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Question for the Money Doctors

Question submitted on Oct 27, 2011.


I owe over $1000 each on about 5 credit cards that charge a 2 digit interest rate. My job is over 50 miles one way from my house and my husband has been on unemployment for some time. I was paying over $100 each month on each card (more than the minimum payment) until gas prices went up so high. Now I am paying almost $600 a month just to get to my job. Would it be wise to consider buying a smaller car to cut my fuel costs or should I just keep trying to pay off my cards? I am only able to make the minimum payments now. Maybe I should consider a debt consolidation loan?


Here are some considerations to think about:

1. Would you consider moving closer to your job? This can save a lot of time and expense.

2. If you moved, are there more job opportunities for your husband?

3 If your husband can''t find a job, are there schools close by that can upgrade his skills so he can be employed? All the schools have job boards with employers looking for workers.

4. Without knowing the exact interest rates on your cards, I am estimating that if you stick with your plan of over $100/month on each card, you should be able to pay these off in a year. This assumes you are not adding to the balance.

Let''s say all you can pay if $500/month, let''s organize the cards by interest rate. Pay only the minimums on the lower cost cards and pay the rest on the most expensive card. This will allow you to pay off the most expensive card first and as you pay off the cards you can keep moving the payments to the next most expensive card. This technique might get these paid off sooner.

4. A debt consolidation loan may not lower your costs. In many areas, you can dial 211 on your telephone and you will be referred to a credit counseling service to help you with this. You can also contact your local United Way for a referral to someone in your area to help you with this.

5. If you don''t need the credit cards, you can call the credit card companies to ask for a FREEZE on the account. This means you cannot charge on the account, and they may stop adding fees to the account. You can also ask them to lower the interest rate so you can pay it off sooner. This means this account will be closed once you pay it off.

This will take some work and effort on your part, but it will pay off when you no longer have this debt. Good luck!

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