Anybody been in debt and got out?

[Jiro]

There are no credit cards that offer 0% interest rates for 12 months. Six months, yes, 12 months, no. It definitely helps to transfer a debt to a zero interest rate card but if you're not really making significant payments then the grace period ends, you're slammed with a high interest.

That's probably because you don't meet a certain criteria to qualify for 0% interest rate for longer than 6 months. These kind of offers are dependent on person's credit history and rating. It's all monitored and generated by computers to decide on who to offer a deal.

I receive dozens mails per week offering me 0% interest rate for 6/12/etc months. I have a Citi "Diamond Preferred" card that has 0% interest rate for 21 months

 

[DeafCaroline]

That's probably because you don't meet a certain criteria to qualify for 0% interest rate for longer than 6 months. These kind of offers are dependent on person's credit history and rating. It's all monitored and generated by computers to decide on who to offer a deal.

I receive dozens mails per week offering me 0% interest rate for 6/12/etc months. I have a Citi "Diamond Preferred" card that has 0% interest rate for 21 months

I wonder what the certain criteria is? maybe it's different in the US but I've never heard of 12 month 0% interest rate cards except for maybe my home depot card? cant remember. I never used it or even activated it. I've never owned more than one credit card my whole life.

I do know I have perfect credit rating so it can't be because of my credit history. I haven't been in debt for about 4.5 years now. I do get credit card offers in the mail but I don't read them so maybe there have been 12 month periods that I wasn't aware of.

 

[Jiro]

I wonder what the certain criteria is? maybe it's different in the US but I've never heard of 12 month 0% interest rate cards except for maybe my home depot card? cant remember. I never used it or even activated it. I've never owned more than one credit card my whole life.

I do know I have perfect credit rating so it can't be because of my credit history. I haven't been in debt for about 4.5 years now. I do get credit card offers in the mail but I don't read them so maybe there have been 12 month periods that I wasn't aware of.

ah - yea it could be because you being in Canada and me being in America. Nobody knows what criteria is because it's corporate matter but in here, they do spam "sweet deals" to people with reliable financial history. or maybe you've developed a habit to immediately discard CC spams without looking at it

I do same too.

 

[Cheetah]

I wonder what the certain criteria is? maybe it's different in the US but I've never heard of 12 month 0% interest rate cards except for maybe my home depot card? cant remember. I never used it or even activated it. I've never owned more than one credit card my whole life.

I do know I have perfect credit rating so it can't be because of my credit history. I haven't been in debt for about 4.5 years now. I do get credit card offers in the mail but I don't read them so maybe there have been 12 month periods that I wasn't aware of.

Perhaps the consumer laws in Canada are different than in the US? Perhaps it's not legal to offer some things in Canada? Just throwing this out there.

I am in the US and I did recently accept an offer from Discover for a 12 month Zero interest with a Zero balance transfer fee. I have a credit score of 780? (I don't remember exactly)

 

[DeafCaroline]

Perhaps the consumer laws in Canada are different than in the US? Perhaps it's not legal to offer some things in Canada? Just throwing this out there.

I am in the US and I did recently accept an offer from Discover for a 12 month Zero interest with a Zero balance transfer fee. I have a credit score of 780? (I don't remember exactly)

Very possible about different laws in Canada.

What's the interest rate of that Discover card after the grace period ends?

 

[KristinaB]

The cell phone bill, has it been passed off to a debt collection agency yet?

Yes, but it is almost paid off.

The medical bills are all at collection agencies right now. They only totaly about $1800 for all of them I think.

We did speak with someone for some help with budgeting and all for paying off a lot of things. His comment was that we were stuck with two things. Not enough credit card debt and not old enough bills with high balances, so we did not qualify for his company's services.

 

[Jiro]

Yes, but it is almost paid off.

The medical bills are all at collection agencies right now. They only totaly about $1800 for all of them I think.

We did speak with someone for some help with budgeting and all for paying off a lot of things. His comment was that we were stuck with two things. Not enough credit card debt and not old enough bills with high balances, so we did not qualify for his company's services.

good thing you didn't use his service. he sounds like a sneaky loan shark.

 

[Cheetah]

Very possible about different laws in Canada.

What's the interest rate of that Discover card after the grace period ends?

I think it was 12% I get tons of offers for higher and would not even touch them. But Discover offered a better deal than all the others so I went for it. Still not as good as my lowest Credit Card at 9%.\

So, now I have three credit cards: 9%, 12%, 17% (guess which one I will probably never be using???) But, the 17% card has the highest credit limit so I hold on to it for now.

 

[Beach girl]

really? why is that better? bigger debts entail bigger repayments and the more you put off paying them, the more interest you collect on the balance and the more debt you've accumulated.

Michelle Singletary recommends this method too (paying off the smaller debts and then moving on to the large ones). It has nothing to do with interest rates and all that.

The point is more psychological. If you can get rid of just one debt that has been hanging over your head, you feel like "whew, got that one done!" Then you apply that money and move on to the next.

It's the feeling of satisfaction, and of feeling the reward for wiping one debt off the list. Things that feel good you are likely to repeat, so it gives added incentive to pay off the other things on the list.

If you keep trying to pay off a big debt and never really see the light at the end of the tunnel, it can feel too discouraging, like you can never do it. If you start with the small debts, you begin to get a record of accomplishment, and the feeling that yes, you CAN do this.

Therefore, small debts first, and work your way up.

 

[DeafCaroline]

Michelle Singletary recommends this method too (paying off the smaller debts and then moving on to the large ones). It has nothing to do with interest rates and all that.

The point is more psychological. If you can get rid of just one debt that has been hanging over your head, you feel like "whew, got that one done!" Then you apply that money and move on to the next.

It's the feeling of satisfaction, and of feeling the reward for wiping one debt off the list. Things that feel good you are likely to repeat, so it gives added incentive to pay off the other things on the list.

If you keep trying to pay off a big debt and never really see the light at the end of the tunnel, it can feel too discouraging, like you can never do it. If you start with the small debts, you begin to get a record of accomplishment, and the feeling that yes, you CAN do this.

Therefore, small debts first, and work your way up.

Ah...gotcha.

I do get what Michelle is saying but I personally wouldn't follow her advice.

 

[Beach girl]

Good advice. The part I made bigger I would say...depends on your interest. If the interest is really high and the income is steady I would put every dime towards that.

This is about whether a person should start a savings account for "life happens" fund or put every penny toward paying off debt. Ms. Singletary (and I) both recommend trying to do both, even if your savings amount is small.

The reason for doing this is that "life happens" to ALL of us, without exception. Something is always going to come up that you didn't expect. If you are putting ALL of your money toward paying off debt and have no savings at all, then when some small emergency comes up, you end up having to charge it AGAIN, thus wiping out some of the progress you've made, and adding to your overall interest charges.

If you can build up even a small "life happens" fund, say $500 or so, then you've got some fall-back money. That would be enough to pay for, say, a small car repair, or a new tire if you have a blow-out, or a dental emergency if you chip your tooth, for example.

The point is to have a little buffer between yourself and having to use your charge card again and again when it could be avoided.

 

[DeafCaroline]

This is about whether a person should start a savings account for "life happens" fund or put every penny toward paying off debt. Ms. Singletary (and I) both recommend trying to do both, even if your savings amount is small.

The reason for doing this is that "life happens" to ALL of us, without exception. Something is always going to come up that you didn't expect. If you are putting ALL of your money toward paying off debt and have no savings at all, then when some small emergency comes up, you end up having to charge it AGAIN, thus wiping out some of the progress you've made, and adding to your overall interest charges.

If you can build up even a small "life happens" fund, say $500 or so, then you've got some fall-back money. That would be enough to pay for, say, a small car repair, or a new tire if you have a blow-out, or a dental emergency if you chip your tooth, for example.

The point is to have a little buffer between yourself and having to use your charge card again and again when it could be avoided.

Very good suggestion! A life happens fund doesn't charge you interest but usually earns you interest if it's a savings account

 

[AlleyCat]

.

 

[Beach girl]

Ah...gotcha.

I do get what Michelle is saying but I personally wouldn't follow her advice.

Think about the difference between paying off a car loan, say, vs. paying off a mortgage. Do you put every penny toward paying off your mortgage before you think about buying a car? Probably not - that mortgage is too big for most people to do that very quickly.

So the average person gets a car loan and a mortgage, and maybe, being prudent, pays off the car loan faster than it's due, and then puts more money toward the mortgage.

It would be the rare person indeed who would say "I'm paying off the big debt of the mortgage first before I'll buy a car." Or "before I pay off the car." It wouldn't make much difference which loan had the larger interest rate; the smaller loan would virtually always get paid off first.

 

[DeafCaroline]

Think about the difference between paying off a car loan, say, vs. paying off a mortgage. Do you put every penny toward paying off your mortgage before you think about buying a car? Probably not - that mortgage is too big for most people to do that very quickly.

So the average person gets a car loan and a mortgage, and maybe, being prudent, pays off the car loan faster than it's due, and then puts more money toward the mortgage.

It would be the rare person indeed who would say "I'm paying off the big debt of the mortgage first before I'll buy a car." Or "before I pay off the car." It wouldn't make much difference which loan had the larger interest rate; the smaller loan would virtually always get paid off first.

I see what you're saying.

I was in that position of having a car loan and a mortgage at the same time and when I did the math for the interest for both, I got rid of the leased car and bought a cheap second hand one. Saved a lot of money that way.

The reason was because my car was worth $16,000. I was paying about $400 a month and the interest rate was something like 23% a year. that meant for a $16,000 loan, it would have taken me about 7 years to pay it off and I would have paid $14,662.21 in interest, that's almost the same price as my car! I started thinking what I could have done with all that money instead of spending it on interest. I could have taken my kids on vacation, donate more to charity, etc etc and that's far more important than having a brand new car so boom, sold my car a few days later.

I know everyone has different ideas of what's important and of value to them. To me, it was more important to use that money to give myself and my children a rich full life instead of being an owner of a new car but looking for pennies in the couch. I hate being poor with a passion.

 

[Beach girl]

I see what you're saying.

I was in that position of having a car loan and a mortgage at the same time and when I did the math for the interest for both, I got rid of the leased car and bought a cheap second hand one. Saved a lot of money that way.

The reason was because my car was worth $16,000. I was paying about $400 a month and the interest rate was something like 23% a year. that meant for a $16,000 loan, it would have taken me about 7 years to pay it off and I would have paid $14,662.21 in interest, that's almost the same price as my car! I started thinking what I could have done with all that money instead of spending it on interest. I could have taken my kids on vacation, donate more to charity, etc etc and that's far more important than having a brand new car so boom, sold my car a few days later.
I know everyone has different ideas of what's important and of value to them. To me, it was more important to use that money to give myself and my children a rich full life instead of being an owner of a new car but looking for pennies in the couch. I hate being poor with a passion.

Totally agree with you! Sounds like a very smart move.

 

[Jiro]

I see what you're saying.

I was in that position of having a car loan and a mortgage at the same time and when I did the math for the interest for both, I got rid of the leased car and bought a cheap second hand one. Saved a lot of money that way.

The reason was because my car was worth $16,000. I was paying about $400 a month and the interest rate was something like 23% a year. that meant for a $16,000 loan, it would have taken me about 7 years to pay it off and I would have paid $14,662.21 in interest, that's almost the same price as my car! I started thinking what I could have done with all that money instead of spending it on interest. I could have taken my kids on vacation, donate more to charity, etc etc and that's far more important than having a brand new car so boom, sold my car a few days later.

I know everyone has different ideas of what's important and of value to them. To me, it was more important to use that money to give myself and my children a rich full life instead of being an owner of a new car but looking for pennies in the couch. I hate being poor with a passion.

23%?

My rate's definitely much lower than that but I can't remember exactly. Well - just like cable bills, you can always refinance/renegotiate it for lower interest rate.

 

[whatdidyousay!]

Have you seen "Inside Job"?

Banks were pretty liberal about giving credit.

I had a friend that when to her bank to cash a check and the teller said she had to wait 10 days to cash it. The friend told the teller that I was her friend and had an account at the bank too! The teller cash my friend check just for knowing me!! I was like WTF when I heard this! I did not know a bank would do this! My credit is so good a friend could use it!!

 

[sequoias]

I see what you're saying.

I was in that position of having a car loan and a mortgage at the same time and when I did the math for the interest for both, I got rid of the leased car and bought a cheap second hand one. Saved a lot of money that way.

The reason was because my car was worth $16,000. I was paying about $400 a month and the interest rate was something like 23% a year. that meant for a $16,000 loan, it would have taken me about 7 years to pay it off and I would have paid $14,662.21 in interest, that's almost the same price as my car! I started thinking what I could have done with all that money instead of spending it on interest. I could have taken my kids on vacation, donate more to charity, etc etc and that's far more important than having a brand new car so boom, sold my car a few days later.

I know everyone has different ideas of what's important and of value to them. To me, it was more important to use that money to give myself and my children a rich full life instead of being an owner of a new car but looking for pennies in the couch. I hate being poor with a passion.

Whoa! I pay $290 a month for 6 years for a $16,258 loan with 8.49% interest. I pay it off next year, yay! Good thing my car keeps going and going and going.

 

[SneakerNet]

Yes, getting transferred to 0% interest rate credit card with transfer fee unless if you can afford to pay it off within 12 month. If you can't, then there's no differences of trying to paying it off with current credit card than having 0% interest transfer to new credit card.

I noticed some people start cut up the credit cards once paid off. That will be fine with me if those people who cannot control the "spending spree" and charging up the CC all over again. Most of my credit cards are zero balance. The only time I use it is when I get it in the mail that says 0% interest free for 6, 12 or 16 months, yes 16 months I do get it once awhile... so let say if I got a mail that says 6 months interest free... then I will think of something that I really need to buy for $1000.00 because I can afford to pay it off in 6 months, with about $170.00 per month payment... so I decided to go ahead get a new lawn tractor as for example.
Or, if I get it in the mail that says 0% interest free for 12 months, then I'll look for something that I can buy $2500.00, like new furniture... get the idea. So I usually keep all the credit cards that offer 0% interest free if you purchase anything above $250 or $500 something like that...
So, what more important is to keep all the credit cards with zero balance, then wait for mail that will advertise 0% interest free for 6,12 or 16 months. That is when a good time to buy some thing.. it doesn't have to get a big purchase... you can get something like $600 TV and you can pay it off in 6 months, $100 per month.. you know?
I purchase many things that will save me about $12,000 interest....free