I have student loans from 2 places, 2 credit cards I've stopped using for purchases and working on paying back, and an auto loan.

I have never done anything major financially beyond my retirement fund and I don't understand most of what people say when money comes up.

Is it possible and/or would it be wise to consolidate everything I owe from credit cards and loans into one credit line or loan account? And if the answer to both questions is yes, how do I do it? It's roughly $20,000 combined and I don't know how it will affect me when I try to buy a home in a couple of years.

9/9/2014 7:53:27 PM

About the only way to answer this question would be knowing remaining balances and interest rates on each account.

Most likely it wouldn't be advantageous to consolidate the student loans if the interest paid is tax deductible.

How quickly do you think you can repay the total 20k?

If you don't consolidate you should always payback the highest interest rate loan the fastest, as it is costing the most each month.

Do you have balance transfer offers at low interest rates available to you on other cards? That would help reduce the interest costs for a period.

I'm assuming that you don't have a problem at least paying the minimum each month on each credit line. That would be one big reason to consolidate if you can't pay the minimum.

[Edited on September 9, 2014 at 11:47 PM. Reason : .]

9/9/2014 11:46:22 PM

Are your student loans private or federal (Stafford)? If federal then many lenders will gladly give you a better rate and thus lower payment since they are government-backed loans, most places love to take them; for private loans almost no one out there gives a better consolidation rate than what you've probably already got but like ^ said it really depends on each existing loan amt, remaining months of payment, and key thing is interest rate. My private loans were 5-8% but I've almost completely paid them off. Compared to my federal loans at 3-5% which were consolidated twice, I havent found anyone who could give me a better rate than 7% and thats with an 800 credit score and good income.

If you're willing to put the numbers up I'm sure there are some beancounters that can give you more accurate advice or avenues to check out. Without knowing the details your best bet is to pay the minimum on everything except your highest interest rate you've got, which is probably your credit cards, and add whatever extra you can towards the principal every month. Then once its paid off move on to the next highest interest rate.

On the auto loan, does the lender have custody of your vehicles title or is it just a basic loan you took out to get a car? You can get a better rate and lower overall cost if you find a lender that will give you a true auto loan in exchange for putting a lien on your car should you default, assuming its new enough that they would provide a loan for it.

Unless you just cant make payments then that's a whole nother can of worms.

[Edited on September 10, 2014 at 2:03 AM. Reason : .]

9/10/2014 1:54:23 AM

Quote :

"About the only way to answer this question would be knowing remaining balances and interest rates on each account."

+1

Quote :

"If you don't consolidate you should always payback the highest interest rate loan the fastest, as it is costing the most each month."

We know the credit cards are probably costing him the most...

Quote :

"Most likely it wouldn't be advantageous to consolidate the student loans if the interest paid is tax deductible. "

I'm gonna go out on a limb here and guess he's taking the standard deduction, and wouldn't be able to itemize student loan interest.

9/10/2014 10:00:22 AM

Quote :

"I'm gonna go out on a limb here and guess he's taking the standard deduction, and wouldn't be able to itemize student loan interest."

Student loan interest is off the top. No need to itemize.

9/10/2014 10:17:49 AM

What is your goal? If your goal is to improve your credit for a future home purchase then you should not consolidate and should try to pay off the credit cards as quick as you can.

You should only consider consolidation if you are unable to make sufficient payments

9/10/2014 10:20:28 AM

Quote :

"You should only consider consolidation if you are unable to make sufficient payments"

So if he's paying $30/month minimum payments and $200/finance fees he shouldn't consolidate to a card with a lower APR?

9/10/2014 11:17:08 AM

bdmazur if you don't feel comfortable posting all your info in the thread, feel free to PM me and I can reply back with some ideas.

Essentially though there are many different options available, the best ones are going to be individually set based on credit available, your existing credit lines, etc... Knowing more information is best.

Quote :

"We know the credit cards are probably costing him the most..."

Most likely but not always, I have a 10K card at only 4.5% annually.

Quote :

"Student loan interest is off the top. No need to itemize."

Correct, assuming he qualifies.

Quote :

"If your goal is to improve your credit for a future home purchase then you should not consolidate and should try to pay off the credit cards as quick as you can. You should only consider consolidation if you are unable to make sufficient payments"

It depends on what you mean by consolidate, and even then its not that simple.

9/10/2014 11:51:27 AM

I said sufficient payment, not minimum. and by consolidate I assumed he meant roll into one loan (or at least roll the two student loans into one, and the credit cards into another). It will increase how long it takes to pay it off, he should concentrate on paying off the cards quickly, and i wouldn't want to open another revolving credit account if my goal is to improve my credit

9/10/2014 12:35:14 PM

I don't really understand how good credit vs. bad credit works. My credit score is 653, which I'm told is good, but I recently applied for a credit card through USAir (to help make traveling cheaper) but was denied. That's why I became concerned.

My credit cards are interest free until a certain amount of time has gone by, and then they jump up to be pretty extreme (24%). I'm hoping to have them paid off before then, but I'm worried about putting too much into that and not having enough left for regular spending and paying off everything else.

The loan on my car is 0% for 60 months, and that one I'm not worried about. I haven't missed a payment deadline yet and don't plan to. As for student loans...I've got about $7000 left federal (somewhere around 2% interest) and $3000 private (6.8%). I've been paying more than the minimum each month in hopes of getting everything paid off sooner, but I'm not sure if I can keep that up while saving for a wedding and a home.

I am however putting a significant amount into my retirement fund each month, so at least I'll be fine in 50 years, right?

9/10/2014 2:42:19 PM

653 is not good

9/10/2014 2:44:52 PM

Balance transfer offers at low interest rates are probably your best bet.
You could always try calling the ccs and see if they'll work with you and lower the rate.

Quote :

"653 is not good"

Yeah, you have bad credit so you got denied. You'll also pay higher rates for everything b/c of your bad credit.

Quote :

"My credit cards are interest free until a certain amount of time has gone by, and then they jump up to be pretty extreme (24%). I'm hoping to have them paid off before then, but I'm worried about putting too much into that and not having enough left for regular spending and paying off everything else. "

Then stop prepaying your low interest student loans and put more toward your credit cards.

[Edited on September 10, 2014 at 2:48 PM. Reason : ]

9/10/2014 2:45:47 PM

if he can pay off the credit cards before his interest rate spikes, he shouldn't open a new revolving credit account to transfer anything to

9/10/2014 2:48:48 PM

Yeah, made the post before I saw his APRs.
He also shouldn't be saving for a wedding/home if he has credit card debt which may soon be at 24%.

[Edited on September 10, 2014 at 2:50 PM. Reason : ]

9/10/2014 2:49:19 PM

What is good then? I was told that above 640 is good and above 720 is great.

Quote :

"How quickly do you think you can repay the total 20k?"

Right now I've been paying back ~$650 per month on everything combined (loans, credit cards, car payment) and I'm putting $150 per month into retirement and have not had much left over for near-future savings. At this rate everything should be paid off in only 3 years but that's only if no other major financial needs come up (like a medical emergency, which I had a couple of years ago and set me back substantially).

Quote :

"He also shouldn't be saving for a wedding/home if he has credit card debt which may soon be at 24%."

It hopefully won't come to that, as that rate won't kick in for another 2 years. I should have it all paid off before it gets there...but again, barring I have no emergencies.

[Edited on September 10, 2014 at 2:57 PM. Reason : -]

9/10/2014 2:55:02 PM

Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699
Poor Credit: 600-649
Bad Credit: below 599

http://www.credit.com/credit-scores/what-is-a-good-credit-score/

9/10/2014 3:00:38 PM

Quote :

"Then stop prepaying your low interest student loans and put more toward your credit cards."

agreed, stop paying more than the minimum until the credit cards are paid off. do you have any deferment options for the student loans or have you already used those? (i can't remember how all that works)

9/10/2014 3:07:08 PM

I use 0% interest deals all the time for TVs, laptops or furniture. Chase Slate gives you 0% interest for 15 months and $0 balance transfer fees as an introductory deal. I always pay them in full months before the deal is up though. I also have 760+ credit. It kind of all depends on your credit score though. I figure keeping $4,000 in the bank and paying it off over 8-10 months is better than taking it out of savings. Especially if that savings is earning interest. Then again I always have the cash at hand in case I need to pay it off.

9/10/2014 7:05:45 PM

I have an 825 by not opening a bunch of 0% revolving credit lines (I'm stuck at 825 though, can't figure out how to get 850 but I've read that almost no one does)

9/10/2014 7:27:36 PM

I'm not buying a house so I think the difference between 760 and 825 is negligible. Even buying a house I don't know how much that would impact you. The benefit I get from buying things at 0% interest and having that cash in a savings account out weights the impact to my credit score.

9/10/2014 7:28:43 PM

^It also sounds like you have more income than I do.

9/10/2014 9:23:12 PM

Hey I got an engineering degree. I'm not in engineering but I have a good salary. I feel like in today's society if you get a degree that pays well then well you get a degree that pays well.

9/11/2014 12:22:12 AM

OP, you have to get your priorities straight but it sounds like you are the right track but just dont have all the info.
1) Student loans actually help your credit score so long as you make the payments on time, and $7k isnt bad. Do the min payment on the federal, 2% is actually great for those. Try to throw the extra money towards your private student loans vs the federal.

2) Ideally, knock out your credit cards first even if they have 0% interest for now, it will improve your credit score for when you really need it (obtaining a good mortgage rate for when you buy that house). Gaining 1 or 2% less interest doesnt sound like much until you compare it to the initial principal, or price of a home.

3) Do the min payment on the auto loan until youve paid off the ccards at least - which I havent seen you specify but will assume is less than 5%. More than that I'd probably shop around to other banks/credit unions to refinance it with better rates.

4) You really will need to buckle down on any excess spending, your debt can get out of hand quicker than you realize. Once it snowballs to a point of no return i.e. you cant make payments and default/file bankruptcy your life will go to shit fast.

5) Lastly I wouldnt be moving into a home unless you are just paying rent that is almost double the estimated mortgage payment on whatever house you have in mind. Home ownership costs a good 5-25% more than just that monthly mortgage payment, not including any emergency repairs.

6) Keep investing (assuming its a 401k) that $150/mo unless you really find yourself not being able to even meet the monthly min payments on everything. It's easier to just ignore that chunk of money isnt even touchable, unless youve got some rich parents or big inheritance you are banking on to ride out when you retire.

[Edited on September 11, 2014 at 1:59 AM. Reason : yeah words]

9/11/2014 1:55:00 AM

Quote :

"3) Do the min payment on the auto loan until youve paid off the ccards at least - which I havent seen you specify but will assume is less than 5%. More than that I'd probably shop around to other banks/credit unions to refinance it with better rates."

I think he said:

Quote :

"The loan on my car is 0% for 60 months, and that one I'm not worried about."

Which is great.

9/11/2014 11:15:11 AM

Ok yeah posted that while I was a bit tired last night, scratch that one.

9/11/2014 6:32:47 PM

wait, how have we gone this many posts without a question about a jew asking for financial advice?

WHAT WORLD IS THIS?

9/12/2014 2:49:32 PM

heh was going to leave that one out.

9/12/2014 2:53:17 PM

When I was 10 years old a redneck at school told me all Jews were super wealthy, and kept it all to ourselves because we're super greedy.

I went home to my lower-middle class parents who just days earlier had donated to March of Dimes and said "Mom, Dad....you're doing it wrong."

9/12/2014 7:32:19 PM