Hi Terry! I am new to the working world after many years in graduate school and need to start paying my student loans and credit card debt. Student loans I can manage, but the credit card monthly payments along with the interest are taking a serious toll on my finances and it seems like I’ll never pay them off at this rate. I’m getting letters in the mail from debt consolidation companies but I don’t know how legitimate they actuall are. What type of debt consolidation do you suggest? Thank you!

Terry Says:  I don’t suggest talking to those debt consolidation companies, because they typically advise you to stop paying and accumulate some cash so they can negotiate on your behalf.  In the meantime, your credit is ruined!   Contact the National Foundation for Credit Counseling at 800-388-2227.   They will help you look at your budget and come up with a plan to pay down those balances.  If you must, they will negotiate lower rates (not lower balances) with the card companies and create a debt repayment plan for you (but that will go on your credit report — something you’d like to avoid).   Talk to them about your overall budget.

Did you know that it could take you 31 years to pay off each card if you only pay the minimum monthly payment.  But if you pay double the CURRENT month’s minimum, every month, without charging another penny, the card will be paid off in less than three years!!

So you need to pay more than the minimums — that’s the key.  And to do that you might have to take a weekend job, or evening job — even if it is not in your field, but working as a waiter or in sales — just to get these cards paid off.

Also go to www.SoFi.com to see if you can refi your student loans to a lower rate.  Since you have a job, that might be possible. But double check, because Federal student loans have forbearance or income based repayment options, which will be lost if you refi.   In fact, you might want to use that income based plan (www.IBRinfo.org) to make lower student loan payments, and pay more on your credit cards.

Once you get out of debt you will never go there again!

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