Should You Consolidate Your Debt? 

Watched about 100 of your videos and you guys give out 2 cents at the end everytime. I have about 2 dollars now and wondering where to invest

A decade ago I had a friend who was having trouble paying off his debts. He asked for advice and here is what I told him. 1) order all of your debts not by amount owed, but by interest rate paid. 2) pay the minimum amount back for all of your debts, except for the highest interest rate one -- pay as much as you can into that one. 3) Once that is paid off, rinse and repeat. 4) Do not fall into the temptation of paying off of a lower interest debt all at once even if you are able to. You will end up saving much more in the end by taking that extra payment and applying it to a higher interest debt. After 2 or 3 years. My friend was debt-free!

Something that I feel should have been mentioned is that banks might also stretch the length of the loan to make the monthly payments less expensive, but the length of the loan can also increase the overall debt considerably. I almost consolidated my debt but then realized the new start date of the new loan would mean all payments essentially reset and I would have paid extra thousands in dollars just to interest going that route. That's why you always want to run the numbers. :)

I got into a debt management program thru consolidated credit. 20% interest to %0 and lowered monthly fee. Credit score not hit either. But its all case by case as 2Cents put it!

When my wife and I got engaged, we both had a fair amount of debt we wanted to tackle. After moving her to my credit union, we talked to them about loan consolidation. At first I was skeptical becuase I'd gone to them before about this and the terms weren't really favorable (I couldn't consolidate everything, etc.). But because there were two of us now with two incomes, they gave us significantly better terms. We consolidated our debt and closed all but 1 credit card (the one with the longest history). We had a loan that was set to be paid off in 5 years and we did it in 3. So it was a very successful plan.

A little late of an upload, I was getting ready for bed 🤣 JK thank you, im debt free because of you guys, and Dave Ramsey.

We paid off a bit more than $25,000 debt in 13 months. We did a combination of methods. We knocked down smaller balance items with a windfall that we got (bonus and tax return), then transferred any other high interest debt to other credit cards and made a plan to tackle each one according to expiration date of intro rate. Knocked those out and paid off some other 0% credit card loans that had longer pay off dates because emotionally we didn't want to make payments on our couch and appliances. We haven't carried a credit card balance since. (Debt payoff started in 2018) P.S. this is not the first we have tried to get our debt paid off but the first time we actually had a plan that was realistically actionable.

My lesson here is: learn the difference between NEEDS and WANTS and live way below your means.

I can see this hits home for a lot of us. We had, I think, about $30,000 in credit card debt. We took a second mortgage as a debt consolidation and paid of the credit cards. The problem was that we made no lifestyle adjustments and pretty soon the credit card debt was creeping up and we were close to being in a worse place than before. We took a hard look, worked hard to pay off the second mortgage (really, really bad idea), and then used the debt snowball method to eliminate the new credit card debt. We paid that off, paid off the mortgage, and the only remaining debt of any kind is an auto loan. It took discipline, it took a mindset change, and it was more than worth it. If you'd like to manage your stress, get a handle on your debt.

The end bit about personal accountability and understanding of your own weaknesses is the biggest takeaway of this video. Debt consolidation is the best option in my personal opinion. The stress of juggling multiple accounts for months or years out weighs the "pride of completion" when you finally pay one off. And if you are able to pay off that debt transfer within the supposed promotional period, you do not have to pay that deferred interest, which can save you a pretty penny.. I've consolidated credit cards and just bounced my debt from card to card when they have Debt Transfer Promotions. I didn't have a lot of debt, but it kept my monthly payments low as my credit cards always seemed to have Transfer Promos around the time my last Promo was about to expire. Did that for years until the debt was paid and never had to pay the deferred interest.

No. I remember when some did this and I worked credit repair. A Debt Consolidation company told a woman to stop paying her bills and we removed almost everything off her credit.when they told her to stop paying her bills. They started to report late payments and more. They might have settled their debt once they defaulted. But they still reported late and collections..

I was really worried when I had 12k in credit card debt. I didn’t make the most money and was really worried. I got two personal loans and I was able to pay it off in 2 years. I used a third party lender so my interest rate was bonkers but having that balance go down and never go up was the reassurance I needed to persevere! If you have debt you can get through it too!!!!

I used a debt consolidation for a mortgage and multiple credit card, it was the best thing I ever did, it gave me breathing room and I was finally able to make headway in paying down my debt and eventually became debt free

My credit card companies wouldn’t negotiate with me at all. I was able to make payments but only the minimum which was less that the added interest each month, so I would never get out of debt. My savior was from a credit counseling agency. In my state, they have to be licensed/accredited and have fee limitations per statute. They negotiated with the creditors to lower interest rates and come up with a payment plan. They are different from debt settlement because you never actually stop paying on the debt. They also provide general money and credit counseling. It’s a great solution but make sure they are accredited and monitored by your state. Search for credit counseling not debt settlement.

I just pay off my balance in full every month. If I have to eat rice and beans til next budget cycle, so be it

Is it normal with this much credit debt around the world? Not spesking about those with a shopping problem that max their credit cards and never opens their mail. But normal families? Is it the low grade of social security and high medical expenses in the States that forces normal families to become debt slaves for the rest of their life?

As much as I'd like to say that high debts can be prevented with responsible saving and spending, they make a good point that unforseen circumstances can negate all of that good work. Hope that nobody struggles with debt, but if you do, I hope you get to pay it off and be free from it soon!

The debt avalanche which this channel describes in a previous video worked for me.

Poor Philip had to sell his awesome mustache to pay off debt. So sad.

Nice job on this one. One thing not mentioned that was very successful for me about 15 years ago (not sure if it’s even still a thing), was once I got my bills stable for 6 months and started exploring options, I simply called each creditor and asked if they were able to lower my interest rate. I had improved my credit significantly from when I had first signed up for those lines of credit and had a higher income. To my surprise, every one of them was able to lower my rate or offer me an alternative line of credit program with a better rate and more perks that didn’t cost me anything (important to paying down debts!) Once I would get a credit card low enough, I would take out a personal loan at my local credit union with a lower interest rate, but more importantly, a structured finish line, and use that to pay off the balance. Took a couple years, but when combined with not adding any new debts, it’s something that worked for me! Great job on this topic that puzzled me for many years. Hope it provides some clarity to get others on track.

We were able to pay off $120,000 in 3 years using Dave Ramsey baby steps. 5 Credit cards, 2 car payments, 1 student loan and 401k loan. We are able to pay cash for everything now.

3:53 - snowball method baby!

Excellent video, love how you summarized the practices of the companies that use these methods. A lot easier than having to read the fine print with a financial jargon dictionary.

Do you have to pay that deferred interest if you pay off the balance during the promotion period? That's the only way a balance transfer makes sense.

Love you guys ❤ Thanks for the information 👌

Thank you! This is helpful!

Oh, these americans and their puny 25% APR... try dealing with 250% APR like in Brasil and people still take on credit cards. I still remember laughing of my bank manager in Germany when they told me not to use the overdraft because the APR was of 9%.

Just binged, super dope 👍

This is why I'm scared to even get a credit card. Why give yourself the ability to push yourself into debt you cannot pay?

Thank you for your videos. I am learning so much.

Great video as always!!! Any video on how to choose a beneficial credit card? What to look for and what to avoid so we dont get caught paying higher interest?

Ahh I miss you guys been a while since I watched your videos. You're both so awesome

Oh the 'great' fine print. Thank you for the information!

Unfortunately, I fall into this category. This upload speaks to my credit situation.

Love this channel

I learned the hard way with CC. You have to really think about all the stuff you want to get. It's been 10 years and I am still digging out.

I love this show.

I was over 10k in debt and every month barely made a dent in it. I took out a loan from my 401k. I had to pay a loan fee and pay myself back in interest but that interest went back into my 401k. I only really lost time in the market and the setup fee. I've since cut my debt to about 4k and I can finally see the light at the end of the tunnel. I've considered all of your listed options but borrowing from my retirement has been the smartest choice for me. It was especially beneficial due to getting the loan before the recent market crash.

The biggest issue when it comes to debt in the first place is people knowing what a need and want is. In my country you have to pay school fees to even go to a state school, but there are programs and exceptions for those that can't afford. And sometimes the unwillingness of those applying to give the wants up. Expecting others to loose out to get what they want if they can wangle it. My mom was a secretary for one of the state schools years ago. She had to deal with the forms for those seeking school fee exemptions. Many got denied. Parents riding BMW's was one. If you can afford a BMW, you can for pay for your kids fees, if not, get a cheeper car. But another that was quite common, was they would have DSTV (a paid for Saterlight TV box, quite expensive even back then) and when told they don't qualify and if they gave up the DSTV, they could afford thier kids school fees. Both groups of people used to get quite upset when told they had been denied the exemption. Demanding that they have exemption. Shows you where thier priorities were and it was not with thier kids.

absolutely love this channel

Always informative!

Please, please, PLEASEE do a video on HIGH YIELD SAVINGS ACCOUNTS or OVERDRAFT FEES!

One pitfall with balance transfers from one credit card to another and their promotions can be that if you are late with one payment the whole promotion might be nullified and end up costing more - so be careful to understand all the obligations and be really organised to make sure all payments are on time.

A 0% APR new credit card deal allowed me to clear my debt. The 18 month agreement period became the deadline to aim for which helped me focus on saving. Being in the UK, I put all my savings into premium bonds (government savings with a monthly lottery) while only paying the minimum monthly payment, which kept the money working for me. Perhaps a high interest savings account (do they even exist?) or investment company would be the alternative choice to premium bonds, just so long as you don’t give it to the new credit card company immediately.

2:21 IS ME TO A TEE LOL

yes

Last I transferred my debt, the bank took away my purchase grace period or something like that. So I stop using that credit card until I paid off all debt.

Best way to manage debt is to force yourself to have only low limit cards, around $1600. This psychologically makes me check my balance constantly and thus monitoring my budget as a bonus effect, no thinking needed!

I think it's probably the best case scenario when you have a lot of debt, and most of them are high interest, becasue a debt consolidation will almost always get you lowered interest rates, and you get to do it in a more streamlined manner.

Sorry if I missed it but my 4o1k just lost money when the stock market when down what do you suggest. Or a new video as to what we should do considering all the inflation which I know you have covered before. I really love your channel and all of y'all videos please and Thank you.

I almost bought that Bonobos shirt Philip is wearing

Yo! Where’s the mustache Phillip? It’s like I’m looking at a stranger 🤣

Unlike the Market this channel is on the Up and Up.Hopefully the Philips Stache comes back

Philip, pls have your mustache back

higher wages leads higher cost . it could be worth it .lot Americans can a little less feeding and need rent more . but the same who want workers to make higher wages also want those making higher wages to pay higher % taxes

The stash is gone!

Love from india I love your work so much.

It sounds obscene to me that a debt settlement company can charge a massive fee regardless of if it succeeds in settling the debt. Is that actually legal?

would love to see a video about credit cards!

Looking good guys

Short answer No

very educational. i’m glad i don’t have credit cards right now but also my credit could use a boost. it’s ridiculous

For all commenters.. is student loan a good option ? or is it better to remove the system does not trapping people into debt.. but at the same time can't go to college..

If you can handle 0% APR for 18 months. Then do it. Plus ask help from family if possible.

I'm just glad I'm not in debt anymore.. this stuff gets stressful. I still need to fix my credit x.x

I think avalanche or snowball method works. For some, paying the higher interest amount off first gives them more motivation, for others paying the smallest balance for an easy win gives more motivation. At the end of the day, I believe both methods will have student loans as your final boss to beat and will end with you being debt free 😎

I have over 30k in card debt because of job loss during the pandemic. I have yet to recover and am still hopeless as I can’t even get a job that pays my bills AND is able to pay down all those loans.

Debt consolidators: another snag with this option. the difference between what your creditor agrees to take, will count as income and you will have to pay taxes on that portion. CC debt is $10,000, negotiated payoff is $5,000, CC is now payed off. You will need to pay taxes on the $5,000 you didn’t pay back, this portion is considered income. FYI

That’s why I don’t do credit cards. I use my own money! If you can’t afford it, don’t get it!

was the intro higher in pitch than usual? huh

Every time I hear about consolidating debt I think about Ditech advertising just before 9/11.

Should have covered bankruptcy & letting it go to collections. Great video though

Where is run the numbers? ☹️☹️☹️

Honestly the best fix for addressing debt is getting the leaders in charge to create fair rules and restrictions. Seriously how is 20+ percent even legal and what's the bigger kicker is the organization who created that loan and sold it is free to spend the unrealized profits from that loan right away. You'd think we've learned from this already from 2008... The system is also heavily geared for people who already have money and should have always been fair to both the borrower and lender.

if you have a problem with spending control, I'd suggest cutting the credit cards instead of actually using them.

What did they do to my boy! Evicting such a beautiful mustache should federal offense.

It's hard but make sure to pay off the highest interest debt first!

Make a video where you calculate the APR! That is the secret they don't want you to know! Knowledge is power!

I have $6,000 left on my mortgage and no other debt with a yearly household income of $101k.... was thinking about filing for bankruptcy until I watched this vid LOL

Americans worry about getting into debt. We can't afford to get into debt😅

Oh no! Mustache man is now just.... Man! Time to call him Ryan again! :')

option 4: sell the car, eat rice and beans

The best way to pay off credit card dept is not to acumúlate it in the first please. I have 4 credit cards but just to get the most in cash back in multiple categories. I never keep a balance, never paid interest on any of them 😁

Credit cards are a trap, if you can’t afford something just don’t expense on it, learn how to manage your finances, save money and live free of debts!

I am glad and thankful i dont have any debt to consolidate.

so simple just dont have debt easy

can you guys do a video on how to bear the inflation crisis?

Great vid...hope this helps very many reduce or eliminate their credit card debt! 🙏🙏🙏

Don't put anything on your credit card unless you can pay it off immediately

You think you know the value of money? Try to borrow some.

Is that oranges on ur arm?

Where’d that guys mustache go?

Mustacheless Philip looks like JD from Scrubs.

Step 1: cut up the cards!

Why does someone carry credit card debt month over month?

What even is a bitcoin?

✌️

title. should you consolidate your debt? them. maybe

Where's the mustache guy?

What's credit card debt? I only know that credit card gives me cash back.