| Getting rid of bad unsecured debt. |
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lowbrow
Contributing Member
Cash: $ 5.25
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Joined: 08 Feb 2005
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| Getting rid of bad unsecured debt. |
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I've brought this up before but didn't really ask anyones advise. I have a single consolidated student loan. I messed up in the consolidation process and have a terrible rate of 8%. The original balance of the loan was $53k and I still owe about $40k. I pay $388 a month of which only about $90 goes towards principle. I have a good paying job but with a car note, rent and child support I have a real hard time putting much more money forward each month to this bad debt. I have about $30k in my 401k but it has been advised that I not take out a loan against that to help eleviate the student loan debt. Plus that would just reduce the balance and wouldnt effect the monthly payment I make right now which is where the sting is. I've even considered trying to play the 0% credit card transfer game. But I'm not even sure paying off a student loan would apply to debt transfer rules of the credit cards. I have decent credit btw, something like 718. Oh and I have no equity in anything.
Any advise?
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Thu Mar 17, 2005 4:59 pm |
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lowbrow
Contributing Member
Cash: $ 5.25
Posts: 25
Joined: 08 Feb 2005
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Ouch.
I guess I'm screwed.
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Tue Mar 22, 2005 4:05 pm |
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chiron
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This isn't my area of expertise, hopefully Jim or someone more into this aspect of personal finance will weigh on this soon - but here are a couple of "double check this please" ideas from a tired old man...
1. It's something I am too busy (lazy) to do with my own finances, but is one of a million things I keep planning to look into... have you contacted the creditor about the potential to make twice-monthly payments? I forget the precise benefit of making those, but memory is suggesting that you pay the same per month (which doesn't solve your problem) and merely hit the end of the loan faster since more principal is paid relative to the same amount if paid monthly.
2. Now I know I am tired, because this seems way too obvious. Have you, given you've got a pretty top-tier score, looked into transferring this loan over to another lender at a better interest rate? I'll just stop there and hit the pillow, somebody please come along and flame me for being an idiot.
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Fri Mar 25, 2005 8:44 am |
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BlankenshipFP
Money Talk Advisor
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Location: Illinois
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I've kept intending to reply to this message, but for some reason it kept slipping through the cracks.
The real problem here is that you've already consolidated your student loans. As I understand it, once is all you get. It is possible that you could go back to school, take out another loan, and then consolidate that loan with your current loan in order to get a better rate. I would check with your lender on this first. You may be able to talk them into a slightly lower rate if you talk it over with them.
Beyond that, since you don't have home equity to pull from, you're kind of stuck with options.
Good luck -
Jim Blankenship, CFP®, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Fri Mar 25, 2005 12:24 pm |
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Rolo
Yo' Daddy
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I believe I replied to this...is there another thread just like this one?
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Fri Mar 25, 2005 8:53 pm |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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I think it's an alternate universe, er something. 
Jim Blankenship, CFP®, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Fri Mar 25, 2005 9:45 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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Or a pretty elaborate deja vu'!
"Expect me when you see me."
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Fri Mar 25, 2005 9:49 pm |
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