Question: > A friend of mine has some credit card debt (imo – very significant) > with some very high rate cards. I want to suggest a debt > consolidation company to them but I don’t know enough about them and > which one I should suggest. Does anyone have any first hand > experience that they could offer on this subject? I looked at a few > internet sites and it seems they add in charges (like $39) to the > monthly fee. Now, I know they still may be able to help, but I’d like > to get a lower number than that. Also, any advice on things to watch > out for or alternate solutions would be greatly appreciated. Thanks!
Answer: Your mileage may vary, of course. This is just what I read, and may or may not be true.
Here is what I did – after posting a message to this newsgroup listing all my debts (~$30k), and receiving a lot of feedback, I sat down and did a lot of soul searching about what exactly I want to do in the next 2 years. In 2 years, I wanted to be in the position to begin being financially independent; i.e. debt free and fiscally confident. I will be 23 in September, so my current plan gets me out of debt (100% debt free) before I turn 25.
First, as someone advised me, have your friend pick up the book `Personal Finance for Dummies (3rd edition)` by Eric Tyson. This book got me totally focused on my finances, and it is easy to read. Don’t let the `..for Dummies` fool you – there is a wealth of information packed into the book. Everytime I think I may need to use a credit card for something, I read a little bit more of the book (I usually read in during my metro-train rides to and from work in Washington DC). Go to http://www.amazon.com and search for the book – I think yo ucan even read a chapter from it online, or try http://www.half.com; you could probably find it for cheap. I bought my copy at a local Borders Bookstore for under $20. This book is great – it teaches you about personal finance as a whole, not just debt, or investing, etc. I’ve already laid out a roadmap of how I want to use the extra money I will have once I get out of debt. It really helps me stay focused – I can’t reccomend it enough!
Secondly, gather ALL of your friend’s debts and tally them up – I use Microsoft Excel myself. Something simple: Lender Name, APR%, Balance, and Minimum Payment are all examples of the things I track. Credit cards, auto loans, student loans, personal lines of credit, mortgages, etc – anything that is a loan. Monthly expenses that are not loans, I
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