Hello, I'm your host, Mr. Chuck, a retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. Credit card debt consolidation, before getting a debt consolidation loan, the first thing to do is to have a debt reduction plan. This way, getting the loan will be easier and perhaps not even required. There are many apps that help with getting finances under control, they may not help until the user has a better understanding of getting spending under control out of control spending is what's gonna cause your finances to be out of control. They affect each other. Just because you're planning are looking into getting a debt consolidation loan, what is a debt consolidation loan, we debt consolidation loan is you go somewhere, you borrow money. However, we're whether it's a personal loan, whether you take the money out of a retirement account, whether you borrow money from family or friends, or you borrow money, or you use a credit card was a zero balance that is offering you a balance transfer. For a while you might get 12 to 18 months of interest free on that balance. Those are all ways you can pay off some credit card debt. One way may you borrow the money to pay it all off. If you go out and get a personal loan, the lender is gonna want to know where you're going to use the money for. If you tell them you're going to use it to pay off your credit cards, then they most likely will want to pay those credit cards directly because they want to make sure that happens. And they may even require you to cancel it or they may even do it for you, they may close those credit card accounts down which in the shirt short term will affect your credit score. Why? Because you're going to have less credit available. And your your history. If you've had a credit card for a long period of time, say five or six years, then you're going to lose that history. So when you get that new loan, it's gonna be a new, new with no history. So well it may work, you would need to have a fairly good credit rating, say at least 400 or higher. Now the credit rating goes from 300 to 850. If you're gonna plan on using your home equity line of credit to pay off your credit cards, I would not do that your house is a secured debt. Meaning if you quit paying on that debt, where if you become unemployed, or unable to make your house payment, or to make that payment, the bank or the lender can foreclose on your home, sell the home out from under you gift there's any proceeds leftover give you the difference and probably won't be a whole lot, if any. And now you're going to be homeless, you got no place to live. So you really don't want to do that. And it's gonna make your cost of housing go up, which if you get over 43% of your gross income, may make it harder for you to get a loan down the road. Yes, you may be getting a lower rate of interest. But if you're unable to pay it off within a short period of time, two or three years, it could cost you in the long run. taken money out your retirement count, whereas a 401k or an IRA is not advisable getting a loan from those accounts. Also not advisable. If you would change employers. You have to pay that loan back at the time you leave or before you leave, or those that's gonna become taxable income to you. And you don't want to use retirement savings to pay For non retirement bills, such as paying off your credit card debt, because down the road, when you retire, you're gonna need that money. And you probably need a whole lot more than what you're gonna be taken out. So you need to let that money grow and accumulate over time. If you're young time is your friend, and you would have enough money saved up so that you can retire comfortably and do what you want to do. Instead of just staying home doing nothing and wait for your next Social Security or pension check to come in, I have an article from the nerd wallet. Five Ways to consolidate they credit card debt, consolidate new credit card debt may be a good diet idea if the new debt has a lower APR rate of interest than your credit cards. So if you have a bad credit rating, you may find it difficult to get a loan less than 20%. So that may be something you need to consider. That may not be a good idea to take out a personal loan, if you're not going to significantly lower your rate of interest. Credit card debt consolidation is a strategy that takes multiple credit card balances and combines them into one monthly payment. consolidating your debt is ideal if the new debt has a lower annual percentage rate than your credit cards. This can reduce interest costs, make your payments more manageable, shorten the payoff period. The best way to consolidate with will depend on how much debt you have your credit score and other factors. Here are the five most effective ways to pay off credit card debt. I'm going to start with number five, start a debt management plan. That really should be number one, you need to have a debt management plan, I'm calling it a debt reduction plan. Before you even go out and apply for this loan or before you even get in loan, you need to have a debt reduction plan. Because the consolidation loan is part of that plan. If you're eligible to do it, if you have good enough credit, refinance with balance transferred credit card that is considered in my debt reduction plan. Because what is my debt reduction, plan, one quit creating new debt to make the minimum payment. Three, start an emergency fund and have a minimum amount in your emergency fund at least 500 or $1,000, then you build it up over that a minimum amount of a couple $1,000 Then you use that excess money of that money over your minimum, your emergency fund as set by you and you apply it to a credit card. The first one should be when you're first getting started, you should apply it to the credit card was the lowest balance. Why? Because you want to get it to a zero balance. Why? So that it's available, they have gone to offer you sometime down the road, a balance transfer, and you're going to pay three to 5% to transfer the balance over. But they're going to give us 12 months or 18 months of zero interest, he can use that to your advantage. That's part of my debt reduction plan. And you just keep doing that over and over and over. And as your credit card debt is paid off, and you get less credit cards, you get in less debt, you need to increase your emergency fund so that you can stay on track of not creating a new debt. Number two in the article is consolidate with a personal loan. We talked about that a little bit. Three is tapping your home equity, which is not really too advisable unless it's gonna be a small amount, say less than three or 4000. For consider 401 K savings. Take out your retirement plan. I don't think that's a good idea. And then number five is a debt management plan, which is really should be number one should be your debt reduction plan. You're not going to be managing debt. You want to reduce debt balance transferred and the article goes in pros and cons of each and every one of those So that's pretty much it in a nutshell. I've been seeing on TV, I don't know, for three or four months, maybe longer applications that are being advertised, I'm not talking about tax return preparation apps, I'm talking about App vocations, there's like two of them, one of them's been hitting pretty hard, where they advertise a will help you pay read, cancel your unwanted subscriptions, and they do it for you, these apps gonna cost you money, they say they're free, you can get started for free. And then the things that you want to use in there, the premium services is what they're calling it, it's gonna cost you money, it's gonna be somewhere between $3 to $12 per month. I don't use it, I've never looked at it, I never looked into it, I never downloaded it, I just, I'm just what I'm seeing. If you look it up on the internet, that's what they tell you. Of course, the better the premium, the more you gonna pay, and probably the canceling your subscriptions is probably the$12 a month one. And then you probably might have to sign up for at least a year, or six months. So you can't just sign up for the $12 get everything cancelled, and then unsubscribe, they probably figured that out. And they probably got the lock you in for at least a year. So it's gonna cost your money, there's other ways to do it, you need to do it yourself. And when you need to do is get your spending under control. And one of the ways to get your spending under control is to have an application where you track everything you do in your checking account. In your every credit card you have. I use a app that's called count about all one word. It's $9.95 a year, I believe, he can put in multiple checking accounts, he could put in multiple credit cards, multiple savings accounts. And when you open it up on a grant, you can see the balances in all your accounts, assuming you keep it up to date. And why am I talking about this, because in order to know what is going on in your finances, you have to keep track of your finances. So if you have a checking account, that's the money and your money from work, and other sources, or you're self employed, whatever the case would be, and money out money that you are going to spend on a regular basis, whether it's rent or mortgage, loan payments, credit card payments, groceries, gasoline, for the car, maintenance on the car, entertainment, clothing, all those types of things, you need to know how much you're spending on each of these. So when you put in the detail, you select a category that's important. And you once you get the category, you need to be consistent within that category. For example, I go to a grocery store Kroger, it's gonna be one of three categories, it's either going to be groceries, it's either gonna be gas, because they have gas station, or it's gonna be dining or food for work, because I'm a truck driver, and I have a category called Work food. So that's the three different categories that did that one vendor could have. And I'm doing that. So I know how much money I'm spending when I'm on the road. I do that because I want to keep track of it. So I can budget for it. It's not cheap to eat on the road when you're never home. So if I can go to the grocery store and buy some food and tag it with me, that's gonna reduce my eating costs by at least 50%, if not more. And you do that for at least 30 days. Now that's a good idea if you're just getting started to go back 30 days and put in all the transactions from your checking account, and all the transactions from all your credit cards you use. And why do you want to do that? While you're building up the history, and that way you can category Is everything. And when you get 30 days worth in, you can do a report by category. So if you have a checking account where most of your spending goes through, and maybe one or two credit cards, where the remainder of your spending goes through, you need to do that for those three items. And then when you do a report by category, you combine all those accounts together and get a report for the total by category. And why are you wanting to do that, because when you do a budget, a budget is three columns, the amount that you budget it for that category, the amount that you actually spend in the current month for that category. And the difference? Well, if you don't know what you're spending, how you going to come up with $1 amount for the budget, you just gonna put a random number in and be way off. That's why go back 30 days, do a category, a report by category and that's your starting budget amount. Now, this is gonna vary from month to month, some months, utilities are going to be higher, say in the wintertime, or if you live in a warm climate in the summertime, and other months are going to be lower. So every month, that's going to go up and down a little bit. So you want to figure out what a good average is. And you'll do that over time, by fine tuning your budget amount. And then he gets to the current month. At the first week, I would do it every time you get paid. So you get paid weekly, you're gonna do this weekly, if you get paid every two weeks, you're gonna do it every two weeks, you from the beginning of the month, up to the current date, which was should be your pay day or the day after the day you got paid. And do a report by category for that current month total. That's going to be your actual spending. And you put that in the actual column. And now you can see the total amount that you set for that budget item, and how much you've already spent. He got to keep track of it, your rent, or your mortgage payment on your car loans, if you've already made the payment, it should come to zero because those don't generally change a whole lot. Utilities gonna go up and down a little bit. So it could be off, he may not have paid all of your utility items yet. So if there's be hard to tell, you're gonna have to be aware of when you're spending your money, what you're paying for. And when you're paying for it. And when it becomes due. That's important because you part of your debt reduction plan is you got to make timely payments on everything, you got to quit paying those late fees, you got to quit paying that extra interest and save the money. That's money that can be used to reduce the principal balance of the debt you owe. Fairly simple. And there you got it, you have a debt reduction plan, you have a budget, you have your spending. If it's not under control, at least you can see it, maybe you can start making informed decisions on where you're spending too much money. And you can start thinking, how can I start saving money? How can I start reducing my spending, while maybe I don't need to go and buy clothes every month, maybe I can cut back on my entertainment. Maybe I don't have to go out to eat dinner five days a week May I can only do that one day a week. There's all kinds of ways you can save money. And I'm not even saving money, quit spending money. There's all kinds of way you can quit spending money and reduce your spending. Because when you reduce your spending, you're gonna increase your savings. So your main goal here, not only is to get out of debt, to reduce your credit card debt, and one way to do that is through a credit card debt consolidation loan. If you have good credit, if you have everything else under control, then take that step. I'll be back in one moment with my final thoughts. If you're listening to this podcast through an app, please find the rate and review and give Mi A rating, I really appreciate that. If you know any buddy, any friends or anybody who may benefit from listening to this, please let them know about reduce that increase wealth.com, a weekly podcast, I mainly concentrate on debt reduction. A credit card debt consolidation loan may be good, if you have a good credit score, you have your spending under control, you can get the loan for a short save five years, at definitely less than 10 years, you don't want to be paying for this for over a long period of time, and at a greatly reduced rate of interest. So if you figure your credit card interest rates around 21%, if you can get this personal loan for under 12%, you're going to save some money. And if you can get it for under three years, we can get everything paid off in less than three years, you're going to save a lot more money. But when you do this, your goal should be to get your spending under control to keep your debt under control. You can do that by having a debt reduction plan or a debt management plan. I call it a debt reduction plan. Because that's what you're trying to do. Once you get your debt, all paid off, he still have the same plan. And he got it stick to it. He got to keep keep doing what you did. When you were struggling to pay off your debt. And doesn't ever end. You cannot save too much money. So the important part is you've got to change from being a spending person to a savings person. And this society, we're we're flooded with TV commercials nonstop. The more TV you watch, the more you're gonna be exposed to it by this by this by this, you need this, you can get this. This is a great product use you should buy this because it's better than what you already have. Whatever it is, he got to get out of that mindset. You can look at it and check it out. But don't buy it. You got to put rules on yourself? Do you really need it? Ask yourself before you buy anything, do I really need this? And how is it gone to help me or am I better off saving that $20 and put it in my savings account. Because 20 years from now that $20 is gonna be $200 and the price of gasoline, if there's any gasoline to be bought, it's gonna be expensive. Everything's gonna be more expensive. It's called inflation. Some years, it's worse than other years. But I can guarantee you, no matter what it is, you're going to try to buy 20 years from now, it's going to cost you more. There's no doubt about it. So quit being a spender, quit paying the banks, quit supporting the banks, support yourself, save your money, keep your debt under control. And you'll be better off for doing it. There are many applications out there that can help you achieve these goals. Some of them cost more money than others. But you can do it yourself. Just write it down a debt reduction plan. One, quit creating new debt, quit using debt to make the minimum payment on all your debt. Three, set up an emergency fund and maintain a balance in that emergency find your savings account, at least$1,000 and then build it up. Eventually it should be somewhere between three to six months of your monthly expenses that you pay every month. So if you get unemployed laid off, or it's if you have a child and your spouse quits working, you have enough money to get by for a while without struggling and that's what it's really all about. And And, four, reduce your debt by taking the money in excess of what your minimum emergency fund would be, and apply it to your highest interest rate debt first. And then work your way down. If you're just fairly new and getting started, pay off your lowest balance credit card first. And then keep it do not close any of your credit cards that you pay off. You want to keep them and perhaps use them, make a small charge on them every month or two and keep them paid off. A small charge would be 20 or $30. Just so that they keep active. And why are you doing that, because that's available credit for you. The more available credit you have, the less of it they you use, the higher your credit score is gonna be. So when you go a few years later, you need to buy that new automobile or you want to buy another home and move, you're going to have a great credit score, and it's gonna make that purchase much easier. Get your spending under control. When you get your spending under control, control, your find out your finances will be under control. And by tracking your spending and tracking everything, keeping a budget and be aware of what you pay for when you pay for it. When it's gonna come do. You'll have the money available to make sure everything's paid for timely. You quit paying all those penalties and interest. You'll have much more money and you'll be happy you did so. So let's get started today on getting your finances under control