“Dear Steve,
I am currently in debt, $40,000. I just finished a divorce, had to buy a home and furnish it for my children and myself. Now I want to disolve all of my credit card bills with one monehtly payment. Because I have too much revolving credit I keep getting rejected. I do not want to go to a credit consolidation company. I just wnt to pay my debt and cancel my credit cards.
I have a yearly income of 65,000, with a boarder that gives me 1,000 a month.
How can a person with too much revovling debt get a loan to get out of debt?
Janet”
The Answer:
Dear Janet,
With $1,000 a month to use for debt repayment you should use the debt snowball approach to payoff your debt. This will help to improve your credit rating. And don’t close your two oldest credit cards, that will just hurt your credit rating. Keep them open and use them, but pay them off in full each month.
You are not going to get approved for a loan and the more you apply the worse it hurst your credit report and credit score. Stop doing that, please.
I don’t think you need to go into a debt management program or a credit counseling program. Your first step should be to get a grip on where your money is going each month. You can do that yourself by following my spending plan instructions starting on page 81 of my book you can download for free, Eliminate Your Debt Like a Pro.
Once you know where your money is going you’ll be able to uncover if there is any extra money available to throw at the debt also to get it paid off faster. One thing though, don’t forget to save money at the same time you are getting out of debt. You need a savings account with real money in it for an emergency fund.
