Need advice about consolidating credit card debt!?!?

My sister has confided in me that she has maxed out her credit cards and is not able to make the full monthly minimum payments, but sends in a smaller payment and is now getting flooded with late fees and ever increasing interest rates. I am not sure how to help her. I don't know if she should look into consolidating credit card debt or if that even works? I know she has to be ready to make changes in her lifestyle for this to even work...and honestly I don't think she's ready to commit to a change. But I'm hoping someone can offer some advice that I can take to her and say ';This is your best plan of action...'; and hope that she does something with the information. At least I won't feel like I have done nothing to help her. Thanks!Need advice about consolidating credit card debt!?!?
The Truth About Debt Consolidation





Myth: Debt consolidation saves interest, and you have one smaller payment.


Truth: Debt consolidation is dangerous because you treat only the symptom.





Debt consolidation is nothing more than a ';con'; because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. True debt help is not quick or easy.





Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work.





Debt Consolidation Statistics


A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for ';unexpected events'; which will also become debt.





Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, BUT if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business.





Debt Consolidation Example


For example, let's say you have $30,000 in unsecured debt, including a 2-year loan for $10,000 at 12%, and a 4-year loan for $20,000 at 10%. Your monthly payment on the $10,000 loan is $517 and $583 on the $20,000 loan, for a total payment of $1,100 per month. The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Sounds great doesn't it? Who wouldn't want to pay $460 less per month in payments?





But they don't tell you that it will now take you 6 years to pay off the loan. This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan vs. $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the ';lower payment';. Not such a good deal after all. This example shows you why they are in the business - becuase they make money off of you.





The Real Way to Get Out of Debt


The answer is not the interest rate; the answer is a Total Money Makeover. The way you get out of debt is by changing your habits. You need to commit to getting on a written game plan and sticking to it. Get an extra job and start paying off the debt. Live on less than you make. It is not rocket science, but it is emotional, which is why most people need help getting through it from someone like Dave Ramsey. Don't try debt consolidation!Need advice about consolidating credit card debt!?!?
1. Tear up all her credit cards!


2. Call the credit card companies and get on a new payment plan!


3. Write out a budget for her (EVERY DIME!!!)


4. Review weekly for the first 3 months and then monthly until she is caught up!








Note: You are right, if she is not committed, if she won't do it, it won't happen. It sounds like she is looking for some help if she finally confided in you though, so help her!





Best of Luck!





Joe...
Has she asked the companies to lower her interest rate? Go to http://www.bankrate.com/brm/news/cc/2002鈥?/a> for a helpful script. The only other solution is for her to change her current lifestyle. You are not responsible for your sister's actions. The only thing you can do is to encourage her. No matter what advice she is given or how many horror stories you tell her, she has to be ready and she doesn't sound like she is.
The best thing that she can do now immediately is to join a debt settlement company and try to clear off her debts with low affordable monthly payments...





There is a differnce between a Debt Consolidationa and Settlement.


Debt Settlement company will negotiate with your creditors and try to reduce your principal debt around 30% to 70% depending on your credit companies. You will also be given approximate time frame ranging from 3-36 months as to when you will be out of debt completely.





In Debt Consoliadtion your principal balance will not be reduced. You have to pay the full amount but with lower monthly payments..and GOD knows how long it will take to pay off your credit cards..





So please check the options in detail and take a wise decision. I wish you good luck...





Once you are out of debt it is upto the individual to cut expenses and organise budget in such a way that they will never get into this mess again...





check this link


http://www.debtfreeafterall.com
thats the best idea that you can help her,tell before she ruins her future totally,conslolidate her credit card debt right away,at least by doing so as soo as possible she will not ruin her credit ratings totally,and will be able to escape paying late fees and high interest rates,at the same time she will learn how to spend her a money wisely,
If she owns a home the best advice I can tell you is to refinance her home and include the credit cards in the loan. She will qualify for a much lower rat ethen what her cards are at know. She is prob. not even paying the full interest right know on those cards and thats why her balance is going up every month. She needs to to something very fast. Her credit will start to slip very fast with this kinda stuff on her report. Tell her not to get in and credit conseling. This will hurt her more in the long run. I am a mortgage consultant and prob. would be able to point her in the right direction is you want to give her my info.