Debt Problems

Would it be better to consolidate my debts or just to continue paying them seperately...?

I heard that consolidation has a higher interest rate then paying through the seperate collectors, and ends up taking about the same amount of time to pay off anyway, so it really wouldnt be worth it. But it seems that it would be easier to just pay one company a month instead of several companies a month.... What do you guys think?

Public Comments

1. You say collectors so it sounds like you are already behind on your payments. Some consolidation companies do a good job on your behalf, other just make things worse. One payment is easier, but the main purpose of consolidation should be to obtain a reduce interest rate. Research carefully the company that has reached out to you before making a decision.
2. Pay each separately, beginning with the smallest amount first regardless of interest rate. Here's why: Logic would say to begin with your highest interest rate first or the most you own. But if human nature were logical we would not get into so much debt! Pay the smallest debt first. Once you get that paid you're feel like you accomplished something. Throw the money that went to that debt at the next highest amount....and snowball it upward toward the largest amount. You need to feel like you're accomplishing something or you'll give up. Check out the "get out of debt" king. His name is Dave Ramsey. He is on the Internet.
3. Check out dave ramsey...he'll tell you the truth about debts and the way to "attack" them... http://www.youtube.com/watch?v=GWEUCZymGmY&feature=related
4. If you consolidate and your interest is higher, you can pay more than your monthly payment amount and it will decrease the principle and you will pay less interest on the loan. If you pay separately, you should pay the biggest payment on the smallest amount of debt until you pay it off, then start increasing the payment amount on the next smallest debt until you get them all paid off. If you get these all paid, learn from this experience and don't spend more than you earn.
5. Essentially what consolidating your debt does is make it "seem" like you're getting a deal. What the cons. company does is they call your credit cards, and negotiate with them a monthly fee until the debt is paid off. You're still paying the same amount of debt, you're probably just doing it slower. It only seems easier because you're only writing one check a month. What most people don't know is that if you call your credit card and tell them you're having some debt issues and you'd like to work out a different payment plan with them, they'll be more than willing to work with you. The bottom line is they want their money too, and they'd rather get $20 a month out of you, then nothing at all. It certainly doesn't help them. My advice: Sit down, put together a smart budget (how much you can reasonably afford to give to your debt every month), and divide it into the different companies you owe, giving the most to the highest bill. If it seems like you don't have enough available cash right now to do that, call the credit companies and explain, and you'll be surprised how flexible they are. You might end up paying your debt for a longer amount of time, but it's better than giving extra interest to a consolidation company. Trust me. Plus, consolidation companies do a number on your credit report. As long as your not late or missing any payments, your credit will be fine once you start consistently paying down the debt.
6. Forget the logic of "feely good " getting out of debt. LOGIC would tell you that paying off a debt with highest interest first gives you more money to pay the next one off. "Feely good" is what got you where you are so try a different strategy, YOU CAN DO it and All on your own. Dave Ramsey has some good ideas and some that have no logic at all.
7. I tried consolidating and it really just made things worse. I just ended up with more debt. Plus, most of those "debt counseling" companies charge a monthly fee for their service, which is just more you could be throwing at your debt. I definitely think that you should just pay them off separately, calling each company and getting the best deal you can with them. Then go to powerpay.org and input all your debts and interest rates and it will show you a schedule to pay them off the quickest. It is very similar to the Dave Ramsey snowball method, but this is a totally free website sponsored by a university. If nothing else, it can put it into perspective whether it is worthwhile to pay each one off separately using the powerpay method or getting a consolidation loan (you can usually find calculators for these loans on their websites). As far as having one payment instead of 3 or 4 or whatever, just use your bank's online bill pay. This is a free service most banks have that you can sign up for, just put in the amount and the due date and its all done! This is what I'm doing now, and it is really working. Just remember for the powerpay or snowball methods to work, you HAVE to stop using those cards!! Hope this helps :) Good Luck!
8. Pay them separately. Here's why. Debt consolidation has the same effect as bankruptcy. They don't tell you that-your credit rating will plummet. First, make sure you are current with all creditors. Then, have a mini-emergency fund of about 1k. Then, make minimum payments on all your debts except the smallest one. Get another job, live on a written budget. Pay on that smallest debt like a demon. When it's gone. Throw all that extra money into the next smallest debt and so on. This is the Dave Ramsey way of paying off debt. Yes, you might save a couple of hundred over a year of two if you started on the highest balance first. But, when you are really deep in debt getting those little rewards by paying off creditors does keep you going emotionally. You are trying to change your situation and your habits. Habits are emotional. Read the book, The Total Money Makeover. I got a copy at my local library. Addendum: Just read another submission. If your are current and dealing directly with your creditors then using online bill pay is fine. But, if you are dealing with collection agencies do NOT give them electronic access to your accounts. They will clean you out. They care about nothing except getting the money owed by any means necessary. If you protest later what will you tell the judge: Yes, I owed them the money,but they weren't suppose to take all of it.
9. Continue paying then separately.
10. Consolidation just means a company consolidates all your debts into one payment, then tacks on a big fee for themselves, and you pay it off. Oh, and it ruins your credit history. If I were you, I'd steer clear of consolidation. You can get scammed, and in the long run it's probably better you do it yourself. I would pay off the highest interest rate loan first, because it is eating the most of your money. Even if it is the lowest amount, pay it first, because it is costing you the most for every dollar borrowed. Get rid of this as the priority, while still making minimum payments on the other loans. Then when the first one is cleared, move onto the second highest interest rate loan and repeat. This will make your money work it's hardest, because it will save you the most interest. You can do it if you really want to be debt free. Here's some tips for living frugally. Take your lunch to work. THis will save you hundreds of dollars a year. Also, grow your own vegies. Even a pot of silverbeet on your porch will save you money. Buy non perishables like tinned food, washing powder, and toilet paper in bulk. This will save you quite a bit over the year. If you can, get a renter into your place to split the bills. This can save quite a bit of money over the year as well. Sell things you aren't using through the newspapers. Use any funds generated to make bulk payments on your debts. You can get out of debt, but you need to be motivated. Best wishes.