Ask HN: Getting a Handle on Debt | Hacker News Reader

Ask HN: Getting a Handle on Debt

3 pointsiJohnDoe4 comments

Hi Everyone,

I have around 100k in debt. It’s various credit cards or small loans with the usual companies we all get junk mail from.

My credit is fine, other than just the high balances bringing the score down.

Doing a refi or HELOC isn’t an option.

My specific questions:

Has anyone been through this and figured out a way to consolidate? Anyone find a loan company that is willing to consolidate, even if it’s a high interest rate? I’m basically treading water and not making a dent at anything. Consolidating and getting it somewhat more manageable would help.

Haven't had any luck with LendingTree, SoFi, etc. despite their advertisements. I could give them a try again though.

Anyone have luck negotiating down balances?

Looking for a company that understands the situation and not just running a credit report and denying it. Need a company that understands its for consolidation.

I know about the snowball method and other approaches.

Looking for any experienced hacks or approaches the HN community have found.

Many thanks to everyone!

> consolidate, even if it’s a high interest rate?

This doesn't make sense if you want to pay down or eliminate your debt, rather than just ease the administrative burden of it.

To pay the debt down fastest and at the lowest cost, you should pay down the highest interest rate debt first ("avalanche method"), and also refinance where possible to minimize the dollar-weighted average interest rate of the debt.

Perhaps that might mean some of those 3% or 5% balance transfer promos that give you 0% interest for a year, etc. Getting organized, doing the math, and a spreadsheet or two may help.

I agree.

One exception may be when there are a few very chunks with a low interest, but perhaps to reduce the number of items to track the OP may want to pay them completely. It's a bad theoretical move, but it may help to reduce the administrative problem to send the money to each one.

My wife and I just paid off $75k in 14 months following the Dave Ramsey plan. People like to shit on DR (I get it, he can be abrasive) but his recommendations and mindset were really helpful.

My advice would be to forget about consolidation. DR always talks about how it makes you feel like you did something but you didn't solve the root of your problem (inflow vs outflow). And he was 100% right in our case: we consolidated 25k of our debt at one point and then our balances kept going up, especially since we didn't fix our spending after taking on the $900/mo consolidation payment.

I'd say you need to get radical and do whatever it takes to get the debt out of your life:

- Start with a budget allocating every dollar of your income to a category (we love YNAB for this).

- Cut all the non-essential categories as much as possible, maximize the debt payment category (we still ate out and took small vacations, but all budgeted and paid for in advance).

- Take on extra work if you can.

- Follow the debt snowball (not mathematically optimal, but man do those early wins feel good). I used a tool called Debt Payoff Planner (stebt.com) to track & manage this.

- Start identifying yourself as that crazy person going nuts to pay down your debt.

- Immerse yourself in the debt paydown mindset by reading books like The Total Money Makeover or listening to DR's radio shows (at the very least watch some debt free screams).

This advice is probably a bit too prescriptive but it really worked for us. It was 14 months of saying no to a lot of things and struggling to stay on course, but it was worth it.

Good luck on your journey! It is 100% achievable.

I'd look into Dave Ramsey's stuff to have a plan to get rid of the debt and change your habits about money and debt.

It will likely take a couple/few hard years to dig yourself out, but your future self will be very thankful for it.

Shuffling stuff around and "hacks" will just kick the can down the road without doing anything to tackle the root of the problem.

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