Here it the thing. I just recently went back to work after having our second. We both are in the high income bracket. My husband and myself. For most of my pregnancy I did not work. We were fine until recently a family member got into an accident and it financially hurt us, it hit our savings hard. We still have a good deal of savings but we want to take some measures before it becomes a problem. We have a mortgage that is higher than most. We have a car note that will be done in a year. The car note for our son%26#039;s car just got started. I also have substantial credit card debt. We were debating whether we should consolidate or deplete our savings and pay off two of them and start to rebuild our savings. Any suggestions?
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
Good questions.
The bottom line is, you can take out a consolidation loan, and do it withhout damaging your credit. IF ....
-- You comparison shop for the loan carefully, and then when you are ready to apply, make your moves within a confined period.
The credit score formulas are smart enough to recognize %26quot;shopping%26quot; behavior, and treat multiple the credit applications as a single application, if you apply within a narrow window of time. I%26#039;ve heard varying figures, from 14 days to 30 days. If you confine your loan applications to that window, there will be little to no damage to your credit. The one thing you want to avoid is dragging out the process, and applying for one loan one week, looking it over, applying for another the next week, and stretching it out over months. That looks like desperation to the credit score formulas, and is punished by lowering your credit score.
-- You know what kind of loan you want, and choose the one that fits your needs.
Since you own a house, you probably have some equity. You%26#039;ll need to choose whether you want to tap that equity, or drain your savings even more. If you do the former, your choices are a cash-out refi, a fixed-rate home equity loan, or a variable rate home equity line of credit (HELOC). Cash-out refis and home equity loans have closing costs you need to account for. HELOCs are variable, so you incur the interest rate risk.
Frankly, I%26#039;m more concerned about your willingness to add more debt than which financial instrument you use.
A relative got sick, and you%26#039;re paying the bill. Your son wanted a car, and you%26#039;re picking up the tab. Hmmmm.... I applaud your compassion, I understand your generosity, but you and your husband need to set aside money for your own needs first, and then take care of the world. I know you say you still have substantial savings, but on your current trajectory, you won%26#039;t.
It sounds like you have the means to do a consolidation loan, but I%26#039;d suggest you bundle up your various loan papers and get to a professional who can help you in much greater detail than we can offer here. Try to find a fee-only financial adviser (as opposed to a commission based financial planner) who can look at your situation in detail, and devise an overall financial plan.
Good luck.
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
It%26#039;s best to just get rid of your debt. Keep about $1,000 in a emergency fund and pay off the debt. once you pay off the debt you can rebuild your emergency fund ( at least six months of expenses) with the money you save from having no payments.
Check out daveramsey.com and listen to his radio show. He has lots of great advice on money and debt. It doesnt cost a dime to listen.
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
A conventional consolidation loan will not hurt you, matter of fact it will help you. Just remember, with all your credit cards paid off, it%26#039;s easy to go back out and run them back up. Maintain a strict discipline about that. Set a budget and stick to it. A lot of people try to save more than they can. Set a percentage, normally 10 % under normal circumstances. But in your case, you might want to try 15 % of your conbined income until you feel comfortable with your emergency fund, then back off to 10 %. The point is, withdrawing from savings accounts is a bad habit, once you get use to it, it%26#039;s easy to do. Don%26#039;t try to save more than you can and have to get into saving all the time because you can form that habit. Good luck darlin, hug that baby for me. You have my email, send me a picture?
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
A consolidation loan is just shifting your debt. Instead work on paying everything off yourself.
Start with the credit cards. Pay them off and stop carrying balances. Only charge what you can afford to pay off every month.
If you can refinance your mortgage for a lower interest rate, do that. But do not add any other debt into your mortgage.
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
What kind of consolidation loan are you talking about.
Many people will use there home equity to consolidate debt. Personally, I believe this is a BAD IDEA.. why would you take UNSECURE debt (debt that the banks cannot take anything from you if you cannot pay) and move it to SECURED DEBT (debt that if you cannot pay, the bank will take something from you, like your house)
What I have done, since I too have a large amount of debt, is 1st make sure you get spending under control... if the debt were %26quot;gone%26quot;, would go still be living above your means?
next, I got 3 credit card offers that have low locked in interest rates... they all have 3% - 4% rates for the life of the balance..
also, you could take some of the debt and lock it in at 0% for a term that you know you could pay it off for the lock rate..
Here is a link to a website that shows many %26quot;balance transfer%26quot; offers
http://preferred.ecreditdirectory.com/ca...
thanks!
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
i would pay off the debts as soon as i can. then start to save. then continue with a fixed income for each of my needs.
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
you sound like you need to do a re-fi on your mortgage and pull some equity out to clear up your credit cards. if your on the tail end of your first car loan,you may not save enough interest to justify paying it off unless the payment is bothersome.
you may want to get enough to pay for your son%26#039;s car if it%26#039;s a high interest loan however.
anyway your credit won%26#039;t take much of hit as lots of folks are taking advantage of the all time low rates.
hope this helps ,talk to a financial adviser if your still not sure chances are your husband%26#039;s work probably has one on staff.
How much can a consolidation loan reduce your debt and how to do it without damage to credit?
Practically any type of loan can be wrapped into the debt consolidation process. Common types include finance charges, late fees and overdraft charges, credit cards, personal loans, utility bills, medical bills, car loans, store cards, gas cards and back taxes. A debt consolidation loan%26lt;!--allows you to condense your monthly payments into a single, simple bill, while lowering your interest rates and helping you pay down your debts more quickly and easily. It is also an essential tool in avoiding the much more serious step of declaring bankruptcy.
http://best-loans.awardspace.com/Loan-Co...
Unlike bankruptcy, in which debts are cancelled and your credit rating collapses completely, debt consolidation loans are essentially a type of refinancing, where several--%26gt;old loans are replaced with a new one that has more favorable terms. Your loan consultant will negotiate with creditors on your behalf, so you閳ユ獟l no longer have to deal with harassing phone calls and daily mail.
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