, I will be able to get to this point one day. I'm working on it.
@twpounds wrote:Yes, my wife's debts are included in that total. So far it doesn't look like I'll actually have to sit down with a loan officer if I apply with SoFi as all of that is online. I've also been looking at a company called Happy Money. Never heard of them and they aren't a bank, but they are supposed to facilitate loans. The credit union I am a member of would probable require me to go in and sign, but I also know they won't loan me the full amount and possibly not the $10-$12k that I mentioned earlier. I kind of want to stay away from my credit union because that's where my wife's car loan is at. If it were paid off then I'd feel a lot better, but I really need the loan to come before the car is paid because I won't be able to do that until after the 1st of the year.
There is a twist to this though. If you remember my wife's situation, she has a ton of cards with very high utilization and low credit scores. One thing you told me a few days ago was that she's drowning and my credit may be the 1 thing that gets us out of this mess. That has stuck and that's why I mentioned moving some of my $18k cc debt tolower my utilization. My $18k card is actually the lowest APR of any cards between the both of us except 0% promos. So while it's true, I could move more of her debt to my 0% BT card and free up cash flow thus making the snowball bigger. However, I'll be left with a lot higher utilization on 2 cards and still have an $18k balance. Remember $18k card is at 62% utilization and has been for quite a while and the additional BTs at 0% would push me to 60% also on that card if I chose to go that high. I can't help but think that will hurt my chances of obtaining better credit for quite sometime because it's not like they'll be paid off in a month or two. I know the $18k card is out of the snowball order, but would it make sense to lower its utilization a bit by BT to put MY credit in a better position to obtain better offers in the future since hers is basically down for the count for the foreseeable future? Am I thinking about this right?
If I BT $9,000. $5,200 of my wife's or 6 cards and the other $3,800 from my $18k card. That would put the Citi card with a 58% utilization rate and would take about 7-8 months to get that utilization under 28.9%
By moving $3,800 off the $18k card that would put my utilization on that card at about 50% where it would stay unless I came into some extra money or hit it with some IRA money. This is all assuming I don't obtain a personal loan. Would this be too risky if I intended on trying to get another 0% BT in 6 months or so?
That's good stuff! Hopefully, I will be able to get to this point one day. I'm working on it.
Yes, I see what you're saying about lowering the utilization on your card to help protect FICO and your ability to get additional BT offers. So yes, you're thinking about this correctly. Of course, none of it is ideal, so you're trying to mitigate the overall damage to your score as you try to take on her debt which is "new" to your credit profile. So yes, having two cards with 50% to 60% utilization but then lowering them substantially over the next several months shouldn't hurt your ability too badly to get another card in six months, assuming you make good headway with the snowball plan.
It looks like the other thread participants flaked out as I was hoping to get other feedback and ideas for you besides my own. Community effort when helping someone out is always productive! A few years ago, our forum had many more active participants but right now the membership and active participation is unfortunately low.
@twpounds wrote:UPDATE
My wife and I both rec'd 0% Citi BT cards. Her limit was only $3k, but mine was $15.4k. When we received the cards and activated them it was saying the amount we could BT was our total CL less the 3% BT fee so I called to verify the information since I was previously given incorrect information through email by Citi. We were able to make some major headway yesterday while I was off of work due to the hurricane. I went ahead and applied for a $28k personal loan with SoFi and was approved. Cash has already been deposited this morning. I received a 0.25% interest rate discount for sending at least $14k directly to a creditor and another 0.25% interest rate discount for setting up autopay. After the discounts, my interest rate will be 11.45% which probably isn't the best deal but it's definitely not the worst deal either. I can live with this. I sent $18k directly to capital one to pay down my capital one card and the remaining $10k was deposited into my account. My wife has been busy paying off credit cards with the remaining $10k and setting up the BTs for an additional $12k in order to cover ALL of our high interest credit cards. My utilization rate will be about 65% and hers will be about 75% on the Citi cards. A little higher than we'd like, but we're going to attempt to pay them down to the 28.9% level or at least the 48.9% level before hitting the SoFi loan with the snowball. We will now have payments to Rooms To Go that is on a 0% interest promotion for mattresses we purchased last year, her car note, the Citi card 0% interest BTs, and the SoFi payment. We set the SoFi loan up for 5 years to give us a little wiggle room but not too much. Our payments are basically in line with what we are paying now except we won't be paying high interest cards for 20+ years. Her car will be paid after the 1st of the year which we plan to snowball to the SoFi loan. We also have a couple of medical balances on payment plans that we'll be adding to the SoFi payment as well. Once the Citi cards are paid off at the end of the 21 month 0% period, we'll add that to the SoFi snowball as well. All in all we should be debt free within 3-4 years if not sooner! I can't explain how good it is to see some light at the end of the tunnel. I thank you all so very much for helping me and offering advice! And while I'm explaining it, I might as well ask. Do you think I made the right moves here or is there anything we should be looking at differently moving forward?
That is an awesome update and great to hear, @twpounds ! I know from experience that facing that much debt can be so daunting it just sucks the wind out of you. What I'm reading is you have HOPE, you have a solid PLAN, and you're getting back in CONTROL of the situation again. I can sense your optimism and excitement. That is so nice to hear and you're more than welcome. Myself and others in the community enjoy giving back and helping others along the way, so the only thing I would ask in return is that one day, when you're free of debt again, you pass it along by responding to others on the financial forums or wherever you may encounter them in real life. Unfortunately, there's a lot of people who need a helping hand. You never specifically laid out all the debt and income profiles, but I don't think you needed to do that for us to help. So, it sounds like what you're doing is spot-on. You're calculating utilizations, spreading out the debt on lower APR offers to include BT cards, using personal loans to mitigate the credit score risk and interest charges on some of the debt, and making a budget plan for paying off the debts by the snowball method. Maybe you can find other ways as you get farther into it to shorter it even farther than 3-4 years, such as maybe another BT card in 12-18 months. Lowering the APRs with the 0% BT offers and personal loans should be freeing up much more of your monthly payment to go towards principal and paying down the debt. In other words, your monthly payments may stay the same but you'll be making better progress on paying down the debt instead of just keeping your head above water. Great job! I look forward to some more updates in 6, 12, 18, or 24 months. 
@Aim_High wrote:
@twpounds wrote:UPDATE
My wife and I both rec'd 0% Citi BT cards. Her limit was only $3k, but mine was $15.4k. When we received the cards and activated them it was saying the amount we could BT was our total CL less the 3% BT fee so I called to verify the information since I was previously given incorrect information through email by Citi. We were able to make some major headway yesterday while I was off of work due to the hurricane. I went ahead and applied for a $28k personal loan with SoFi and was approved. Cash has already been deposited this morning. I received a 0.25% interest rate discount for sending at least $14k directly to a creditor and another 0.25% interest rate discount for setting up autopay. After the discounts, my interest rate will be 11.45% which probably isn't the best deal but it's definitely not the worst deal either. I can live with this. I sent $18k directly to capital one to pay down my capital one card and the remaining $10k was deposited into my account. My wife has been busy paying off credit cards with the remaining $10k and setting up the BTs for an additional $12k in order to cover ALL of our high interest credit cards. My utilization rate will be about 65% and hers will be about 75% on the Citi cards. A little higher than we'd like, but we're going to attempt to pay them down to the 28.9% level or at least the 48.9% level before hitting the SoFi loan with the snowball. We will now have payments to Rooms To Go that is on a 0% interest promotion for mattresses we purchased last year, her car note, the Citi card 0% interest BTs, and the SoFi payment. We set the SoFi loan up for 5 years to give us a little wiggle room but not too much. Our payments are basically in line with what we are paying now except we won't be paying high interest cards for 20+ years. Her car will be paid after the 1st of the year which we plan to snowball to the SoFi loan. We also have a couple of medical balances on payment plans that we'll be adding to the SoFi payment as well. Once the Citi cards are paid off at the end of the 21 month 0% period, we'll add that to the SoFi snowball as well. All in all we should be debt free within 3-4 years if not sooner! I can't explain how good it is to see some light at the end of the tunnel. I thank you all so very much for helping me and offering advice! And while I'm explaining it, I might as well ask. Do you think I made the right moves here or is there anything we should be looking at differently moving forward?
That is an awesome update and great to hear, @twpounds ! I know from experience that facing that much debt can be so daunting it just sucks the wind out of you. What I'm reading is you have HOPE, you have a solid PLAN, and you're getting back in CONTROL of the situation again. I can sense your optimism and excitement. That is so nice to hear and you're more than welcome. Myself and others in the community enjoy giving back and helping others along the way, so the only thing I would ask in return is that one day, when you're free of debt again, you pass it along by responding to others on the financial forums or wherever you may encounter them in real life. Unfortunately, there's a lot of people who need a helping hand. You never specifically laid out all the debt and income profiles, but I don't think you needed to do that for us to help. So, it sounds like what you're doing is spot-on. You're calculating utilizations, spreading out the debt on lower APR offers to include BT cards, using personal loans to mitigate the credit score risk and interest charges on some of the debt, and making a budget plan for paying off the debts by the snowball method. Maybe you can find other ways as you get farther into it to shorter it even farther than 3-4 years, such as maybe another BT card in 12-18 months. Lowering the APRs with the 0% BT offers and personal loans should be freeing up much more of your monthly payment to go towards principal and paying down the debt. In other words, your monthly payments may stay the same but you'll be making better progress on paying down the debt instead of just keeping your head above water. Great job! I look forward to some more updates in 6, 12, 18, or 24 months.
Thanks. I definitely intend on giving back. Everyone needs a helping hand from time to time and you are spot on. When I started getting serious about tackling this debt, it didn't take long for it to knock me back down and my hope was very low. All of the reading and research I did at the suggestions of other posters got me back focused and I was able to see some light at the end of the tunnel. We
definitely have a plan now, but the hard work begins now. We have to follow through which I really believe we will be able to. The mental pick me up of not staring down 20+ high interest cards is just an awesome feeling! One thing I did call and ask SoFi before applying for the loan was if they would accept a BT payment. Unfortunately, they do not so that's off the table. Good thing is that we can breath again and we have time to figure out some better options as BOTH of us should be in better credit positions in the future. May take a little time, but our plan is doable. I'll definitely post some updates as we work this plan! Thanks again!