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Advice on lowering credit card balances, increasing credit score, and/or getting a personal loan. May need a car soon

Novakingwai 2,137 263 August 3, 2016 at 12:11 PM
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Right now according to Credit Karma I have a TransUnion score of 616 and Equifax score of 621.

I have an Amazon Chase card with a balance of about $4,000. APR 19.49%
A Walmart card of about $3,400.
A Paypal of about $1,200.
Star Card (For use at military bases) $500
Bestbuy $80

I would like to pay these off faster. I have already stopped charging to these cards. I have reduced my spending, and every time I buy something I use cash or my bank debit card to avoid adding to the cards.

Would it be beneficial to get a loan from a bank or online that I can put all these together and pay lower APRs? Or should I just work on paying the cards off as they are?

I would like to be able to get a car soon. My current one is 2001 with over 150,000 miles. It is running ok now. But I am worried that it may go bad at any moment and I would like to prepare.

28 Comments

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Joined Dec 2008
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#2
1) Cut up the cards
2) Pay the highest APR first
3) Once paid off, build an emergency fund
4) Then, once all of this is done, start thinking about a car. Which means, pay cash for a car around $6k or so.

Look for ways to save money each month. You need to cut cable, stop eating out, etc, etc. Use that money for your debt.

With proper maintenance, your car should last 200+K miles. I usually don't buy cars until they are close to 100K miles. Are you logically worried about your car (i.e., something sounds bad, isn't running well, etc), or just tired of your car and want a different one? Smilie
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"This whole.. I have XX company so my pee pee is 2" longer talk is hilarious. Who cares what company is cheapest, best, etc. Pick the company and plan you want and keep it to yourself."
#3
See if you can open a chase slate card. They usually have a balance transfer offer of 0% for 15 months with 0 transfer fees.

If you could transfer your 2 largest balances and then pay off the others quickly, then focus on paying off the big balances before the 0% runs out.

The other poster said to pay the highest APR first. That is mathematically the smarter way to do it it, but you could use the snowball method of paying the lowest balances first just to get them off your plate.

The only bank loan I would consider is a home equity loan
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#4
You mentioned having a Star Card. Are you active duty? If so, are you single? married/family? live on base (dorms vs home?).

Besides the above steps, you need to cut down on your spending and if possible increase income. Evaluate your budget/spending habits and make some sacrifices. Find work you can do on the side. You'll be surprised how easily you can make an additional $500+ per month by doing this.
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Joined Jan 2006
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#5
Quote from bta15 View Post :
See if you can open a chase slate card. They usually have a balance transfer offer of 0% for 15 months with 0 transfer fees.
I was going to suggest this also, but with those poor credit scores and nearly $10K in CC debt it's unlikely any lender would provide the OP with enough credit to cover his debt.

OP, I would put off a new car for awhile. Even if you get approved for an auto loan your interest rates are going to be quite high.
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As the username says ...
#6
Lending Club might be another option, providing loans to pay down credit card debt is a large part of their business model. The rate you are offered will be largely dependent on your credit score and annual income. The total debt you owe seems fairly low (at least in comparison to many people) so seems like you should be able to get an offer better than your current credit card rates. Might be a good option if you cannot get a credit card offer with a good balance transfer offer.
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#7
What are the APRs and limits on all of the cards, and how much money do you have each month to put towards these debts? Make sure you pay at least the minimums on all your cards, every single month. I may just pay off the BB card immediately since the balance is so low. Not necessarily the best move financially (unless it's the highest APR), but it could be a quick boost psychologically.

Aside from that, put more towards the highest APR card(s) first. Depending on the interest rates, it might make sense to approach a bank about a loan to consolidate some of them, but don't be too hopeful about it. $10k in debt with a ~600 credit score isn't likely to get a very big loan, nor a large limit on a BT card. Ironically, the people who could benefit the most from BTs typically don't qualify for them
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Marshall: Have the rest of you guys figured out by now that mmathis is the smartest guy on SlickDeals?
#8
I have no debt whats so ever and I am saving above 80% of my gross income every year. I am not a high income earner. I just live in a very frugal fashion.

My car is a 1996 accord with close to 200K miles. There is a constantly-updated list from craigslist I make of the used car for sale that I consider getting if I ever need to dump the car when the repair cost is higher than the car value. But that is all I need.

My advice for the OP is not to borrow any more money from the bank for any reason. Borrowing money is the decision that caused you to be in miserable state in the first place. You have done everything else right so far (stop using CC, use cash, reduce spending). You don't want to go back.

You prepare for car repair with the emergency fund. Don't let the car buying fever screw up your plan.

I would save more and do really strict zero-based budget and work on as many part-time job as humanly possible before being debt-free.

It's funny to see all these suggestions from others about credit score and lending club. If you let all the smoke screen blind you, you will find it difficult to ever be debt-free.
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Last edited by teetee1 August 5, 2016 at 12:23 PM

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#9
Quote from teetee1 View Post :
I have no debt whats so ever and I am saving above 80% of my gross income every year. I am not a high income earner. I just live in a very frugal fashion.

My car is a 1996 accord with close to 200K miles. There is a constantly-updated list from craigslist I make of the used car for sale that I consider getting if I ever need to dump the car when the repair cost is higher than the car value. But that is all I need.

My advice for the OP is not to borrow any more money from the bank for any reason. Borrowing money is the decision that caused you to be in miserable state in the first place. You have done everything else right so far (stop using CC, use cash, reduce spending). You don't want to go back.

You prepare for car repair with the emergency fund. Don't let the car buying fever screw up your plan.

I would save more and do really strict zero-based budget and work on as many part-time job as humanly possible before being debt-free.

It's funny to see all these suggestions from others about credit score and lending club. If you let all the smoke screen blind you, you will find it difficult to ever be debt-free.
Please explain how someone can realistically save 80% of their GROSS income without depending on someone else for food, shelter, clothing, etc. Unless you're not counting other sources of income generation or pay minimal to no taxes.
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#10
BB car is around 25%
PP can be up to 27% depending on which card
17-23% on walmart
14-22% chase

I would pay off lowest balance to highest.
Then the highest APR of Walmart/Amazon. They are close enough to not change anything by that much.
Doesn't matter much in this case. I think the lowest are the highest APR.

Check online for payment calculators
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for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20)
#11
Quote from boingyman View Post :
Please explain how someone can realistically save 80% of their GROSS income without depending on someone else for food, shelter, clothing, etc. Unless you're not counting other sources of income generation or pay minimal to no taxes.
It's actually surprisingly doable when I am single, rent cheaply, work from home, lots of expenses paid (Internet, traveling, food) by the company, max out all three retirement funds (401k, Roth IRA, HSA). Lots of peanut butter and jelly / ramen noodles are involved. This is the net worth saving, so the retirement account contribution is included.

I figured it's the best way to save and train my self control since I basically condense 5-10 years of normal household saving rate into one year while still go out with friends for breakfast and movies a few times a year. It also allows me to reach that traveling goal for retirement with amazing speed. I can hardly imagine doing the same when I am over 50 so any chance I get, I save while I am still young.
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Joined Jan 2006
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#12
Quote from teetee1 View Post :
I have no debt whats so ever and I am saving above 80% of my gross income every year. I am not a high income earner. I just live in a very frugal fashion.

My car is a 1996 accord with close to 200K miles. There is a constantly-updated list from craigslist I make of the used car for sale that I consider getting if I ever need to dump the car when the repair cost is higher than the car value. But that is all I need.

My advice for the OP is not to borrow any more money from the bank for any reason. Borrowing money is the decision that caused you to be in miserable state in the first place. You have done everything else right so far (stop using CC, use cash, reduce spending). You don't want to go back.

You prepare for car repair with the emergency fund. Don't let the car buying fever screw up your plan.

I would save more and do really strict zero-based budget and work on as many part-time job as humanly possible before being debt-free.

It's funny to see all these suggestions from others about credit score and lending club. If you let all the smoke screen blind you, you will find it difficult to ever be debt-free.
If he can get a lower interest rate or better yet 0%, then it's the smart play. Hypothetically, let's assume Mr. X has a total debt of $10K w/ a 19% APR. Mr. X wants to be debt-free in 18 months.

Monthly payment required:
$642.83
Total interest:
$1,570.94
Total cost:
$11,570.94

If Mr. X picks up a 0% BT offer he can save ~$87/mth or nearly $1,600 in 18 months. Perhaps his credit score doesn't qualify for that, but he can get a BT for 4%. He'll still save ~$69/mth or ~$1250 over 18 months. Those savings may be trivial to someone who is financially secure, but they can be significant for someone that is struggling to get out from under a mountain of debt.

Quote from boingyman View Post :
Please explain how someone can realistically save 80% of their GROSS income without depending on someone else for food, shelter, clothing, etc. Unless you're not counting other sources of income generation or pay minimal to no taxes.
The only way I imagine this being possible is if we are talking about someone that already owns property, has alternate means of food, etc.
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#13
Quote from teetee1 View Post :
It's actually surprisingly doable when I am single, rent cheaply, work from home, lots of expenses paid (Internet, traveling, food) by the company, max out all three retirement funds (401k, Roth IRA, HSA). Lots of peanut butter and jelly / ramen noodles are involved. This is the net worth saving, so the retirement account contribution is included.

I figured it's the best way to save and train my self control since I basically condense 5-10 years of normal household saving rate into one year while still go out with friends for breakfast and movies a few times a year. It also allows me to reach that traveling goal for retirement with amazing speed. I can hardly imagine doing the same when I am over 50 so any chance I get, I save while I am still young.
So I'm guessing you mean 80% of your AGI? Even if I spent absolutely nothing and maxed out pre-tax retirement, HSA, etc to get my AGI down I still would pay more than 20% of my gross towards federal taxes, not including state taxes, medicare, social security, SDI. Taxes alone would be nearly 1/3 of my gross income. I'm guessing you live in a non-income tax state and your federal tax rate has to obviously be less than 20%.

Anyway regardless good job! I wish I maxed my retirement during my single days. Back then I also worked for the state and could have maxed 403b + 457 + IRA. Not sure how much money I would have had after that though since I made 45-50% of what I do now which was 11 years ago. Although I only worked 4 days per week so could have easily done a part-time job within my field.
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Last edited by boingyman August 5, 2016 at 02:52 PM
#14
Quote from ManUpOrShutUp View Post :
If he can get a lower interest rate or better yet 0%, then it's the smart play. Hypothetically, let's assume Mr. X has a total debt of $10K w/ a 19% APR. Mr. X wants to be debt-free in 18 months.

Monthly payment required:
$642.83
Total interest:
$1,570.94
Total cost:
$11,570.94

If Mr. X picks up a 0% BT offer he can save ~$87/mth or nearly $1,600 in 18 months. Perhaps his credit score doesn't qualify for that, but he can get a BT for 4%. He'll still save ~$69/mth or ~$1250 over 18 months. Those savings may be trivial to someone who is financially secure, but they can be significant for someone that is struggling to get out from under a mountain of debt.
If one can do math, one would not be in the hole in the first place. Sometimes the paradigm shift is what's needed. I believe debt should not be treated as a math problem, it should be treated as an enemy and be dealt as such.
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#15
Quote from boingyman View Post :
So I'm guessing you mean 80% of your AGI? Even if I spent absolutely nothing and maxed out pre-tax retirement, HSA, etc to get my AGI down I still would pay more than 20% of my gross towards federal taxes, not including state taxes, medicare, social security, SDI. Taxes alone would be nearly 1/3 of my gross income. I'm guessing you live in a non-income tax state and your federal tax rate has to obviously be less than 20%.

Anyway regardless good job! I wish I maxed my retirement during my single days. Back then I also worked for the state and could have maxed 403b + 457 + IRA. Not sure how much money I would have had after that though since I made 45-50% of what I do now which was 11 years ago. Although I only worked 4 days per week so could have easily done a part-time job within my field.
Gross income (with bonus included) is the income before the tax and deductions. My definition of saving rate = savings / gross income. If it's divided by AGI, the saving rate will be even higher, and not make much sense since I included my contributions to savings (aka annual net worth saving).

I work like mad and save like mad but it's going to be worth it. Not to mention it's necessary for me since I am not planning to have kids and there are parents and grandparents of mine who did not have the financial knowledge and have nothing to show for it so some of my wealth will be used on them in a few years time. It's a sad realization after I had a epiphany and realized that personal finance should be taught since kindergarten.
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