@Debtdebt wrote:Hi,
Im freaking out and living paycheck to paycheck due to massive credit card debt that I have accumulated over the last few years. Credit Card Debt is about $83k overall and 57% credit card usage... I use to have BT promos that have since expired at some point this year, driving my monthly bills way up. I have $8k in my savings for emergencies. I need immediate advice on how to tackle this and consolidate my debt. Due to the debt, first thing I will do is sell my car to get rid of the $855/month car loan and just use my beater car thats paid off and runs well. Sitting at 712 Fico Score. What are my options as I'm currently stressing everyday and losing sleep thinking about the debt and don't know what to do!? Do you think a local Credit Union would help me out with consolidating this debt into some sort of fixed loan? I also have about $100k equity in my house, but I heard banks aren't doing HELOCs at the moment and my DTI is too high. Thank you in advance to everyone who takes a minute to look at my situation. I will gladly update with other info needed.
-Monthly take home pay is $4800 (guaranteed), but usually bring home $5200 after Overtime.
-Mortgage $1830/month
-Chase Sapphire $407/month ($13.8k/$14k) 24.24%
-Citi Diamond $593/month ($26k/$28.5k) 20.24%
-BOA $628/month ($19k/$30k) 28.74%
-Amex Blue $310/month ($10k/$10.5k) 25.74%
-Chase freedom unlimited $155/month ($14k/$15k) 21.24%
- CU loan $450/month
- Car loan $855/month
*TOTAL monthly debt is currently $5288
Thank you for taking the time to look at my post and offering any advice. Happy Holidays.
1. You've already identified one thing you need to get rid of, the $855 month car loan.
2. You've also identified what I think would be another good move -- a credit union debt consolidation loan. You're not going to get a big enough loan to tackle all the credit cards, so what I would do is get a loan to tackle the BOA card. Pay that card to zero, and don't use it again for awhile except for tiny numbers which you can pay off before the statement even cuts.
3. Then I would start reducing balances to 88%, then reducing balances to 78%, to get out of the "maxed out" zone.
4. Once I got them all to 48% or less, I would start snowballing. (Paying smallest balance to zero, then next smallest, etc.)
5. As you've probably figured out, it would be good if you could supplement your income and apply the additional income to the credit card payments. So more overtime and/or a side gig would be nice if possible.
I would not replace unsecured debt with heloc debt secured by my home.
of the $2093 in payments to the credit cards, only $458 is being applied to the principal balances. you are hemorrhaging interest. also, the math does not check out for the $155 monthly payment for Chase Freedom; the payment is less than the interest accruing and minimums are usually at least 2% of the balance, which is $280.
| limit | balance | apr | min | int | util | |
| BOA | 30000 | 19000 | 28.74 | -628 | 455 | 63 |
| Amex Blue | 10500 | 10000 | 25.74 | -310 | 215 | 95 |
| Chase Sapphire | 14000 | 13800 | 24.24 | -407 | 279 | 99 |
| Chase Freedom | 15000 | 14000 | 21.24 | -155 | 248 | 93 |
| Citi Diamond | 28500 | 26000 | 20.24 | -593 | 439 | 91 |
| TOTAL | 98000 | 82800 | 23.69 | -2093 | 1635 | 84 |
| CU Loan | -450 | |||||
| Mortgage | -1830 | |||||
| EXPENSES | -4373 | |||||
| INCOME | 4800 | |||||
| diff | 427 |
it looks like at least a year before all your revolving accounts are below the maxed out 88.9% threshold:
| limit | balance | apr | min | nper | new bal | new util | |
| BOA | 30000 | 19000 | 28.74 | -628 | 11 | 16853 | 56 |
| Amex Blue | 10500 | 10000 | 25.74 | -310 | 11 | 8829 | 84 |
| Chase Sapphire | 14000 | 13800 | 24.24 | -407 | 11 | 12180 | 87 |
| Chase Freedom | 15000 | 14000 | 21.24 | -155 | 11 | 15116 | 101 |
| Citi Diamond | 28500 | 26000 | 20.24 | -593 | 11 | 24150 | 85 |
| TOTAL | 98000 | 82800 | 23.69 | -2093 | 77128 | 79 |
at that time, I would seek out a personal loan of 25-30K to consolidate BOA and Amex Blue. a personal loan from discover, marcus, etc will give you an estimated amount and rate without a hard inquiry. I am not sure you would qualify for one now, but you can try.
in any case, because the interest on your accounts is so expensive and your budget is so tight, I would emphasize that the avalanche method is probably the best way to pay things going forward. the snowball will drag it out even more ridiculously expensive and slow than it already is.
if I was $83000 in debt with stifling interest, I would try a free consultation with at least two bankruptcy attorneys just to get some insight what it might look like.
@Debtdebt wrote:
I am scared of bankruptcy and the effect it would have on my family and home. Never been through one and don't know anyone that went through one either. I'm just glad I have a stable job with benefits.
bk is definitely not to be taken lightly. but it is good to know all your options. in any case, I am not advocating for/against bk, I am advocating that you are informed about all your options.
just for exercise, consider the following table:
| balance | apr | pmt | nper | cumipmt | total pmt |
| 82800 | 23.69 | -2367 | 5 | -59227 | -142027 |
| 82800 | 23.69 | -2164 | 6 | -73030 | -155830 |
| 82800 | 23.69 | -2027 | 7 | -87464 | -170264 |
| 82800 | 23.69 | -1930 | 8 | -102488 | -185288 |
| 82800 | 23.69 | -1860 | 9 | -118057 | -200857 |
| 82800 | 23.69 | -1808 | 10 | -134126 | -216926 |
the rough estimate for $82800 in credit cards at your blended interest rate of 23.69% apr requires pmt for nper number of years. that is 40%+ of your take home for years to come, equal or more than your mortgage. anything beyond 5-6 years is unconscionable. at 7 years more cumipmt interest is paid than the original balance.
sure you can throw more cash at it and/or lower the apr at some point to help with the interest, but it needs to be really significant.
Any equity in the home? HELOC possibly. I've never said yes file BK. The biggest investment is a home. Credit cards are not. Were do you see yourself in say 3-5yrs after filing for BK. Fresh start and rebuilding. Or. Still paying on these debts and interest is flying out the window. Money lost. Never recovered. Choice is yours. Best of luck.
