UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Author: Xenonax Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308363  
Subject: Getting Serious Date: 10/15/2005 3:36 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have long talked about getting rid of debt. I wasn't doing too bad with debt a few years ago. Then, I got married, bought a house, sold a house, bought a house and fixed it up. About one year ago is when things where the worst. I had every credit card maxed and I wasn't paying enough attention to get my payments in on time for at least one of my cards.

Now, things are a bit better. I am done (for now) renovating my house--it is livable. I now have a permanent mortgage so I don't feel like I'm out in limbo as I was with the construction loan. I have eliminated a few cards and am now staring at 4 credit cards as my primary enemies.

Now, none of these credit cards are maxed out, but some still have some rather high balances on them. Here is the break down.

MBNA VISA:    7,218.44    13.99%
Discover:     4,717.17    14.49%
Chase VISA:   1,743.45    11.89%
Home Depot:   1,053.91     0.00%
--------------------------------
             14,732.97

Until today this looked a little bit worse. I just got finished talking with a representative at MBNA and managed to lower my interest rate from a usurious 17.74% to 13.99%. As might be expected, I am quite pleased with this change.

I think that to keep myself on track, I will post updates on this board and try to glean what I can from you all. I do have other debts that will be focused on later, including school debt, two cars, a mortgage, and a line of credit.

Currently, I intend to use the line of credit to pay off some of the above debts quicker as I have a 6.9% rate there. Every time I make a payment on my line of credit, I will advance what is available so that I can expedite the payment of the credit cards. I also will be looking at balance transfer options.

MBNA does currently have the option to transfer at 0%, and I am seriously weighing this now that MBNA is no longer my highest interest card. I do not consider a balance transfer a threat to my plans to eliminate debt as I have stopped using the cards altogether. In fact, I have long since cut them up into the tiniest pieces that I could manage and disposed of them.

I am really serious about getting rid of these debts and look forward to sharing the experience here.

--Xenonax
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: ClimbingOut One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 212577 of 308363
Subject: Re: Getting Serious Date: 10/15/2005 3:52 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I can't wait to join you in your happy dance.

I'm very concerned about this though:

Every time I make a payment on my line of credit, I will advance what is available so that I can expedite the payment of the credit cards.

Trading unsecured debt for secured debt can be a smart move when, as you have, you have stopped using debt. However your decision to keep advancing the HELOC is probably not a good idea. I would use it to get some room on the cards and then stop. Most HELOCs, like CCs are tied to the prime rate and Greenspan has given no indication that his love affair with interest rate hikes is going to change. You could end up in a far worse situation than you are now.

Continue to pay down the cards to get room and good BT offers, but for gods sake don't BT to a card with a balance.

Print the post Back To Top
Author: Xenonax Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 212580 of 308363
Subject: Re: Getting Serious Date: 10/15/2005 4:27 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Trading unsecured debt for secured debt can be a smart move when, as you have, you have stopped using debt. However your decision to keep advancing the HELOC is probably not a good idea. I would use it to get some room on the cards and then stop. Most HELOCs, like CCs are tied to the prime rate and Greenspan has given no indication that his love affair with interest rate hikes is going to change. You could end up in a far worse situation than you are now.

You have an excellent point. Let me clarify one thing, though. The line of credit that I am referring to is simply an open-ended unsecured loan. I have a $7,500 line of credit which is in no way tied to my home. Perhaps that makes it slightly more paletable? Thanks.

--Xenonax

Print the post Back To Top
Author: ClimbingOut One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 212582 of 308363
Subject: Re: Getting Serious Date: 10/15/2005 4:56 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Ah, I see Line of Credit and immediately think of a HELOC.

So you are trading unsecured debt for unsecured debt, which is the same as a BT. So long as the fees and interest savings at least break even, then by all means restructure that debt. I love the idea of debt restructuring as a means to pay it down.

Print the post Back To Top
Author: Booa Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 212643 of 308363
Subject: Re: Getting Serious Date: 10/16/2005 1:35 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
MBNA does currently have the option to transfer at 0%, and I am seriously weighing this now that MBNA is no longer my highest interest card. I do not consider a balance transfer a threat to my plans to eliminate debt as I have stopped using the cards altogether. In fact, I have long since cut them up into the tiniest pieces that I could manage and disposed of them.

Um, the only thing about the 0% BT to MBNA is that you have a large balance on there at 13.99%. If you transfer some amount on there at 0%, any payment you make to MBNA will go only towards the balance at 0%, and you will not lower the balance at 13.99% until the 0% balance is paid off.

If you could transfer the MBNA balance off to other cards, or pay it with your line of credit, then you could transfer the same balance back, or the balance from other CCs, to the MBNA at 0% without trapping the $7.2K at 13.99%. Just a thought.


--Booa

Print the post Back To Top
Author: Xenonax Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 212685 of 308363
Subject: Re: Getting Serious Date: 10/17/2005 12:27 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
If you could transfer the MBNA balance off to other cards, or pay it with your line of credit, then you could transfer the same balance back, or the balance from other CCs, to the MBNA at 0% without trapping the $7.2K at 13.99%. Just a thought.

That's the way that I've been thinking. I've only toyed with the idea of transferring to the MBNA thinking that it may lower the overall rate that I am paying. But then again, it wouldn't be by much and because none of the payments to the MBNA card would go to the 13.99% balance I may actually end up paying more interest on the deal--particularly with the new minimum payment guideline being adherred to.

If I can manage to get enough room on other accounts, then I will certainly dance as much as need be to get everything consolidated to the lowest rate that I can manage.

--Xenonax

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Advertisement