Is this a sound financial plan to pay off debt?

[Strogen]

Currently, ive got $26,235 in debt on credit cards and paypal credit. 

I make about $45k a year base. But have recently been working 10 extra hours each week for overtime. So about $60k a year if I work OT each week (easy). 

I juggle these debts around for 0% BT offers and the like. But I never seem to get anywhere, im just far to prone to spending any extra money. 

I had a lending club loan from Aug 2015 for about 15K that I paid off a bit early, it was good to have that structure that forced me to pay it off. 

I was curious and apparently, lending club offered me $28.8k with income of 45k @ 7.21% interest rate. Marcus loans also offered me $24k @ something like 7.99%. Payment on the lending club 

I need this proverbial monthly "gun to my head" to get anywhere it seems.  I applied for the lending club loan, they are processing it. 

It would be advisable to take the loan, right? I can afford the $892 payment monthly, I will certainly have to cut back on some spending but it should be doable, even on the base salary. 

As soon as the money hits my bank account, I would cancel that bastard paypal credit and all but 1 or 2 of my credit card. 

[Al209]

Getting a loan to pay off all of the credit cards can work, but you need to be careful that you don't run them back up again.  Your spending habits are what got you into your current debt level, so you need to make sure you also have a plan to correct those.  Closing most of your credit cards will help a lot, but it won't completely fix everything.

If you aren't currently budgeting, I would start with that.   You need to be able to write a budget and stick to it.  Put away all of the credit cards and only use cash and/or your debit card.  Once you've been budgeting for a few and can follow that, then you can phase the credit cards back in.

[Strogen]

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@Al209 wrote:

Getting a loan to pay off all of the credit cards can work, but you need to be careful that you don't run them back up again.  Your spending habits are what got you into your current debt level, so you need to make sure you also have a plan to correct those.  Closing most of your credit cards will help a lot, but it won't completely fix everything.

If you aren't currently budgeting, I would start with that.   You need to be able to write a budget and stick to it.  Put away all of the credit cards and only use cash and/or your debit card.  Once you've been budgeting for a few and can follow that, then you can phase the credit cards back in.

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Its true that my spending habits have been....... horrible to say the least. 

Theres no reason for me to have 225k worth of credit lines open if I get the loan. If the loan is approved, ill be closing all of them except my wells fargo credit card ($3000 line) as I use them as my bank. 

Paypal credit has to go as well, its a real nice hidden trade line but ive got $6300 on mine. Too easy to use. 

I will have to budget, thats for sure.  

Thanks for the advice. 

[Medic981]

Paypal, definitely close, as a hidden tradeline is of no help to your credit file.

Rather than closing your credit accounts, cut up your cards. Keep the tradelines open. Once you have gotten a handle on your finances you are going to need those tradelines in the future or risk starting from square one and building your credit again IMHO.

The aftermath of the 2008 recession had me close my tradelines and ten years later I am starting from scratch. Something to think about.

[xaximus]

First things first - you have to get your spending in order. Set a budget that you stick to for spending. I have heard a lot of people say that they will stop all together but it doesn't work (sometimes but self-control isn't easy). Set an amount that you feel comfortable every month for spending and gradually lessen it. (Something I always follow - if I want it today, I wait, I'll give it 2-3 days, if I still want it and need it, then I'll get it, otherwise, I won't.)

As far as cancelling all CC's - other then the Paypal TL, I would get rid of that since it's a hidden TL. I would SD the rest and not use them until you can manage and stabilize your spending (and also pay your debt off). Once that's complete, make sure you have a budget, spend only what you need to (have an emergency fund as well).

Good luck! We're rooting for ya!

[Strogen]

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@Medic981 wrote:

Paypal, definitely close, as a hidden tradeline is of no help to your credit file.

Rather than closing your credit accounts, cut up your cards. Keep the tradelines open. Once you have gotten a handle on your finances you are going to need those tradelines in the future or risk starting from square one and building your credit again IMHO.

The aftermath of the 2008 recession had me close my tradelines and ten years later I am starting from scratch. Something to think about.

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I was approved for the $28,800 loan so thats good news. 

Ive been thinking about a way to deal with the credit cards as well. I have lots of cards with good benefits that could be very useful. 

Suppose I could throw them in my safe and forget about them. I would not be starting from scratch even if I cancelled all cards but one, as ive got a car loan and another small personal loan. But I kinda see what you mean. 

I think ill at least close out redundant cards, like I have two discover card becuase I used them for the price protetion benefit. 

[Kree]

As long as you math it to make sure that closing accounts won't hurt your AAoA or AoOA in 10 years there is no problem with closing a few. I think most people recommend keeping atleast 5 revolvers for maximum scoring purposes.