Comments on: Is It Ok to Consolidate Your Debt Before Paying It Off? http://financefreelancelife.com/2009/04/27/is-it-ok-to-consolidate-your-debt-before-paying-it-off/ Sat, 20 Mar 2010 15:34:03 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Diane http://financefreelancelife.com/2009/04/27/is-it-ok-to-consolidate-your-debt-before-paying-it-off/#comment-44104 Diane Mon, 27 Apr 2009 16:14:23 +0000 http://financefreelancelife.com/?p=1397#comment-44104 I'm on the side of getting the lowest interest rate possible to stem the bleeding on interest while paying down debt. IF you're serious about paying off debt you must stop using the cards while doing so. If you can't discipline yourself to stop spending on the cards you're not likely to be successful at paying off the debt! Freeing up cards should not be a temptation to continue spending, unless you're not really ready to deal with the problem. I just advised my best friend to do a balance transfer to a new card with a 3% fee but 0% interest for 1 year. This will save her $100 per month in interest, as the old card had gone up to 27.9%. She is locking up the 27% card. The $100 per month saved on interest will allow her to pay down the debt much sooner when applied to the actual balance. Part of Dave Ramsey's strategy is to pay off small balances, in order to see success. That might be necessary for some people to succeed. I viewed my debt as an overall total to be paid down, so I felt success every time I reduced the total. I did move a couple of debts to lower interest cards while paying down my debt, although I was never able to consolidate it all onto 1 card. I then paid down the highest rate debts first, followed by the lower interest debts until it was gone. It worked for me, saving me $100s in interest over the life of the debt. I’m on the side of getting the lowest interest rate possible to stem the bleeding on interest while paying down debt.

IF you’re serious about paying off debt you must stop using the cards while doing so. If you can’t discipline yourself to stop spending on the cards you’re not likely to be successful at paying off the debt!

Freeing up cards should not be a temptation to continue spending, unless you’re not really ready to deal with the problem.

I just advised my best friend to do a balance transfer to a new card with a 3% fee but 0% interest for 1 year. This will save her $100 per month in interest, as the old card had gone up to 27.9%. She is locking up the 27% card. The $100 per month saved on interest will allow her to pay down the debt much sooner when applied to the actual balance.

Part of Dave Ramsey’s strategy is to pay off small balances, in order to see success. That might be necessary for some people to succeed. I viewed my debt as an overall total to be paid down, so I felt success every time I reduced the total.

I did move a couple of debts to lower interest cards while paying down my debt, although I was never able to consolidate it all onto 1 card. I then paid down the highest rate debts first, followed by the lower interest debts until it was gone. It worked for me, saving me $100s in interest over the life of the debt.

]]> By: Miranda http://financefreelancelife.com/2009/04/27/is-it-ok-to-consolidate-your-debt-before-paying-it-off/#comment-44100 Miranda Mon, 27 Apr 2009 13:50:23 +0000 http://financefreelancelife.com/?p=1397#comment-44100 Great post on the advantages v. disadvantages of debt consolidation. I like the idea of consolidation if you can keep yourself from using the credit cards again once you have the loan. If you just had to make one payment, at a lower rate, to clear your consumer debt, it would be paid off much faster. <abbr><em>Miranda’s last blog post: <a href="http://www.bizzia.com/yieldingwealth/recession-silver-lining-sales/" rel="nofollow">Recession Silver Lining: Sales</a></abbr></em> Great post on the advantages v. disadvantages of debt consolidation. I like the idea of consolidation if you can keep yourself from using the credit cards again once you have the loan. If you just had to make one payment, at a lower rate, to clear your consumer debt, it would be paid off much faster.

Miranda’s last blog post: Recession Silver Lining: Sales

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