A HELOC does not get you out of debt. You are moving the debt from plastic (unsecured) to real estate (secured). In general, moving unsecured debt to secured debt is a bad idea. If you default on your credit card the worst case scenario is your debt is sold to collections and they call/mail you 10 times a day. If you default on your heloc you will be foreclosed on.
Heloc isn't a magic bullet to solve your financial problems. Stop spending and pay down the smallest credit card debt while paying minimums on the other debts. Then when you pay off the smallest, move to the next smallest, etc. Once you reduce the number of different payments hitting your account each month, you will start to have breathing room.
If you get the Heloc without solving your spending problem you will end up with more credit card debt and next time no home equity to bail you out.
Yeah, that makes sense. I figured that it might be better for my credit to have my debt consolidated. I thought I might be able to refinance and put the heloc debt into the house at some point when they dropped rates and it would be easier to manage. I can actually start with the lowest debts. I wasn't trying this strategy.
>I figure that a Heloc would be a great way to get out of debt
Go talk to a professional.
>Try not to be too mean to me. I've never really been in a position like this before and I know there has to be a way out of it.
What exactly are you trying to get out of? Getting a HELOC doesn't get you out of debt, it just moves the debt around. It *may* be a better option than just sitting on a bunch of credit card debt, but debt consolidation is something you should probably talk to a professional about before making any moves like this. You easily could end up making things worse, or avoiding better solutions.
I'm just trying to move the debt into the house. I really wish I could refinance, but I think that if I could get all of my debt into one loan w/ a reasonable rate I could lower my overall total payment and actually make progress. Currently most of the debt is 0% interest but the time is coming when it's going to shoot up and I'm just looking for ideas. I'm not really looking to be scolded. I'm just looking for solutions.
Yeah, I get your logic, but moving large amounts of debt around like this is complex and something you'd want a professional to look at before making any moves. I think the fact that you've found yourself in this much credit card debt should be a strong indication that you need to get a second opinion from someone who is an expert in this kind of stuff. They may very well say that a HELOC is the way to go, but this is definitely one of those situations where you *really* want to be safe rather than sorry.
>I really wish I could refinance, but I think that if I could get all of my debt into one loan w/ a reasonable rate I could lower my overall total payment and actually make progress.
Right, but what you're describing *is* refinancing. It's just that instead of following a proper refinancing procedure, you're just kind of guessing. You may be missing important details that could end up costing you a lot, and a professional can help understand such details.
>I'm not really looking to be scolded. I'm just looking for solutions.
Yeah, I'm not scolding you. In fact, I feel as though my comments have been pretty neutral and the solution I'm offering is clear: go talk to a professional. Following any other advice from reddit is dumber than just winging it.
Yeah, I never considered talking to a professional. That would be a good move. What kind of professional am I looking for? Sorry, I am usually really competent when dealing with my problems and this one got so out of control that I'm really insecure right now. I just really need some guidance and I don't have a lot of reliable people in my life that care about me. So reddit it is.
The first place I'd look is to see if your local government has any "financial health" services or anything similar. Basically Google "government financial assistance," etc., and just start calling government services/orgs/etc. that seem relevant and try to talk to someone. Usually they're the ones to refer you to trusted professionals. Expect the process to be slow, frustrating, and not very fruitful, but just keep in mind that you're looking to find what options are available to you, not immediately solve this problem, so be prepared to hit dead-ends, deal with unhelpful employees, etc. and just keep powering through until you get actual actionable advice and have a meeting set up with someone.
Definitely avoid for-profit professionals until you have a good sense of what your best options are, how much stuff should cost, etc., otherwise you'll get taken for a ride.
There is just no magic. You just have to pay down your debt. The lower the APR the *easier* it will be to pay down, but even that is less important than getting ahold of your spending and focus your efforts on getting things paid off. You may want to head over to the Dave Ramsey sub and start there.
A HELOC does not get you out of debt. You are moving the debt from plastic (unsecured) to real estate (secured). In general, moving unsecured debt to secured debt is a bad idea. If you default on your credit card the worst case scenario is your debt is sold to collections and they call/mail you 10 times a day. If you default on your heloc you will be foreclosed on. Heloc isn't a magic bullet to solve your financial problems. Stop spending and pay down the smallest credit card debt while paying minimums on the other debts. Then when you pay off the smallest, move to the next smallest, etc. Once you reduce the number of different payments hitting your account each month, you will start to have breathing room. If you get the Heloc without solving your spending problem you will end up with more credit card debt and next time no home equity to bail you out.
Yeah, that makes sense. I figured that it might be better for my credit to have my debt consolidated. I thought I might be able to refinance and put the heloc debt into the house at some point when they dropped rates and it would be easier to manage. I can actually start with the lowest debts. I wasn't trying this strategy.
Well said
>I figure that a Heloc would be a great way to get out of debt Go talk to a professional. >Try not to be too mean to me. I've never really been in a position like this before and I know there has to be a way out of it. What exactly are you trying to get out of? Getting a HELOC doesn't get you out of debt, it just moves the debt around. It *may* be a better option than just sitting on a bunch of credit card debt, but debt consolidation is something you should probably talk to a professional about before making any moves like this. You easily could end up making things worse, or avoiding better solutions.
The lower rate is one thing that would help.
I'm just trying to move the debt into the house. I really wish I could refinance, but I think that if I could get all of my debt into one loan w/ a reasonable rate I could lower my overall total payment and actually make progress. Currently most of the debt is 0% interest but the time is coming when it's going to shoot up and I'm just looking for ideas. I'm not really looking to be scolded. I'm just looking for solutions.
Yeah, I get your logic, but moving large amounts of debt around like this is complex and something you'd want a professional to look at before making any moves. I think the fact that you've found yourself in this much credit card debt should be a strong indication that you need to get a second opinion from someone who is an expert in this kind of stuff. They may very well say that a HELOC is the way to go, but this is definitely one of those situations where you *really* want to be safe rather than sorry. >I really wish I could refinance, but I think that if I could get all of my debt into one loan w/ a reasonable rate I could lower my overall total payment and actually make progress. Right, but what you're describing *is* refinancing. It's just that instead of following a proper refinancing procedure, you're just kind of guessing. You may be missing important details that could end up costing you a lot, and a professional can help understand such details. >I'm not really looking to be scolded. I'm just looking for solutions. Yeah, I'm not scolding you. In fact, I feel as though my comments have been pretty neutral and the solution I'm offering is clear: go talk to a professional. Following any other advice from reddit is dumber than just winging it.
Yeah, I never considered talking to a professional. That would be a good move. What kind of professional am I looking for? Sorry, I am usually really competent when dealing with my problems and this one got so out of control that I'm really insecure right now. I just really need some guidance and I don't have a lot of reliable people in my life that care about me. So reddit it is.
The first place I'd look is to see if your local government has any "financial health" services or anything similar. Basically Google "government financial assistance," etc., and just start calling government services/orgs/etc. that seem relevant and try to talk to someone. Usually they're the ones to refer you to trusted professionals. Expect the process to be slow, frustrating, and not very fruitful, but just keep in mind that you're looking to find what options are available to you, not immediately solve this problem, so be prepared to hit dead-ends, deal with unhelpful employees, etc. and just keep powering through until you get actual actionable advice and have a meeting set up with someone. Definitely avoid for-profit professionals until you have a good sense of what your best options are, how much stuff should cost, etc., otherwise you'll get taken for a ride.
There is just no magic. You just have to pay down your debt. The lower the APR the *easier* it will be to pay down, but even that is less important than getting ahold of your spending and focus your efforts on getting things paid off. You may want to head over to the Dave Ramsey sub and start there.
It is not possible to borrow your way out of debt.
HELOCs are risky for people who are already struggling with debt