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Debt consolidation company? or try for a 2nd mortgage on house?

post #1 of 19
Thread Starter 

I feel like I am at a complete loss here, My DH is about to lose his 2nd income, and its the only thing keeping our family together financially. We have come to the co nclusion that these are the only 2 options we have. In consumer debt (I think that's what it would be called, credit cards like Lowe's, home depot, chase) we owe $9,510. We still owe $4,500 on our Tahoe and we cant get rid of it because we use it to haul water. I have figured out that each month we pay $448 a month in minimum payments. Our house payment is $659 a month until January, and when January comes around it goes up to around $690. Our take home pay is somewhere around $1950 a month. So with just the Tahoe payment, the mortgage and the credit card minimums we are paying out $1,356 leaving us with less than $600 a month for food, animal food and utilities.


Anyone have any words of wisdom for me? Any recommendations of the debt consolidation companies because I know some of them are scams and I don't want to waste my time with them. Do you think its even possible for us to get a 2nd mortgage on our home?


Anything will help, even bad comments are welcome, I just need some perspective here from someone else. DH and I disagree on debt and credit cards so its very hard for us to have a calm talk about it. 2 years ago his mom gave us almost $16,000 to pay off all our debt, and we did, and look where we ended up again bag.gif I think because we got out of this mess so easily last time he has not truly felt the consequences of his actions. Yes some of this debt is mine. A good portion of it has funded both his and my own business adventures (not a good thing because he MADE the money from his and just kept it instead of paying off the card he put it on, my business is not making money yet, I have put close to $500 into a business with my brother and so far we have only made $57 dollars back). DH thinks that debt is a good thing, I think its the worst thing in the world. I am fine with my house being not paid off, and we NEEDED to buy the Tahoe to get water but I am not OK with having almost $10,000 in credit card debt. OK enough ranting, help PLEASE!!!!

post #2 of 19

Just wanted to say I know how you're feeling - we're in a similar boat, barely anything left after paying all the bills, and lots of debt that we can't pay down because we can barely afford the minimum payments.  No end in sight. 


Anyway, debt consolidation can be a good thing - have you talked to your bank about it?  If you have good credit you could probably get a better interest rate than whatever you have now, and that would help lower the payments.  I did that years ago - debt consolidation through my bank - and it helped a lot.  And interest rates are a LOT lower now than they were then.  Anyway...hope that helps.  I feel you, sister.

post #3 of 19

I would look at other ways to bring in money and lower your bills before getting a second mortgage.  

If your credit card rates are high, I would try tackling that first.  Call them and tell them you need them lowered, telling them you are going to transfer to another card if they can't.  Have you asked your bank about a line of credit or anything?  I wouldn't go with one of those consolidation companies that makes money off of you, but I would consider a cheaper loan from my bank to pay the credit cards.  I think someone at your bank would be able to help you sort through your options, but keep in mind they make money by selling you mortgages and loans, so you have to take their advice with a grain of salt.  If you do get another loan or do the debt consolidation it is so easy to just end up back at square one, so you would both have to be committed to cutting up the cards.  We did that once, paid off the debt and then racked it up again, so I can relate to how you feel.  Now we are living without any credit and it can be inconvenient but it's a huge burden lifted.

post #4 of 19
Thread Starter 
Thank you both for your thoughts on this. We have tried to talk to our normal bank but they don't offer anything that can help us and they don't do any loans to deal with houses, so no refinancing or taking out a 2nd loan on it. And we talked to the credit union we financed our tahoe through and with they say we don't make enough to get another loan because our debt to income ratio is to high. Well no kidding, that's why we are trying to consolidate it! So we are going to try another place next week and see if they can help us. I really hope they can because if not I don't know where to go from here.

I don't see a way to add more income at this point, both DH and I work full time (well my boss just last week told me I can't get more than 33 hours for a few weeks but most weeks I get 35) and DH has a computer repair business on the side and his biggest client is the company that is closing, he also helps one of our friends with his company when there is extra work but sadly that guy also works for said company that is closing so that will end soon, and we sold our jeep in February so we could use that money to pay off tahoe, but we sold it on payments and sadly that guy also works for the same company. We live in a pretty small town. So I don't know what to do. He possibly has a website that needs to he built and actually the lady said she likes his ideas and that she's going to use him to build them but she hasn't got him the information he needs to start them. But that's only $600, so it won't go very far.

Eta: I forgot to say that if we do get this loan, every credit card with my name on it will be closed and cut up as soon as I get them paid, even if we don't as soon as they are paid off they are gone. We tried hiding them in a safe but it didn't help, so they have to go away permanently forever. I can't force DH to do the same, but I am sure going to try.
post #5 of 19

Have you looked into Dave Ramsey's system?  I think it's do-able for you to get out of debt without a 2nd mortgage.  His system has helped me a ton!  The easiest way to get info about it is to get one of his books at the library.  Good luck!

post #6 of 19
Thread Starter 
Rnra- I actually love Dave Ramsey and have a few of his books. He is the reason I wanted to get out of debt a few years ago. My husband on the other hand absolutely hates him. He says he is the devil and actually blamed him for some of our marital problems. He hates the idea of being on a budget, he hates the idea of saving money for things. This is part of the reason we are in the situation we are in now. The one thing he did agree with that Dave says is life insurance, we both have a policy and that is 100% due to the Dave Ramsey teachings. This is one of the reasons I am nervous about our financial future, but if I close all the cards with me on them then we will only have 3 cards I think and I hope that I can keep them under control.
post #7 of 19

Definitely DO NOT take out a second mortgage against your house. If you default on a credit card, you get a bad credit score. If you default on your mortgage, they will TAKE YOUR HOUSE.


First--- it is possible to survive on that $600. You will have very little wiggle room but it can be done.


I would personally make the minimum payments possible on all cards-- and snowball any extra cash you get towards the one with the lowest balance.


As for making extra money-- can you babysit? Taking in a couple kids on a Friday night could get you $10/hour. Work weekends at Wal-Mart. Use that money towards your loans.


Yes, this is unfortunate and I feel for you. But you really need to work on getting out of this and not getting back into it. Start working at your debt. Make charts. Show your husband the progress you're making-- hopefully, he will come around.

post #8 of 19

Another way to get some extra money is to have a garage sale.  My friend just did that to pay off some debts and made over $800.  If you don't have enough for a garage sale you could always try listing items on Craigslist.

post #9 of 19

Don't take a second mortgage out, or get into business with a debt consolidation company. Dave Ramsey is the way you need to go.

post #10 of 19

I think everyone else agrees! Don't try to take a second or some kind of consolidation, you aren't terribly far off from making it, even with the loss of the second job.


Maybe sit down and talk with your husband and lay it all out. Minimum payments, and what your projected mortgage payment will be. Then show him the extra (what you have left over after just the min.s) And let him help decide what to do with that cash. It's not a budget really, but just the real amount of his/your income that you actually have some kind of say over what happens with.


There are tons of budget/debt calculators that will tell you what would happen if you paid xx amount over the minimums, and let him play with them a while.


Good luck, debt isn't fun--I know it well

post #11 of 19

Overall your debt is not that much.  It is your minimum payments that are.


What is the balance, interest rate and minimum payment on each card, it is hard to give advice without knowing that information.


are any of them term cards(ie, we have a chase card that has a balance to be paid off in 36 months)

post #12 of 19
Thread Starter 

Thank you for all of your ideas, I have been going through them in my head over and over trying to figure out how we are going to make this work. I don't think we will be able to get a debt consolidation loan or the 2nd mortgage anyway. I called the last place that I thought could help and they will only do it if we refinance our house through them but they do not have very good interest rates on modular houses and that's what we live in, right now we are sitting at a 4% rate *I think* and they would raise it to at least 9% or higher, 9% on $85,000 does not look like a good option. I do honestly think that would be the best way to go if we could get a better rate as it would give us a bit of time to figure everything out, but if its not in the cards there is not much I can do. I have listed all the bills together in an effort to show DH how bad we are and we are paying out $2,100 a month before any food, animal food or gas money is factored in. We will only be bringing in about 1,950 next month. We will at least be getting one more check from the Tahoe payment and hopefully one more month of computer work. The lady has still not gotten back to DH on the websites. I did make a lot of money selling bracelets this weekend and if I make about $50 more then I will start to get a profit from it, I have a friend taking them to a Karate class tonight and she thinks she can sell some of them and I will be doing the flea market again this weekend to sell them, last time that did not go very well at all (I made $7) but I can hope for the best. I have tried selling stuff on craigslist, we have a few trailers we need to get rid of and 2 extra water tanks, and also have a set of rims and tires, all together that would be about $800-$900 but not one call or email on them yet, and they have been listed on and off for 3-4 months. If I sold all of that I could pay off 4 of our 10 credit cards, going with the Dave Ramsey method of smallest to largest. that would equal $197 or so dollars a month that could go to the next ones, if I could get income somewhere else for food and gas money. Babysitting is impossible as I live about 45 minutes from town and have no neighbors and no one in their right mind is going to spend 30-45 minutes one way driving their kids all the way out here, yard sale is in the same category as I just live to far away from anyone. My uncle in another state said he might have some contacts here that he would be able to get my husband some extra part time weekend work, it wont pay a lot but its something, so I am hoping that it will work out for us. He said he just had a guy quit that was doing the exact same job for him 2 days a week and made $7000 in 5 months of just working on Saturdays and Sundays. As soon as I get the nerve up to do it I am also going to slaughter 5 of my birds so we have some meat in the freezer and then I have 5 less mouths to feed, wont save a ton of money but will save maybe $10 a month, and I will get a few meals out of it. Thank you guys so much for your ideas and help, it really does give me something positive to think about rather than just freak out all day long about how I am going to survive until tax time.

post #13 of 19
Thread Starter 
Originally Posted by CarrieMF View Post

Overall your debt is not that much.  It is your minimum payments that are.


What is the balance, interest rate and minimum payment on each card, it is hard to give advice without knowing that information.


are any of them term cards(ie, we have a chase card that has a balance to be paid off in 36 months)


I did not see your post before I posted my last one, I am not sure what you mean by term cards, but this is the list of what we have from smallest to largest:

Sears/Kmart - $80 / I don't know what the minimum is but I plan on just paying it all if I can

Bill Me Later #1 $200 / $50

Care Credit $203 / $25

*Sam's Club $394 / $47

*Lowe's $651 / $36

Home Depot I honestly don't know how much this is, I am guessing its around $900 / $25

Peerless Tire $1,140 / $81

*Bill Me Later #2 $1,200 / $70

*Wal-Mart $ 1380 / $28

Chase $3,712 / $86


As these are paid off all the ones that are mine or have a * will be canceled. DH wont even think about getting rid of the others. The Care Credit is the card we use for vet emergencies for our animals, it had a balance of around $450 for a cat that needed emergency surgery so that's why we are keeping that one. Our house seems to break so until I have money in a emergency fund of at least $2000 DH wont get rid of home depot because it has saved us a few times. Bill me Later #1 is his and he thinks it comes in handy, but he also says that about sears. We use the peerless tire one for tires for our cars every other year. and Chase is mostly that high because our car broke and needed a LOT of work.


Some of the numbers might be off a bit because I can not find current bills for everything but this is as close as I can get right now. 


If i even mention that I am trying to do this Dave Ramsey style DH will flip out, so I am trying to tell him the issues and show him without telling him well this is the problem. If we can get to tax time, we should get back around $3000, so I will be able to pay off a few of these bills with that. I was going to pay off the Tahoe with it but I am not sure that is the best idea because some of these cards have 25% interest rates and the Tahoe is at 7.1%, so while it has the highest balance it has the lowest interest of anything. Even doing the Dave Ramsey method last time a few years ago I never quite figured out how to do the sinking funds so we could not need credit cards for things like tires, car repairs, vet bills and such. And with hubby not on board I just really don't know how I am going to do this. mecry.gif

post #14 of 19
Originally Posted by Pogo0685 View Post

 And with hubby not on board I just really don't know how I am going to do this. mecry.gif

You can do this!  How much longer until tax return time?  I think you could save some in an emergency fund and then pay off a couple of the smaller cards. If you can, maybe you can focus on all the ones that are yours, or that can be cut up, so that even everything will feel more manageable.  If you pay off the Sam's, Lowe's, Sears and Bill me Later #2, that would leave over $600 for emergencies, the Tahoe, or whatever you and your husband can agree on.  Why will he flip out at the idea of the Dave Ramsay method?  

post #15 of 19
Thread Starter 

Tax time is anytime from January 1st to March. We use H&R block to do our taxes and usually get them back pretty quick. Last year we got our check in March, year before that in February. I think what will work best is to try to put $100 in the Emergency Fund, and then also pay down the lowest credit card. Its not exactly what Dave says but I think that's what is going to work for us. We have not spent any money that is not necessary in a week, so that is good. And when we get next weeks paycheck we will have more than enough to cover the house payment and $100 in groceries. 


My hubby just does not like him, he feels debt is a good thing, I agree with him that its ok that the house is debt, but we disagree on consumer debt like credit cards. Really its just that he wants to  spend money because he feels he deserves things. A good example of this is I traded my friend a 80 gallon long aquarium for her turtle for a bird cage, she has a new turtle that needs a bigger home, I had the extra tank and honestly it was taking up room and I wanted it gone. She had a bird cage she didn't need so we traded. I told DH when I did it that we would get birds eventually, when I felt we had a bit of extra time and some extra money for them. Now I have not even gone to get bird cage yet and he is bugging me every day about when we are going to go pick out the birds and what ones are we going to get. I was planning on maybe getting them come December, but probably was going to wait until next spring. He wants them yesterday. So this is where we just can't agree on anything.

post #16 of 19

uh if you are in the  hole that much, why would you get another pet to take care of? vet bills, food, etc. honestly. your dh sounds like the issue in a lot of this. i'd do more work with that before bothering to pay off cc's just to have them run up again.

post #17 of 19

What are the rates on the cards? You should consider that too, not just what the payments are. And the Walmart card is worrisome to me. At that minimum payment you're still going to be paying that one off when you're in the nursing home... and what's the interest rate on it?

post #18 of 19
It sounds like you need to get your husband on board with the idea of not building up any more debt, so no more new pets or other non-necessary expenses. Maybe you can make tires last longer. You really should be eliminating any expenses that are not totally necessary to live. Yes you have to pay bills, keep the house functioning and keep the car running.

I don't know if there's any way you can save money on animal care. If it were me I'd go to the cheapest food and the minimal vet care necessary for standard good health. I'd also try to find loving homes for some of my animals if possible.

You can go cheap on food, not eat out, that sort of thing. You can buy only used clothes. I'm sorry if I'm suggesting things you're already doing.
None of it will work if you husband doesn't cooperate. You can bring up ideas without mentioning the Ramsey method.

My family and I got out of 60k in credit card debt slowly (7 yrs ago maybe) by being super frugal and by me luckily getting some amazing commissions when I needed them most. My husband didn't always understand why he couldn't buy certain things, but I nagged and badgered and frankly just got mad. We were lucky in that he did have a reliable income, any income I pulled in could go straight to bills.
post #19 of 19
Thread Starter 

lookatreestar- Yes DH and I have a lot of work to do on getting him to commit to this and stay on a budget, I think I have him convinced that we need to pay them off, and hopefully once they are paid off and he sees that we can use that money as cash and he sees the savings growing so if he wants something he can still get it then he will really strive to work with me on this. Its just going to be a long hard road to get to that point.


erigeron - I don't even look at the interest rates on them to be honest. I had to look at the wal-mart bill that just came in the mail and its at 19.87% interest rate. Its depressing to see so much money going out the door for stuff. I don't even know what we bought with this card. I cant look around my house and pinpoint any item except my DS's bike that was on the card. 


leafylady - We already make our tires last around 2 years per set, which is pretty good because we live on dirt county roads and they are not known to be nice to tires. As far as animals and vet care goes, we only do vet care when we have to, I am against all shots except rabies and feed my animals beer instead of that chemical cocktail known as heart worm prevention. I took my dogs off a raw diet and even though it killed me inside to do so, I will save about $30-$40 a month doing so, the cats are cheap, I think they cost maybe $25 a month between litter and food. The snake costs $8 a month in mice, so she is really cheap, the fish cost $10 a month give or take (for all 4 tanks, but I am going to try to get down to 3 tanks soon by putting in a barrier in my big tank and putting a fish on the other side), The chickens are pretty expensive at $30 or so a month for food, but they give us eggs and also teach my son responsibility, and you cant put a price tag on that in today's times, and I *WILL* figure out how to slaughter the extras within the next month so food on them will go down and we will have some extra meat in the freezer, not much maybe 20-25 pounds but its something. And the horse is probably one of the more expensive animals, she eats about $15 of hay a week, about $10 a week for supplements, her shots are expensive, as is vet care for her. But you can not put a price on happiness, I can be poor and be happy, just because I have lots of money does not mean I am going to be happy, and having a mini farm and starting to live my dream is priceless to me, but that's just me, other people have cheaper hobbies that make them happy. And last animals are not disposable, just as I feel children are not disposable. When you get an animal I believe it is your job for that animals life to take care of it. I do not believe in re-homing animals, if I have to get rid of my animals I will have them put to sleep because it is not fair for me to pass off my problems onto another person, I think that is one of the huge problems with America in general today, nobody wants to take responsibility for the problems they have created. And you can think you have found the most loving home for an animals and in reality they can be the family/people from hell and abuse or neglect the animal and then decide they don't want it and just let it run free and get hit by a car, starve to death or whatever or just give it to some random people on craigslist and the animals is the one that suffers. I have known many people that do this so I will not let that even be a chance for any of my animals. I don't breed them to create more problems, but I will take care of them until they die without question. Sorry if this sounds rude, I am not trying to be I just have a huge problem with people pawing off their problems on other people. We don't eat out unless one of our moms pays for it and I took us off a more expensive primal diet and have added a lot of rice and breads and stuff back into our diet to save some money. I make all the bread myself so that I know whats in it and that its healthy, its the best I can do at this point. And lastly you getting out of $60k of debt is seriously awesome and inspiring. Add another 10K and that would be me paying off my entire house! So I think its awesome that you did that, and I do thank you for your input, I read every idea here and write down all the ones that are going to help me and my family and then think about how to put them into practice so that I can do this. 

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