Money Matters
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
How does MM feel?
Hi there, would you mind sharing your thoughts on credit counseling services? Organizing myself to start aggressively getting rid of my debt so wanted to hear your opinions on whether or not it would be smart to enroll in that type of program.
Thanks!
Re: How does MM feel?
I have never worked with any of these, but have never heard good stories. Dave Ramsey calls them credit CON-solidations. You pay a lot of money for their services, but generally you can achieve the same results on your own. A lot of the money you pay the service, goes to the service, not your debt. Just call the delinquent debt- or wait for them to call you and offer to settle. Get it in writing before you send them a cashiers check. Often he says you can settle for as little as 20 cents on the dollar depending upon how long you have been behind on your debt (assuming of course that you are)
If you are not behind, start working what's called the debt snowball- list your debts smallest to largest on a sheet of paper with their minimum payments next to them. Pay off the smallest one as quickly as you can, using any extra money you have towards that debt. Once you have that debt paid off, take the minimum from the smallest debt and apply it to the next smallest debt- again with any extra money you can get to put towards it.
Hope that helps a bit!
I'm not behind on my debt just getting no where with the minimum payments (obviously). This one agency I've researched negotiates the interest rates down and for 1 card in particular they negotiate to 0% where without the program I'm at 29.99%.
If I worked it on my own, why from smallest to largest balance and not based on interest instead?
Because you get the momentum going by getting some cards paid off which is a great feeling and can keep you going. Every now and then someone will call in and say how that's not the best financial move because you end up paying more in the end. DR always tells him that if you were thinking mathematically you wouldn't be in that mess and that it's not so much about logic as it is about behavior. Behavior got you in the debt, you need to change your behavior to get you out of the debt. In the long run, you're not going to save that much by paying off the higher interest first, but you have a higher chance of actually being successful if you actually see that you're making progress by getting the debt gone.
Thanks, that makes sense. At the part about seeing the progress, I can see how that would make a difference!
They would make the payments to each of the cards on my behalf (at a negotiated interest rate) and I pay them. There is a fee each month, it's about $45. But if they negotiate the interest rates it still seems like I would save much more in the long run instead of doing this on my own. With a few of the cards over 10% some even over 20%, all of their rates are under 10% and 1 or 2 would be 0% or 2%.
TTC since June 2012
http://gailvazoxlade.com/blog/archives/4953
This one of the articles I have read about getting your interest rate lowered. Hth.
My H had worked with one before we got married. It was not a very good deal, the interest reduction was minimal and they charged him a $20 monthly fee which ended up being more that the interest reduction was saving him. They also had lead him to believe that he was not allowed to pay it off early. The whole thing was stupid and as soon as I found out about it (while we were dating) I called them, confirmed that he in fact could pay it off and helped him sell some stuff and shift money around to get rid of it. My H is not great with financial dealings, he doesn't blow money necessarily, the CC debt was in part because him employer went under and stiffed him 6 weeks pay. He just isn't good with asking the right questions etc and they took advantage of that.
One good thing I can say is that his credit score was fine but it's not something I would recommend some one do. I would start with looking to see if the CC company is willing to negotiate with you directly. If it is going to go to collections they will sometimes let you pay a reduced lump sum to settle the debt. From my understanding that is basically what the credit counselors do for you, then they loan you the reduced amount and charge interest and fees. If you are offered anything like that you could see if your bank will give you a personal loan or one secured with any property you own - car, home etc...
The best thing to do of course is to slash your expenses, get an extra part time job and snowball the debt.
That you used a credit counselor can appear on your credit report as a PP metioned. So even if debt is cleared the fact that you needed credit counseling can still show.
As PPs said (all good advice) figure out your budget, cut expenses, get another job if need-be, and do a debt snowball.