Chris asked:


In desperate need of a kind soul with lots of financial knowledge and a the time to read my story.

Today, I found out the hard way that my wife of 1 year (girlfriend/fiancee of 7 years) is in a LOT of credit card debt. She had managed to keep it from me all this time but today checking the mail I saw something that peaked my interest and confronted her.

After a lot of yelling, cooler heads finally prevailed and I realized the situation needs to be addressed NOW. She has about $9,000 in debt racked up among 8 different credit lines, and the interest rate on a couple of them are insanely high (20%!).

I have never had any type of financial issues so I am at a complete loss on how to handle this. As it is, the majority of her paycheck goes to just paying the minimum payments and with the high interest rates, the principal amount is barely going down. The debt will never get paid off this way!

I’ve read mixed reviews about using debt consolidation. Some say it’ll lower your payments and put everything in one convenient bill but some say it’s a total scam and will destroy your credit.

Some say Bankruptcy is a better option but at this point she’s not deliquent on any of her accounts. Like I said, she CAN pay the minimum each month, but it leaves her very little left and the debt isn’t going down very fast.

I’ve also read that you can call the various credit card companies and negotiate a lower interest rate, but I’m not sure they would do this since she’s still paying them every month.

Lastly, I heard going to the bank and trying to get a debt consolidation loan yourself is a good idea. I’m not sure if we’d get enough to cover the debt because I have no idea where her credit is at but so far this seems like the most sane idea.

Ok, that being said, please help!

We have already resolved to buckle down and do a budget. I’ve always been able to keep a budget but she can’t, but that’s going to change now that I actually KNOW about this debt. But right now I’m wondering what the best course of action is to get us out of debt ASAP! It seems that just paying the 8 credit card companies as much as we can every month will work but take a while. I’m in for the long haul but if there’s a quicker way I’m up for it!

Thanks in advance!
Thanks for you quick and concise answer to my debt question, Rick.

Just a follow up regarding consolidation: What if we were to go to the bank and get a loan for $9,000 (roughly the amount owed to the credit card companies) and managed to get a lower interest rate than the credit cards? We could then pay off all the credit cards and instead have one loan with the same principal amount but a lower insterest rate. Wouldn’t that essneitally be trading the high-interest credit cards for a lower-interest loan?

Thanks again!