If you did not have enough willpower to not run the cards up again I doubt if paying them off with a loan will keep you from running them up again. Cutting up is fine as long as you do not use them on line for purchases. You will do what you want.

Don;t get a loan, Here are two methods, from Suze Orman and Dave Ramsey. But I agree with Malfleur, you need to get yourselves under control.

http://www.thesimpledollar.com/dave-ramsey-vs-suze-orman-which-plan-for-dealing-with-debts-is-best/

Would you use the house as collateral ? Don't get a loan. Just pay off cards ASAP

If you use the house as collateral , you risk losing the house if you can't pay for some reason. Not the case if you kept the debt on the cards.

Let's run some numbers. I'll use $1,000 as my base amount. For a 36 month loan at 10% the payment is $32.27.

Let's say you are looking at taking out a $12,000 loan. Multiply that $32.27 by 12 to see your payment, which would be $387.21 per month.

Could you apply whatever that loan payment is directly to your cards instead of taking out a loan?

maifleur01 This is the only time we have had credit card debt in our 10 years of owning credit cards so I'm not understanding what you are referring to when you say "again." Yes, the cards were maxed when we were building our home, because of home purchases. I'm not sure if you've ever built a home and had to work with draw structures but most people don't have $30,000k in cash lying around to get them from draw to draw. Most people a) use credit cards b) get a line of credit or c) pull from savings. Before the house, all the cards had zero balances. One time out of 10 years surely doesn't prove that we consistently run up our cards. I would also be closing the accounts, not just cutting up the cards.

I would never use my house as collateral for anything. They would want income verification and that's it.

sushipup1 Thank you! I actually came across Dave Ramsey throughout this whole ordeal and found some really great information! I also downloaded his "Every Dollar" app and it's great! My Mom's best friend also owns a well-know bankruptcy/solvency business in Canada and has been helping me out :) (Note: I'm not filing for bankruptcy haha it's not that bad. I just asked her personally for some help)

Christopher_H Yes, I have looked at that option and agree that I could probably just put that money towards the cards rather than a loan. And if I have any extra one month, probably more.

Although a loan would definitely give me peace of mind, I think I'm just going to focus paying them off one by one. I also think the fact that we have realized our mistakes and are taking steps to ensure that a) we get out of it and b) it doesn't happen again, proves that we are committed to the process.

Thanks all!

Before I begin - I am the anti-Dave. So far as I am concerned Dave Ramsey gives people the bad advice that they really need. He is very good at helping people establish discipline and that is the most important thing but I don't love his advice.

Get the loan!! With a 6.5% loan you will pay off the credit cards 28% sooner. This means that you will save $481.32 for every $1,000 you owe. That is a very serious amount. Assuming that you were to make the monthly payments necessary to pay off the loan in 5 years without refinancing you would pay $577.77 in interest per thousand, while refinancing to 6.5% and making the same payment drops your interest to $120.48 per thousand.

I am sorry to dissent (yet again), but...get the loan and stop charging crap while you are at it ;).

bry911 Very good point! I have done the math and I would definitely save a ton in interest (19.9% vs anything less than 10% is a no brainer!) They offer a 3 year or 5 year term and I would choose the 3 year. The no-penalty to pay it down faster is also an attractive option as we successfully paid off 2 vehicles before their end dates with the same no-penalty terms.

And yes, we have already stopped charging. Just the other day one of the companies called me to tell me (for the 18,394th time lol) that they were offering me a limit increase and when I said no she asked why and I said, "I have too many credit cards!" To my surprise, she didn't push. We kind of chuckled about it and that was it. I do also plan on calling the 2 cards that we do keep (1 for me, 1 for him) and lowering the credit limits.

I have 1 on an 18 month no payment, no interest (washer & dryer for the new house) that will be paid off at the end of November. I also have 1 other on a 24 month equal payment, no interest which won't be finishing until 2018 so I am not going to focus on that one at the moment. Those payments are already automatically set to come out of my bank account every 2 weeks. I have 1 card that is maxed and 1 other carrying less than a 50% balance, but still enough to freak me out. I'm not in a huge amount of debt but enough to make me stressed and I hate being stressed about money. Normally we do save up for things. I guess we just let them get the better of us this time. Lesson learned.

If you read your original post, "All the cards were paid off in full after the build. Somehow (that's a lie, we know how haha!) we jacked up our balances again". This is why I wrote again.

@maifleur01 "Again"... as in we maxed them during the build, due to the build. Not prior to the build. Context.

My only thought is - why do you need 2 different credit cards? If you are really serious about not charging, keep only ONE. You can get 2 cards on the same account, of course, if each of you think you have to have a credit card in your possession all the time.

And never ask for a credit increase. DH and I have had a MasterCard for over 30 years and I think it's still at its original limit of $2,500. (We pay the balance every month.). Granted, we've never built a house - but you aren't going to build another right away, are you?

Littebug you should look at your statements. Most credit card company's will raise your limits without asking. I have never asked but have gone from about your amount to much higher over about the same length of time.

littlebug zone 5 Missouri You have a good point there. Supplementary cards. Somehow my brain didn't think about that.

And I have *never* asked for a credit limit increase. One automatically asked me if I wanted an increase (which I took because it was during the build) and one other asks me 2 - 3 times per year (which I have taken once a few years back) Just the other day they called me again which is what I referenced to in one of my earlier posts. I said no way!!!

And nooooo haha! No house building in the near future. Someday again, yes. But you learn so much from the first time which for us is ... get a damn line of credit haha! (Although the build isn't my current issue. That's done and over)

I'm still on the fence about said loan. Today I was driving and remembered that one of my cards really doesn't have a high balance when I think about it. I have a few hundred to claim on my husband's benefits which I haven't sent away yet (doing that tonight!) I will get all of it back then that will go on the balance. I also purchased concert tickets about a month ago and 2 days after the purchase I thought, "I can't afford these" and sold them to a family member for what I paid. (We haven't exchanged the tickets/money yet) So that takes off another almost $200 from that balance which doesn't leave a whole lot left.

The plan was always (the original plan, not statements I have said here) to get rid of all the other cards and just keep the one we hold with our bank (joint card) So I think that's what we will do. And work on paying down all the others. Cutting them up, closing the accounts etc.

bry911 I know, I know! But I really don't want the cards period haha! I do have credit a fairly long credit history so I think I should be fine. I also have things like my mortgage, car payment, insurance, and mobile phone bills which will still be on there. However, now that I think about it, some of these cards might be my oldest credit that I currently still hold on to. (Mortgage is new. I have had car loans before but this one is new) I think I would still prefer to just get rid of them. Even if I can exercise control (which I'm confident I can because I do not want to be here again) I just simply don't need that much credit. And it ties up my credit too right?! (Ratios)

Unfortunately what's negatively affecting my credit right now is my hard pulls due to my mortgage. When we built we had to get a construction loan then a mortgage to pay that out so the amount of inquiries I was getting was less than desirable.

Even with this current hurdle, we still have managed to hold on to our good scores. In the words of my broker, "You two have the best scores I have seen of anyone your age." We were pretty proud in that moment. I spent a long time building good credit and I don't want to ruin that.

You could be right, maifluer01. I THINK our credit limit is $2,500, but I guess they could have raised it. I never looked, and we never asked to have it raised. I just pay the bottom line, every month.

Even if I can exercise control (which I'm confident I can because I do not want to be here again) I just simply don't need that much credit. And it ties up my credit too right?!

They do not tie up your ratios - open accounts are much better for your ratios. Your available credit never hurts your credit score only the amount that you have used. I have about 5 times my annual salary in available credit and my has about 3 times her salary in available credit. We don't use it, and I can get more credit today. For disciplined people there is never a reason to cancel a card.

Spread out your debt - 5 cards each with $10,000 limit and $900 on each are better for your credit than 1 card with $4,500 and 4 cards with 0.

The more open accounts that you have the better it is for your credit. For the number of accounts to not negatively effect your credit, you need more than 20 (installment or revolving).

Don't tie your cards together. For credit cards, if you can avoid it, never be an authorized user of your spouses card or a joint holder of cards. There is absolutely no reason in modern society to tie your credit scores together. Bad things happen, with separate cards it is possible to protect one spouses credit while letting the other's take a hit.

I also have things like my mortgage, car payment, insurance, and mobile phone bills which will still be on there.

Phone, insurance, utilities, etc. are not on your credit report. Installment loans and revolving credit are the only things on there. Many of these bills don't report on-time payments just derogatory remarks.

what's negatively affecting my credit right now is my hard pulls due to my mortgage.

Hard pulls diminish as time goes by, after 6 months they have little, if any, effect.

I think I would still prefer to just get rid of them.

That is perfectly fine - my goal on this forum is to inform people about the reality of money, credit and discipline. If you still want to get rid of them after informing yourself, great. Often these things go against common sense.

It is important to remember that common sense and credit scores are not anywhere near the same thing. Credit scores favor people with lots of unused credit and never even look at your salary or the money you have in the bank. A guy making $250,000 a year with $1,000,000 in a money market account may not qualify for a credit card when a guy making $18,000 with $8 in the bank would. In the end, credit is an algorithm that says based on people with similar credit profiles your risk is X.

bry911 I would have sworn that I responded to this. My cell phone bills are reported with the credit bureaus as was my old company as well. But otherwise, you're right, not my utilities although one place I lived did report but that was back in 2006. (I had a balance owing and it wasn't until I went to get my first car loan that I came across it. I had no idea and it ended up being something like $30.)

For now, I have decided to bite the bullet and just work on paying each of them off. They were removed from my wallet around the time of this post and sit in a jar in my kitchen haha! It's going to take some time but I'm confident that we will get there. As for closing them, I only personally have 2 so I think I would stay with your option and keep them. It's my husband that has all the cards (we combine money so obviously, what's his is mine and what's mine is his etc. The debt was accumulated by both of us) One is a store card so as soon as that's paid it's gone because it's useless to us otherwise.

Anyways. Thanks for all the advice.

ANY bill that you pay significantly late or don't pay can have an effect on your credit score. Most bills don't report to credit bureaus because they have no principle to pay down and no credit limit. Rarely do they report on-time payments which is what you need. Remember we are talking about keeping the things that improve your credit score, we are not interested in things that hurt your credit score, they are pretty easy to find.

We don't care if they report late payments and they will almost certainly report charge-offs, those things don't help you. On-time payments for revolving credit and installment loans help you, I am not sure if any other bill payments made on time are even used in the algorithm.

bry911 I don't ever not pay a bill. I always, always pay well more than my minimums. My utilization is just obviously high which needs to come down. I had credit monitoring for a few years because both my bank and credit card were frauded. Apparently when I cancelled this past year, something happened (I really didn't understand the whole situation haha!) so they ended up giving me an extra few months for free. I was able to pull a new score (soft) and it actually went up. I was surprised. But also not because even with the debt, I still pay my bills and on time.

I'm confused as to what you're referring to. I will continue to pay at least the minimums on each card while I (at the same time) focus on throwing the larger chunks at the card with the highest balance first. I'm not sure if you thought I meant I would focus on one card and not pay the others at all?

I'm confused as to what you're referring to.

In an earlier post you spoke about not needing revolving credit on your report because you had other things on it, "But I really don't want the cards period haha! I do have credit a fairly long credit history so I think I should be fine. I also have things like my mortgage, car payment, insurance, and mobile phone bills which will still be on there."

I am pointing out that insurance and mobile phone bills are not beneficial to your credit score. They have the ability to hurt scores, but not help. I didn't say or imply that you pay bills late, but that is the only way that cell phone bills will impact anyone's score, and I can't imagine insurance ever changing a credit score (paid or unpaid), since insurance is typically paid in advance, services are not provided without payment and therefore you don't owe for nonpayment.

Age of credit history is calculated by adding active accounts with (1) principle balances or (2) available balances and then dividing by your total number of accounts. For example: if you have two accounts (1) a credit card that is 2 years old, and (2) an auto loan that is 5 years old. Then the account age for your credit score is (2+5)/2= 3.5 years. However, paying off the car will reduce your age to 2 years because 2/1 = 2. So getting rid of credit cards can hurt your credit score if they are old, especially as installment loans get paid off. Monthly expenses don't meet the criteria and are not used. Neither are closed accounts.

My utilization is just obviously high which needs to come down.

You can fix that by getting more credit cards. Not that I am advising you to get more cards or anything only noting that it is the easiest way to fix credit card utilization. The formula for utilization is current balance / credit limit, and just like all fractions it gets lower when you have less of the numerator or more of the denominator.

I propose making extra payments on the debt with the card charging the highest rate of interest.

It's actually paying rent on money - would you rather pay a high rental rate, or a low one?

Eleven years ago, paying rent of $800.00 per month on a two-bedroom townhouse with unfinished basement in a suburb ... when the new owner of my stepuncle's farm, that I'd been checking on for almost a year following his death, asked whether I'd be interested in renting the nice, if dated, two-bedroom farm bungalow ... at $450.00/month ... it didn't take me long to say that such looked like a good deal, to me.

I've been there since (paying over $550.00 per month, now) ... and figure that I can continue as long as I can drive, for hitchhiking a dozen or so miles to town in the cold, snow and blow in February is not my idea of a worthwhile way to use my time.

ole joyful

First- do not get a consolidation loan, unless you are completely disciplined and ready to do #1- Take ALL your credit cards (except for one with a small, zero balance for emergencies) and put them in a safe deposit box- out of sight, out of mind :) Better than the old advice of freezing them! No more charging furniture, or accessories, or anything.

Two, YES- pay off the highest interest cards first, if you can. Be disciplined, and "suffer". Give up daily coffee "out", and other indulgences. Tighten up on entertainment. Pay off fast.

Although it's a bit dangerous, I see what you did. So here's the other piece of advice:

Every single day, celebrate the beautiful home you just affected. Nothing erases painful financial "belt-tightening" than to remind yourself every day of how you just won. Invite friends/family over for the simple things in life- potlucks, birthdays, because nobody loves Mondays- whatever. Ask everybody to take pics and send them to you. Spend a couple of dollars getting them printed, and create a "feature wall of friends". Very unique- you won't regret it.

Just enjoy this. One day soon, you'll still have the beautiful home, your equity in tact AND a lot of satisfaction and good memories.