About $2,000 in debt(20 years old)?
Hello. I'm a college student. I have $2,000 in credit card debt,between three different cards. I know that isn't much to some people, but to me it's a lot, I have learned alot from this and would like to get rid of it. I only make $5,000 a year.
I think it's best that I fix this now rather than ignoring it, because credit is very important.
Do you think I should consolidate this debt, is that possible?
I think I'm going to just buckle down. Give up my cell phone, and going out to eat with my friends. That should save about $150 now that I think about it.
- 1 decade agoFavorite Answer
It's possible to consolidate, but it may not bring the remedy you desire.
If you consolidate the cards into a single card payment, it won't reduce your monthly required payment. You can scout around for cards that have lower rates, though. And, many cards feature 0% rates for the first year on transferred balances. Even with a transfer fee of 3%, that can allow you to pay off quite a bit more of the outstanding balance during that year.
You can also seek an unsecured personal loan. This may, or may not, have a lower rate than the credit card debt. However, since such loans often spread debt repayment over 2-4 years, whereas credit card payments can run 5+ years, the installment loan will typically require higher monthly payments.
The bottom line is that only by digging your heels in and aggressively paying down the debt are you likely going to get out from under it in the near term. That will likely take monthly payments of $75+ (depending upon your actual interest rate).
- Chris CLv 61 decade ago
IT's great to see you are responsible enough to nip this in the butt before it gets to be a problem! Great job on that!
Getting a consolidation loan won't solve the problem, unless you have a real plan on how to pay it back as soon as possible. It will just stretch it out over a longer time period is all. Chances are you wouldn't qualify for a loan anyway...your debt to income ratio is high, your income is low and the loan amount might be smaller than most companies would even set up a loan for.
Here's what you need to do:
Take that $150 a month and apply that to the smallest credit card balance (assuming all the interest rates are the same...if they vary by more than 3% or so, start with the highest interest rate). continue making the minumum payments on the other 2 cards, while making the increased payments on the first one.
When the first one is paid off, move the entire payment (extra $150, plus the original payment) to the next smallest debt adding it to the minimum monthly payment. Continue paying the min. payments on the last card while making the extra payments on this second one.
when that second one is paid off, move the entire payment (extra $150, plus original payment on first card, plus original payment on 2nd debt) to the third card. Continue paying it until it's completely done.
After the cards are paid off, you will be used to making those payments for sometime, so you might as well move the entire amount into a savings account of some kind so you don't need to use the credit cards again.
Basically, you are just moving the payments from one place to another as you pay off each debt. You are continually making the same total monthly payment amount, it's just going somewhere different.Source(s): financial advisor. this is known as a debt snowball. It's promoted by almost every decent debt management company on the planet, and is promoted by Richard Kiyosaki (Rich Dad, Poor Dad series author) and Dave Ramsey (Total Money Makeover author)
- Anonymous7 years ago
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RE About $2,000 in debt(20 years old)?
Hello. I'm a college student. I have $2,000 in credit card debt,between three different cards. I know that isn't much to some people, but to me it's a lot, I have learned alot from ...show more
- Dan BLv 71 decade ago
Unfortunately, your debt to income ratio will not qualify you for another, lower interest card.
Cut expenses, apply savings to the higher interest cards first. Then double up on the payments on the other cards as each is paid off. Then never use the excuse to 'build my credit' as a reason to get a credit card. Your income to savings ratio has more positive weight than your payment history and credit card to balance ratio (those are negative influences).
We have no credit cards and were able to purchase a second home with no money down, not a lot of disposable income, no credit cards but we had some savings. I think that's a better gage of your ability to manage your money.
Watch the Ramen Noodles. They have over 1,000mg sodium.
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- 1 decade ago
Good for you to recognize the issue early on. Try pay off the cards, the smallest balance to the largest, while making minimum payments on the other cards. Then either use cash or ATM instead of credit.
Along with your cell phone, I recommend Ramen noodles, although you are probably already familiar with that delicacy. Cheap and filling, try adding an egg of additional nutrition. Goodluck, I've been there myself.
- Anonymous1 decade ago
I know you will hate doing this, but ask your parents for help. Perhaps they will help pay off your debt as you pay them back (and cut up your credit cards for now).
- 1 decade ago
I am also a college student and i also am in debt of -$120.00 Due to a company who promised to bill me in 90 days, instead they billed my isntantly and i have no idea how to get that money =(
I suggest looking for a PARTIME CALL ON job =( i'm look for one as well.
- Anonymous1 decade ago
This article will surely give you tips... hope you could learn from this...
- Anonymous5 years ago
- angelikaLv 45 years ago
Can someone tell me what is the correct answer for this question?