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Author: bdoepken Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: Credit Card Shuffle Date: 12/2/2003 12:57 PM
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Here's the deal

I have 23000 in debt split between two cards. One with 10000 at 3.99 for the life of the bal transfer and the other one with 13000 at 4.99 for the life. I have an offer for one of my other cards for 3.99 for the life of the transfer.

My girlfriend (we do plan on getting married) has 16,000 in debt spread across five cards and rates averging 18 to 20% (ouch). Now, I could take on 13000 of hers to my 3.99 percent card. I figure that saves around 1600 to 2000 over a year. Her remaining 3,000 will be paid off in 4 months. At that point she would give me 800 to a 1000 a month to my payments

I'm already paying around 1100 to 1200 per month on my cards. So my credit looks good right now event with 23000. The big question is, if I take 13000 from her that gives me 36,000 total debt. That is a little over half of my salary. How will that effect my credit rating? It would be short term pain though, becuase all cards (hers and mine) would be paid off by July 2005.

Would it really affect my credit rating right now?

Any ideas you have would be greatly appricieated.
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Author: agg97 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174193 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 1:59 PM
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I wouldn't take on anybody else's debt until you're legally bound to do so. Life can happen between now and then (death, disability, etc.) While a remote possibility, if you assume the debt, you will be responsible for it if anything happened to her, or she simply broke up with you on a whim. I would NOT want to take that kind of risk, no matter how sure I was about the future.

-Agg97

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174196 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 2:40 PM
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<<I wouldn't take on anybody else's debt until you're legally bound to do so. Life can happen between now and then (death, disability, etc.) While a remote possibility, if you assume the debt, you will be responsible for it if anything happened to her, or she simply broke up with you on a whim. I would NOT want to take that kind of risk, no matter how sure I was about the future.

-Agg97
>>


Yeah, suppose she found a guy with a positive net worth?




Seattle Pioneer

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Author: bdoepken Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174199 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 2:59 PM
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So what are you saying?

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Author: FoolishAngela Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174200 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:12 PM
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They're saying don't do it. You each keep paying your own debts. Unless you have some legal form that binds her to help pay you off in the event that she ups and runs off with Mr. Moneybags. I know its bleak, but with money you ALWAYS have to plan for the worst case scenario- because then when or if it happens, it wont be so bad.

What difference does it make if you pay her debt while yours accrues and then she pays your debt? Just keep on paying your respective debts together (but seperate) and then once your debt free you can give her all the money you want.

angela

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Author: lizmonster Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174201 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:12 PM
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So what are you saying?

Probably exactly what you think he's saying; but don't let that distract you from Agg97's point. Life happens, and until the two of you are married you have no legal recourse should something happen (be it breakup, tragedy, or otherwise). I'm not sure I'd advise it after you're married, either; I have an ex who claimed that he got stuck with all of his ex-wife's debt, because he kindly signed it all over to his cards when they got married. It's not romantic to think of these contingencies; but IMHO her debt should stay her debt (and yours should stay yours). If you guys want to contribute jointly to paying it all down, that (to me) is different.

And of course, all advice includes the implicit "Neither of you are using these cards anymore, right? And you're committed to LBYM, right? Because we all know the balance transfer game is rearranging deck chairs on the Titanic if we're still running up the debt, right?"

-lizmonster


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Author: mlk58 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174202 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:16 PM
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Don't do it!

Even if you have her sign a contract promising to pay you back, it won't help your credit rating if she decides not to pay. And, sad but true, she will feel less urgency to get it paid off if it's in your name and not hers.

Don't do it.

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174203 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:19 PM
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Yes, I agree. Anything can happen. Yes, you say you are getting married but things can change and then you are stuck with your debt and her debt. Better to wait for marriage.

Catleen

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Author: mlk58 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174204 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:21 PM
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*Sigh*

I wasn't going to go into this, but maybe it will help you make up your mind.

When my DH and I had been dating seriously for more than a year and were "planning on getting married" but not officially engaged, I loaned him $8,000 to buy a car. He was going to pay me back at the rate of 800 to 1000 per month.

Guess what? I never got paid back. He was out of work for a while, then one thing and another came back and I never got paid. I was pissed as hell. Every time he bought a new part for his computer, or a new CD, or whatever, all I could think about was that he still had $8,000 of my hard-earned dollars and was choosing to buy toys for himself rather than pay me back.

Because we were in love, I felt like I shouldn't be so pissed. I know HE felt like I shouldn't be so pissed. Life happens, jobs get lost, and there are always more computer toys to buy. But I still feel like I got taken and it took me a long time to get over it.

These days, of course, we are married and he is the model of financial rectitude. I've gotten over being mad, we've successfully paid off more than $100,000 and life is good.

But if I had to do it over again, I wouldn't have loaned him that money before we were married.

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Author: bdoepken Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174205 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:23 PM
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<-- I wouldn't take on anybody else's debt until you're legally bound to do so. Life can happen between now and then (death, disability, etc.) While a remote possibility, if you assume the debt, you will be responsible for it if anything happened to her, or she simply broke up with you on a whim. I would NOT want to take that kind of risk, no matter how sure I was about the future

Agg97 -->

While all of that is possible, sometimes the risk is worth it. Even if I did not take on some of the debt, I am still going to help her pay off her debt first, becuase of her high balances. We both are really committed to getting out of debt and getting on with our lives together. We have both made spending choices, due to divorce, playing etc..

I've already decided the risk is worth it. What I really want to know is how would it affect my credit rating, long term, if at all. My credit rating is very high (according to my 3 agency credit report) and I'm at better than half the people in the country on my credit score.

Thanks




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Author: bdoepken Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174206 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:34 PM
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Lizmonster

<-- If you guys want to contribute jointly to paying it all down, that (to me) is different. -->

I'm leaning towards this course. I already have a plan put together with paying hers down first (still paying off 500 on my cards a month), then we will take her money + my other money and pay off mine.

Yess I hear everyone who has been burned or knows somebody that has loaning money out to somebody. Luckly for me I've never been very realistic :)

<---
And of course, all advice includes the implicit "Neither of you are using these cards anymore, right? And you're committed to LBYM, right? Because we all know the balance transfer game is rearranging deck chairs on the Titanic if we're still running up the debt, right?"
-->

Yes, the cards are out the window. All transactions are made from checking/cash.

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Author: lizmonster Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174207 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:40 PM
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What I really want to know is how would it affect my credit rating, long term, if at all.

Since FICO formulas aren't made public, we can only guess.

I'm guessing you'll take a hit for this. How long that lasts probably depends on how long you take to pay down the debt, and what happens to your salary/expenses in the meantime.

-lizmonster



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Author: Aranknitter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174208 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 3:48 PM
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Luckly for me I've never been very realistic :)


I wouldn't knock realism. Realism keeps families together. Realism stops you getting burned too badly. Realism keeps a roof over your children's heads and food in their bellies. (Unless you plan on being childless all your life of course.)

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174210 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 4:03 PM
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bdoepken,

You wrote, While all of that is possible, sometimes the risk is worth it. Even if I did not take on some of the debt, I am still going to help her pay off her debt first, becuase of her high balances. We both are really committed to getting out of debt and getting on with our lives together. We have both made spending choices, due to divorce, playing etc..

I've never been burned in this way; but I agree with all the other posters. Don't loan money to a close friend or lover. At least don't loan them enough money that you'll be pissed off if they don't pay you back. Offering to help them pay their debts down is a different matter -- especially if you're already living together.

Also, I've already decided the risk is worth it. What I really want to know is how would it affect my credit rating, long term, if at all. My credit rating is very high (according to my 3 agency credit report) and I'm at better than half the people in the country on my credit score.

In the long run, both of your scores will probably improve. In the short-run yours will decline and hers will rise. By how much depends on a lot of factors and FairIsaac does tell us peons what those factors are. However, if you bought a credit report with a score recently, you should be able to use CRA's own credit score simulator to figure out the answer to your question.

- Joel

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Author: eudaimon6 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174212 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 4:35 PM
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the scoring models are proprietary, so i cant tell you exactly what effect adding $16000 (is that the figure) to your debt will have on your fico score. but...

you can go to www.transunion.com and order your credit report and then you can play with what is called a fico simulator. it lets you see what effect certain actions will have on your fico score. the choices as i recall are along the lines of "what if i pay all my bills on time for six months" or "what if i max out all my credit cards" or "what if i pay all my bills late this month" doing that might cost you $15 or so, but it can be an interesting exercise.

as a dealership f&i manager ive looked at literally thousands of credit reports in the last seven years. if i assume that your present debt has you somewhere around 40% of your available credit used and that going from 23k to 40k will bring you to roughly 60% of your available credit used i wouldnt be a bit surprised if taking on her debt cost you 80 or 100 points on your fico score. as long as you dont need to borrow money in the next two years it doesnt matter, but....

life happens, as has been said.

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Author: DizChick Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174214 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 5:38 PM
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I'm already paying around 1100 to 1200 per month on my cards. So my credit looks good right now event with 23000. The big question is, if I take 13000 from her that gives me 36,000 total debt. That is a little over half of my salary. How will that effect my credit rating? It would be short term pain though, becuase all cards (hers and mine) would be paid off by July 2005.

Would it really affect my credit rating right now?

Any ideas you have would be greatly appricieated.


I wouldn't move her credit to your card.

Instead you could help her call and work on getting lower rates. If she can't get lower rates, or the rates she does get are still higher than the rates you have, then you could help her to snowball the cards.

Even after marriage, you might want to be cautious moving her credit into your name because of how it could effect your credit, and then your other cards.

After marriage, if you two wanted, you could try for joint cards to get lower rates if she still can't get lower rates on her own.

DizChick

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Author: dtschet Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174217 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 6:28 PM
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bd,

I admire your generosity, but you may be hurting yourself if you take on her balances.

Why not help her repay her debt while keeping it in her name?

Maybe moving it in small increments, say $1K every few months or so as a balance transfer to your cards so it would not impact your FICO score very much.

Best wishes in whatever you decide to do.

donna

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174218 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 6:56 PM
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While all of that is possible, sometimes the risk is worth it. Even if I did not take on some of the debt, I am still going to help her pay off her debt first, becuase of her high balances. We both are really committed to getting out of debt and getting on with our lives together. We have both made spending choices, due to divorce, playing etc..

You're still missing the death/disability part.

Suppose you transfer the debt, and she gets hit by a bus tomorrow. Legally her family will have a great deal to say in her estate, whether she dies or is in a permanent coma, and whether or not she left a will. And they aren't going to care whether or not you wiped out her debt for her.

You'll be left without her, and with a huge debt. The law will not help you.

Wiser, more sensible solutions, would include the small increments idea, occasionally giving her an extra check to help pay something down, assisting with phone calls asking for lower rates, and so on.

By the way, if your own credit cards take on extra debt, you'll probably see your interest rates skyrocket, thus adding to the total debt.

I know you love each other, and are committed to each other and to paying down the debt, but if you transfer the balance, and the debt goes up on your cards, you aren't really helping. You need to start thinking as a couple, in the long-term, rather than focusing on short term debts. And long term, you will probably end up with more debt by doing this.

Nancy

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Author: TMF2Aruba Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174219 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 7:29 PM
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Hi bdoepken!

First of all, welcome to the boards and to The Motley Fool (I see that you're new)!

You've made your position very clear. The risks of high debt while starting off a marriage have been pointed out to you, but you've stated how you're aware and prepared for that.

So, to answer your question, it's difficult to state exactly how you're credit rating will be affected, but affected, it will be. Will it damage your rating? I'd doubt it, unless you were to default in paying. The negatitive factor comes into play when (if) the debt ratio to your income is out of proportion, so it could technically lower your score somewhat, especially if you were to come close to maxing out your available credit. Additionally, if you were to look for a loan or mortgage while carrying that debt, lenders could be squeemish about lending more.

I believe you need to do what works best for the two of you (if you've indeed made this decision to take on her debt) and not be overly consumed with what your credit score will be in the short term. In my opinion, you might consider just taking on some of her debt as opposed to all, which could become an easier compromise for this situation.

Good luck, and again, welcome!

Tony
...but I still am...

Off2Aruba

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Author: dianakalt Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174221 of 308782
Subject: Re: Credit Card Shuffle Date: 12/2/2003 8:34 PM
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My girlfriend (we do plan on getting married) has 16,000 in debt spread across five cards and rates averging 18 to 20% (ouch). Now, I could take on 13000 of hers to my 3.99 percent card. I figure that saves around 1600 to 2000 over a year. Her remaining 3,000 will be paid off in 4 months. At that point she would give me 800 to a 1000 a month to my payments.

For the love of God do NOT do assume her debt, until you get married and maybe even not then. If you assume her debt and the relationship goes sour, you will be stuck with 13K of HER debt that you are now the legal owner of, and responsible for paying. If you want to help her out with paying her debt off, that's fine--work together to plan a strategy that minimizes payoff time without jeopardizing your future, don't assume her debt.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174225 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 12:09 AM
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If she has a decent FICO score, she should be able to obtain a card with a decent interest rate to transfer her existing balance. It is not a quesiton of transfer it now to your card or there will never be another chance.

If she does not have a good enough FICO score to obtain a good balance transfer interest rate then she may run up additional debt before you are married.

Debra

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174227 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 12:52 AM
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Any ideas you have would be greatly appricieated.

All this talk may be a moot point. The 13K that you need to put on your card would probably be considered a cash advance, not a balance transfer so you probably wouldn't get the same rate.

I also noticed that you still call here your girlfriend, not fiancée, if your engagement isn't 'official' and you haven't set a firm date then there is probably a reason. If you aren't ready to make a commitment then you shouldn't merge you finances with her.

Greg


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Author: llamalluv Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174234 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 2:54 AM
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My girlfriend (we do plan on getting married) has 16,000 in debt spread across five cards and rates averging 18 to 20% (ouch). Now, I could take on 13000 of hers to my 3.99 percent card. I figure that saves around 1600 to 2000 over a year.

Lil' advice--wait until you get BACK from the honeymoon to do that. I'm sure she's a nice girl, and you two probably WILL get married ("someday"), but on the off chance that something goes awry you don't want to be in court a year from now, suing your then ex-girlfriend, after she runs off with that cute guy from the gym and leaves you hanging with her debt.

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Author: llamalluv Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174235 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 3:00 AM
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Guess what? I never got paid back. He was out of work for a while, then one thing and another came back and I never got paid. I was pissed as hell. Every time he bought a new part for his computer, or a new CD, or whatever, all I could think about was that he still had $8,000 of my hard-earned dollars and was choosing to buy toys for himself rather than pay me back.


And that's probably the best reason not to do it. It's a strain on the relationship. You two shouldn't "owe" each other anything other than love and respect. Lending her money just places you in a position of master over her, and the little things she "wastes" money on (everything from a new blouse to a pack of gum) will make you feel just like mlk58 did.

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Author: llamalluv Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174236 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 3:01 AM
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While all of that is possible, sometimes the risk is worth it. Even if I did not take on some of the debt, I am still going to help her pay off her debt first, becuase of her high balances. We both are really committed to getting out of debt and getting on with our lives together. We have both made spending choices, due to divorce, playing etc..

If you decide to go ahead and do it, the best thing to do is just GIVE her the money--don't "loan" it to her. Meaning, should you two end up NOT marrying, don't be coming to her, hand out, "Ahem, I believe you have something of mine....?"

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Author: llamalluv Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174237 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 3:02 AM
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(Unless you plan on being childless all your life of course.)

Which usually doesn't happen unless people are realistic!

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Author: bleplatt Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174239 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 6:26 AM
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Guess what? I never got paid back. He was out of work for a while, then one thing and another came back and I never got paid. I was pissed as hell. Every time he bought a new part for his computer, or a new CD, or whatever, all I could think about was that he still had $8,000 of my hard-earned dollars and was choosing to buy toys for himself rather than pay me back.

The same thiing has happened to me. I loaned an ex $$ to buy a car and every month I have to call her up and remind her she needs to make a payment. (She doesn't always do so). It's been over 3 years and she's managed to pay me back about 600.00 on a 2K loan.

It's *really* strained our friendship; some days I can't even talk to or about her. I PO'd that she doesn't respect me enough to pay back the money that she owes me and I have to call her up and remind her about it all the time. It REALLY po'd me when she managed to buy a used Miata because the car she was driving was going kaput. Somehow she found cash for the Miata (and the new security system and sound system she put in it.)

I'm getting hot under the collar again. grrr. I mean, if she were paying me 25 dollars a month, I'd be happy. At least she's making good on her debt.

Don't do it.

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Author: Wingenit Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174257 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 3:27 PM
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Here is another good reason NOT to.

I took on about $10k of my husband's CC debt (all acquired before we married) by turning into interest-free student loans. Good for lowering total interest paid, good for freeing up our finances while we were still in college.

BAD for him ever becoming a responsible person financially. The student loans in my name are now at about $9400 and he sees absolutely NO urgency to pay them off because of the low interest rate. He has also STILL not stopped the spending habits that got him into that pickle in the first place. If something happened to him today, I would not just be a widow with two small children -- I would also still have this debt to pay off.

Taking on these loans removes her responsibility. Obviously you were both spending money irresponsibly. If she never has to pay that off, she will not be responsible with her future spending.

Live & learn,

Wingenit

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Author: Swimmerdog Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174278 of 308782
Subject: Re: Credit Card Shuffle Date: 12/3/2003 11:41 PM
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I have another story that somewhat relates to this. An acquaintance was engaged to marry a woman who was younger than he. He paid for her to finish college, get a master's degree, buy a car. They eventually got married and bought a house together. After they went on a very nice Hawaiian vacation and he'd bought her a vacation wardrobe and some very nice jewelry, she said their marriage was over.
This was, I believe, three weeks after he'd mailed in her last tuition payment. They had been married less than a year.

Katy

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Author: windyelliott Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174401 of 308782
Subject: Re: Credit Card Shuffle Date: 12/6/2003 10:50 AM
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Please do not mingle your finances before you are married. This is how lawsuits start. If you give her a free ride on this debt, then she is likly to go into debt again. Also, the minute you put this debt on your card it becomes yours, not hers.

This is a very bad idea pre marriage. I don't care how in love you are.

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