I have a debt of 4503 different credit cards divided if I make $700 every two weeks but 80% of it goes to rent or car payment and insurance should I take out a small loan of $5000 to pay off my debt and slowly pay off the loan and not use my credit cards during that time?
Financial question, should I take a small loan of 5,000 to pay off a debt of 4,500$ from three different credit cards
byu/Recent_Cry_3589 inpersonalfinance
Posted by Recent_Cry_3589
10 Comments
Assuming lower APR, then financially make sense.
But have you address your habits/behaviors that have led the CC debt? If no, what is stoping you from running it up again?
You should take a loan of $4500 to pay off a debt of $4500. Otherwise you’re just digging the hole deeper
You are living off credit cards beyond your means, and then wanting another loan to pay off those credit cards…
I am guessing you wouldn’t be a good candidate for a personal loan.
You might be able to take out another card with 0% balance transfers to consolidate it… But then you have another card.
I know it usually makes sense to pay off the highest interest one first, but cash flow is a concern here.. if it were me, I’d just throw everything you can at the lowest balance one until paid off, pick up gig work as needed… Then you need to figure something else out with your expenses or your income.
If the interest rate on the loan is low, then yes. After you pay off that loan, you should try to hurry to pay off your car loan or if possible get a cheaper car now or do without a car. Your rent and car are taking up way too much of your budget.
No. You can’t borrow your way out of debt. Just throw everything you can at the debt using the snowball method and it will be gone soon enough.
Are you gonna run them up again?
Totally get why you want to simplify things. Before taking the loan, call each card and ask their APRs, only consolidate if the new loan’s rate (including fees) is clearly lower.
You can’t take out a loan to pay off a loan. You might gain some efficiencies with interest rates if you’re lucky, but you still owe what you owe.
The problem is you’re spending more money than you’re making. That’s gotta change.
Here are your 3 variables:
1. You make too little money.
2. Your wife makes no money.
3. You have 3 dependents.
You can’t change 3. Well, I guess you could make more dependents, but you already know you shouldn’t.
That leaves 1 & 2.
1. You need to find a higher paying job, or work more hours. This assumes you have skills and education that can make more than minimum wage.
2. Your wife needs to join the workforce. You have no idea how liberating dual income households are.
If you have grandparents that can help with childcare I would highly recommend 2.
Unfortunately, we don’t live in a country where a family of 5 can live off a single income. Your wife needs to join the workforce. That’s the gist of it.
Prior you should adress how you ended with 4500 in CC debt. Budget a plan for upcoming months. Track your intake and expenses make sure they don’t balance in the negative, because if it does you’d just end up digging a bigger hole for yourself. Seek financial aid and professional advice prior, discuss your options. Act on your options once those steps have been done.
If you just blindly open lines of credit you are not really going to solve the issues at hand and you’ll likely just end up with greater debt.
This sub is so wild. You have people who actually take the time to not judge and give good advice but most of the time it’s just people saying “get a better job” , “well guess you need more money”. Like no shit more money would help but not everyone can just magically snap their fingers and get a better job. Not everyone has the connections or means to fast track themselves into new work.
Keep in mind people can come from poor backgrounds, and that’s hard to escape for some. If you don’t have money for school you put yourself in debt just to get a decent job but be stuck right in debt from the beginning. I know plenty of people who have decent jobs, save their money, are responsible with their spending but even all that something can happen in the blink of an eye and you’re back to struggling again.
A lot of people just do the best they can with what they have and sometimes that’s not enough. My advice would be the same as most though, keep working hard, throw any money you can at your cards, cut spending where it’s not needed. Make a budget and stick to it by any means.
I don’t have credit card debt anymore it’s all paid off but it was definitely wild for a bit trying to manage everything at first without a budget. My only issue now is my car had some regular maintenance come up and In doing what was needed other issues arose that needed attention and it drained a chunk of my savings. All my bills are paid, food on the table, clothes on our backs but now I stress about rebuilding what I lost. Money issues no matter how big or small will drive you crazy unless you sit down and take the time to figure out what goes where.
Anyway OP I hope you get everything taken care of, my best wishes go with you. Just keep one day at a time and do what you can. It might take a while, it might keep you up at night but you can do it. That goes for anyone on here, no matter how bad your situation is you can overcome it. You will overcome it. Just take it one step at a time and push for what you want and you can achieve it. I hope everyone here finds happiness in life and can overcome their issues. ☺️