Consolidating Debt

Hi Everyone

DH and I are taking a serious look at our finances. He has not been very responsible with his money in the past and has accumulated quite a bit of debt. I also have debt on my credit card from when I was unemployed.

Between us we have two credit cards, he has a loan which he took out to pay off his credit cards years back, and we have a loan from a family member to pay back. We have a lot of debt.

Is consolidating the answer. One monthly payment and a lower interest rate? I have never had a loan, I really don't know much about it. What are the best options? Is there anyone out there who can speak from experience?

Talk to a bank and see what interest they'll charge you. They might also try to steer you towards a line of credit instead. The difference with the line of credit is that you pay what you want when you want, creating more interest revenue for the bank.

It makes sense to consolidate. The danger is that once your consolidation loan is set-up and your cards are cleared, it's easy to fall back onto the trap of using the cards again.

The plan is to get rid of my card and lower DH's credit limit and store the card away in case of emergency. We are pretty committed to this so I hope that we won't fall into that trap!

Wimbly11, I agree completely with blueeyetea. Consolidating makes good sense from the point of view of having a lower interest rate. However, if one is not fully committed on stashing the credit cards and living on cash, at least until the consolidation loan is paid off, there is a real danger of getting into the same predicament again.

Congratulations on coming to the realization that you will be better off if you control the finances rather than have the finances controlling you. Good luck with your plan to move forward to retire your debt. It will be worth the effort

Likely a debt consolidation loan would be far cheaper, but what you also have to do is take a deep long look at why you/he/or both overspend. Unless you figure out why and address it, you will likely keep repeating the cycle. Trust me. I see it every day.
It may not seem too serious now, but it has the potential to cost you seriously in the future.

A cash budget is the best way to go. Once it's gone, it's gone.

We are taking a good look at where we are spending. We have made a budget and are sticking to it this month so we can track every penny. I think I'll make an appointment with a bank next week and see what they say. I want to get back on track...

Good Luck !

Don't forget to give each of you a little bit of $ to have for a splurge. You don't want the budget too tight that you feel trapped and can't spend any money.

Thanks everyone. We do have some "mad money" on our budget which is ours to do what we want with. I think that's important, I don't want to feel like we can't go see a movie or get that fancy coffee if we want to, we just have to be smart about it and not do it all of the time lol

Yup! We have date night everyother Friday night "in" and we both really look forward to it. We (he) cooks a fancy meal. We drink too much homebrew wine lol and listen to music and chat all night. Sometimes we even dance in the livingroom lol Doesn't have to cost $ to have a good time :)

When you consolidate consider borrowing from your house as you are likely going to get a better interest rate and second make sure you have the option to pay more then the minimum each month in case your circumstances change before the loan is paid.

Good luck!