It's an embarrassing amount and yes, I should have been more involved in our personal finances but it is what it is. We have decent equity in our house, my plan is to get a home equity loan and just start attacking it month by month. The home equity at our credit union looks to be 1.99% for the first 6 months then goes to 6.8% variable, capped at 12. There's also the 2nd mortgage route, it's a little higher at like 7.5 but it's fixed. All her credit cards are at 16-26% interest currently. I also get these offers all the time for 0% credit cards for 6 months, another solution may be to transfer everything to these cards and just move the money around when the 6 months is approaching. It's depressing but I think it's possible to knock it out in a couple years. And yes, I've made sure she closed all her accounts and cut up the credit cards, I think she's onboard with everything, at least for now. Thanks as always guys for the friendly advice.
Not wife but I had a gf who nearly zapped me with this same shit. She ended up declaring bankruptcy. There is counseling available for this just like gambling or drinking. Financial counseling as well to dig your way out.
You could set up credit monitoring via Experian for all of your accounts to keep an eye on all accounts on which she’s an authorized user. Albeit, you only get balance updates after the statement closing date. And since that only covers accounts with your name on them, an illegal thing would be to do the same thing, only under her name. For that, of course, you’d need all the pedigree information which, I’d assume you have, since you’re married. That way, you could see if any new accounts are opened that are reported to Experian, again, albeit - slightly in arrears. As for structuring the pay down situation, a zero percent balance transfer might be a start for whatever grace period you have. Still, that may not get you ahead what with transfer fees and the interest rate thereafter if you can’t get the equity loan you need to pay that off right away. Read the offers and do the math against a conventional equity loan. That, and check you credit score (see Experian) to see if you even qualify for those offers what with your debt/income ratio. You may need to go straight to an equity loan. And don’t close any accounts, even if they’re not being used. You want to keep you average account age as high as possible as that shows creditors that you’re a long time, reliable payer and does help improve your credit rating. I have a shit credit card from college that I still keep open just to keep my account ages up. And whatever you do, start today since those credit card statement balances balloon pretty quickly.
I know alot of people have had good luck using Dave Ramsey's methods for getting out of debt. Good luck bud.
why couldnt she get a 2nd job and use every single take home dollar to pay it off?? What was she using to open all the accounts?? I would not put my residence down as collateral for retail charges and I would not use savings. You really have to look at the cost of borrowing the money and also she should be making weekly payments and liquidate any assets you can to cover it... like a vehicle. I know people that have been paying off the same $20,000 credit card debt & its kind of like a hamster on a wheel. The problem to their issue is they believe they "deserve" a vacation or 3. meh... I guess if you were never given a high school level finance course. Life becomes much easier if you don't have a "bunch of stuff". The simpler the better...
Look at peer-to-peer loans too. Just Google it. I had racked up some big bills 10 years or so ago. Got mad and consolidated everything into one payment with a p2p loan; interest rate was like 7% vs the 14 on the cards, cut my payment by half and I was able to knock it out in about 15 months. Like mentioned above, I wouldn't use your home to cover retail debt.
As mentioned, NEVER use your home as collateral for retail debt. Think about it. If your life goes pear shaped and you can’t cover that payment, you lose your house…over credit card debt. NEVER risk the roof over your head. It’s how many people become homeless, in short order.
TurboBlew makes a valid point, why are you required to clean up after her? Why not help her clean her own mess? A second job to pay the bills off has the benefit of both teaching her a lesson, and keeping her too busy to shop for more crap. Purely out of curiosity (and you can completely tell me to mind my own f'ing business) but what was she buying that you didn't notice? I would notice if my wife came home every week with a new outfit or bag or shoes or cars. And by the sounds of it, it's more than lunches out with her friends would cost.
I think details of why/what/how she ran up debt would help understand if you should get out of debt together or if you should start wondering if there’s deeper issues.
Totally feel for you. My wife recently got the “ your fucking out of here asap if you don’t get rid of your stupid credit debt bullshit!” I’m long out of patience for her constant stupidity towards credit.
Early in our relationship, the wife did this to me (us). I am super conservative with money, and couldnt stand any debt at all. she used my good credit, to sign my name and hers to get a card, then maxed it out, in short order. I went over what she bought, found it was mostly stuff for us, food, clothes for the kid, etc... the day I found out, I had bought her a used snowmobile, to ride with me, on a trip I planned for us. I sheepishly called the guy back minutes after returning home with it, explaining the story, and asked him if he would take it back. he was understanding and did. obviously the trip was cancelled too. then I sold a 67 Cutlass convertible, and an older Sidewinder speedboat, to pay it off. Once she saw what we had to gave up to pay our debt, she was waaaay different about money, and credit cards. she was also given the "if you do this again, under my name, I will kick you to the curb, and prosecute you to the fullest extent of the law, with zero remorse on my part." We had/have an understanding, and worked through it. Hope this works for you. Ski
I see using home equity to pay off credit cards as a last resort solution. How about a debt consolidation loan? Should be a lot cheaper than the cards interest, and it doesn't put the house on the line. How about an unsecured personal loan? Same thing as the above. Can you borrow from your life insurance? Even borrowing from a 401K, where you pay back yourself (and you get to keep the interest as well) is better than putting the house on the line if your job(s) are stable I have a long-time (50+ years) friend who found himself in a generically similar situation a decade or two back. He got a second job in his field working 20-30 hours a week part-time, and negotiated longer payment terms and lower interest rates with the card companies. Is this sort of solution an option for you?
Just pay it off as you can. Do not touch your house. Consolidating debt is a scam. Paying to borrow money to get a "better deal" makes as much sense as spending $60K on a EV to get better gas mileage. At the end you would have saved money by sticking with what you got.
You can rack up thousands of dollars of debt with stupid shit, coffee, eating out, etc. It doesn't have to be anything major. Death by a thousand cuts. p.s. My wife says guys wouldn't notice because men are stupid.
I'm a minimalist, I'd notice. Kids and motorcycles are the only two that I spend somewhat freely on, everything else, I'm cheap.
As someone who has made this mistake on a small scale in the past there is only one solution. She has to humble herself to the point of realizing she caused the problem, and it is on her to be the solution. I did it very early on in our marriage to the tune of about $5k. She would have had every right to kick my ass to the curb if I had not taken the position of "I was wrong, and I'll solve the problem.". That meant only one thing to resolve the issue. I got to put in the extra work to cover what I had done. If it had not been painful, I would not have learned a thing. My problem was I had too much spare time and that lead to exactly what you would expect. Spending money. I am decidedly in the crowd of borrowing money to pay off debt is quite frankly an idiotic solution. It will keep the pain at a distance for a bit but that is all. My process involved apologizing to my wife for being an idiot and for being distrustful. I then resolved the problem of having too much spare time by working more and taking side jobs outside of my normal work week to pay off what I had done. It sucked and I was pretty angry for a bit but soon realized the only person I could be angry at was myself. It has changed my mind set about credit. It is a tool and not a way of life. If not kept in check it insidiously eats away at your money in a way that can go unnoticed while you are basking in the pleasure of whatever you just bought and keeping you from having any chance at living a life without struggle. Based on practical experience I suggest the following.. 1. If she is truly the root cause and you did not participate in creating the problem then she has to own it. apologize and be willing to work like a dog to fix it. 2. Her spare time spent shopping is now occupied by however many jobs it takes to pay it off. 3. Anything not nailed down and unnecessary to life gets sold. As someone who has committed stupid know that it is fixable but not with methods that use the same stupid that lead to the problem. Good luck with it.
Spending is a symptom, a behavior caused by something else. Work together to find the problem. It will make you a stronger family in the long run. -Tom