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So I've recently decided to do something about the credit card debt I accrued during my first stupid years of college. Over the first two years where I worked near minimum wage jobs I built up $3,000 worth of debt. Now this might not seem like very much to most of you, but I'm operating on a $10.50/hour income. So the debt is manageable, just uncomfortable. I make all my monthly payments, and generally don't suffer too much, but I want to be done with this debt. And with my current rates and amount of debt, despite making everyone of my payments, the amount owed has not budged an inch. And just for full disclosure here are the amounts and rates of each card:

Card One
Max amount: $2,000
Rate: 23%
Total Balance on Card: $1,945

Card Two
Max Amount: $500
Rate: 18%
Total Balance on Card: $490

Card Two
Max Amount: $700
Rate: 15%
Total Balance on Card: $550


So I have three plans of attack which I will give ridiculous names such as:

The Robotic Loan Shark Gambit!

This plan consists of me going to my bank and requesting a loan, roughly in the neighborhood of $3,000 dollars. The point of this would be to consolidate the debt into one big lump, which hopefully has a lower rate then each of my other credit cards. Furthermore, it would make my life easier to pay one large monthly payment, then dashing to a number of different websites, with different due dates and paying them individually. This won't work if the bank offers a higher rate then what I am currently paying on my various cards at the moment though.

Go BIG or Go BANKRUPT!

This plan is one of pure attrition. I would cancel all scheduled monthly payments from my current bank account. This means no WoW, no X Box Live and no Netflix. Then, I would use my entire paycheck (usually 400-600 dollars every two weeks) to pay enormous amounts off of my credit cards, and then just use the card I paid down to survive until the next paycheck. This would require a Spartan existence until my cards are paid down though, as any debt I continue to incur on my cards from pure survival will make paying them off that much slower.

Bleed it dry...

The least dramatic of my ideas, this simply would entail adding an additional $100 per month in payment to my lowest card and working up from there.

I would take out the bank loan (so long as you're approved and at a good rate, of course!), pay off the CC debts, then pay back the bank loan + a little extra each month (make sure there's no penalty for early/extra payments). This would likely get you through it quickly and least-expensively.

If you really want to get rid of it, get a bank loan if you can. If not, try to find a low interest card that will take it all. Sometimes calling the company and saying you want a lower rate or you are leaving is all it takes. Drop any unnecessary stuff that you can live without and add the amount you save to paying down the loan. Don't stretch yourself too thin that you need to start using credit again.

It could really help to sit down with your previous bank statement and look at everything you spent money on. Sometimes trimming out a bunch of small dollar purchases can save you more than trimming out single larger purchases.

get the big loan, pay off the cards and then dump as much as you can bare back into the loan repayment every paycheck.

Fake your own death, move to Switzerland. I hear they have a ton of great restaurants!

... Yeah, try and get a loan.

get a loan from a bank, you won't be nowhere near a 23% rate.

1) If you go big, you will fail. Sorry. If you cancel WoW, the internet, etc. you will find something else to spend money on because you'll be damn bored. WoW can be the best money saver out there if that's all you do. $15 a month versus $30 in a bar in one day easily. Hell, buy one DVD and you've already gone over the limit. And because you're cascading your credit cards, you're really not getting anywhere, but you're making it look good.

2) Getting a good rate on a loan from a bank will be difficult if you don't have any assets to back it up with. An unsecured LOC can be upwards of 15-19% if you're lucky. Try it out first though; you never know what you'll get - and it will be the cheapest method to get out of debt. Check your local credit union too, they be more amenable to giving you a lower rate if you move your deposit business there.

3) Cut up two of your cards. Don't think about it, just do it. Now, using the extra $100 a month, start paying off the most expensive card (the one that has the most money on it) This will take 3 years to do, but it's doable as long as you show some financial discipline. As well, if you get a raise or any kind of extra compensation, that goes towards the card - not a movie, not a dinner, the cards.

If you need any more advice, I'd be happy to help in PM or here.

With the different dollar amounts and interest rates, I went and calculated your AVERAGE interest rate (i.e. should you take all 3 cards and put them together with one total and one interest rate) is 20.705%. So long as you can consolidate and get lower than that interest rate in a bank loan, you'll be better off than you are now.

EDIT:
Another possibility you could do is max out your debt on the lower-interest cards, leaving as little debt as possible on the higher ones... though it doesn't look like it will make too much of a difference at this point. It looks like you could save about $12/month by doing that (transferring $150 from a 23% interest to a 15% interest).

Ross said:

With the different dollar amounts and interest rates, I went and calculated your WEIGHTED AVERAGE interest rate (i.e. should you take all 3 cards and put them together with one total and one interest rate) is 20.46875%. So long as you can consolidate and get lower than that interest rate in a bank loan, you'll be better off than you are now.

Click to expand...

FTFY

Adammon;266880][quote=Ross said:

With the different dollar amounts and interest rates, I went and calculated your WEIGHTED AVERAGE interest rate (i.e. should you take all 3 cards and put them together with one total and one interest rate) is 20.705%. So long as you can consolidate and get lower than that interest rate in a bank loan, you'll be better off than you are now.

Click to expand...

FTFY[/quote]
I was going to add in "weighted," but some people don't know what that implies, and would think my calculations were some sort of trickery if they saw that in there.

Also, you quoted me too fast with the 20.47% interest amount I accidentally did the original calculation using the "max debt" numbers, and not his actual debt numbers... oops. The correct interest is what I changed it to... 20.705%.

Ross;266888][quote=Adammon;266880][quote=Ross said:

With the different dollar amounts and interest rates, I went and calculated your WEIGHTED AVERAGE interest rate (i.e. should you take all 3 cards and put them together with one total and one interest rate) is 20.46875%. So long as you can consolidate and get lower than that interest rate in a bank loan, you'll be better off than you are now.

Click to expand...

FTFY[/QUOTE]
I was going to add in "weighted," but some people don't know what that implies, and would think my calculations were some sort of trickery if they saw that in there.[/QUOTE]

Ahhh math nerds. Give me a hug

Adammon;266890][quote=Ross;266888][quote=Adammon;266880][quote=Ross said:

With the different dollar amounts and interest rates, I went and calculated your WEIGHTED AVERAGE interest rate (i.e. should you take all 3 cards and put them together with one total and one interest rate) is 20.46875%. So long as you can consolidate and get lower than that interest rate in a bank loan, you'll be better off than you are now.

Click to expand...

FTFY[/quote]
I was going to add in "weighted," but some people don't know what that implies, and would think my calculations were some sort of trickery if they saw that in there.[/quote]

Ahhh math nerds. Give me a hug [/QUOTE]
*hug*

I wish I had had more statistics courses and less calculus courses though... Damn, do I hate calculus.

No matter what yo go with I'd say you should quit Xbox Live. Youll be saving money that way, and without that you should also be less tempted to buy Xbox games. Keep Wow, and perhaps even set aside a bit of cash for another PC game you can play online for free (like TF2).

By the way, here's my little parental shake of the hand: I hope that Xbox of yours was a gift and your PC can just run WoW - or your pay is a lot less than it used to be.

Ross said:

I was going to add in "weighted," but some people don't know what that implies, and would think my calculations were some sort of trickery if they saw that in there.

Click to expand...

Ahhh math nerds. Give me a hug

Click to expand...

*hug*

I wish I had had more statistics courses and less calculus courses though... Damn, do I hate calculus.

Click to expand...

All of mine are accounting courses sooo...yeah...I don't feel too bad for you

I have been told that calling your credit card company and simply asking for a reduced interest rate yields surprising results. It's definitely worth a shot in either of the scenarios you've outlined.

Except for the bank loan one. I guess that would work, but I don't have much experience with such things.

Had an issue where we were remodling our kitchen. We had the money save up, but after we started we ended up finding it was a bigger project than we anticipated (floor boards were rotted, entire kitchen was gutted down to the joists). Long story short, I ended up with 5k debt on a credit card with 20% interest. I knew I could pay off the debt in less than a year, but I have issues paying that much interest (I'm the kind of guy who uses credit cards for emergencies and incidentals, and pays off his ballance every month, I think I have paid less than 100.00 in interest in the 10 years I have had credit cards).

I found a bank offering a loan at 8% (adjustable, and this is when rates were dropping, I think in the end I was down to 6%) and cleaned off my credit card.

Highly recommend that as your way to go.

I say try to get a regular bank loan. Don't get those debt consolidation loan, they will cancel your card. I recently discover that if you cancel your card after paying it off, you lose points in your score since those payment history are deleted also

I'm trying to get a loan and guess what? I cancel some of my old card couple months ago since I finally paid those off and those cancellation hurt my score (I lost 90 points)