My wife and I currently have a mortgage @ 1300 a mont(tax/escrow) included. Two auto payments. 13 credit cards. We have about 13 credit cards around 95% utilized, 13,000 total. Our scores are around 625 each. Income is currently 60K combined. I am looking for some advice. My wifes income is probably going to double within the next 5 months, going from 16k to 32k annually. I am looking for the best financial advice on what to do with extra income. Extra income=taxes, etc. Might have an additional 4k between Jan-April of 2008. My hope is if I can get our scores higher-maybe to 650, and lower the cc debt to 75%, maybe we can than qualify for a personal loan and pay off all credit cards. Currently our CC rates are around 19%. We have about 8k in equity in our house, but just refied into a fixed mortage from a 2 year arm so house refinancing is not an option. We are looking to close the smaller CC accounts and eventually get a more reputable card like Discover, etc. I am currently working for a credit union but do not want to go through them as my scores are not good enough.


1. Does anyone know of any good companies willing to give personal loans under our situation?

2. How long should I wait until after my wife has her new job? Does she have to be seasoned?

3. I don't want to go to a debt consolidation company but these cc companies are killing us with financing and overlimits.

4. Does anyone have any tricks for increasing cc lines? Oue biggest card is a $3500 BJ's. Its @ 95%. I thought maybe an option would be to lower that balance and transfer other balances over cause the rate is a little lower.

5. Would it be better to payoff or paydown the smaller balances? Some of the smaller cards are uselss and I want to get rid of them do to there annual fee's, etc.


All advice greatly in need and appreciated.

IMO...

Pay off as many of the CC's as you can. Start with highest rate/lowest balance.

The faster you can get those paid off, the less money you will be spending each month just to keep up with the minimum payments.

Until your DW gets the pay raise, try to come up with some ways to increase income by getting a part time or possibly a seasonal job.

Keep your expenses low, get a working budget in order.

I really wouldn't bother with getting the personal loan. If your DW income is going up by $16K, then even after state & fed taxes, you should be able to pay off your CCs within 18 months if you just concentrate on that.

Well not really. Once her income goes up, we will now have daycare costs of around $10,000 annually.

well, then, will you have any extra income?

After my inital budget of $500 a month for credit card payments, we'll have between 3-5000 additional income betweem now and May 1st.

I'd attack the CC's with a balance of $1,000 or less in order of amount owed. Once those are gone pay off the high ones by interest rate.

I think that is a wise way to apply the extra payments.

The main thing is to assess if there is enough after tax benefit to having your wife take a full time job and using day care for your child. If there is extra after tax income then apply that towards reducing your credit card debt.

Good Luck!

Well-I know I can do that. What about the cards that have an annual fee? Should I close them once I pay them off? I was also thinking of calling each company and trying to get the interest rates lowered.

Would it be better to try and see if we can qualify for a personal loan through a credit union?

I'd have no problem with closing out the small accounts . I'm just thinking a personal loan with these cards paid off and paying 10% interest is better than 19.9% interest. Does anyone know of any reputasble organizations or ways to get a personal loan-no equity in house.

It is. Problem is, with lower scores and high utilization, unless you can get a CU to work with you- you're limited to the CitiFinancial type lenders. Citifinancial's lowest unsecured rate is 20% right now.