Young couple in DEBT!?

Question

We're a young couple, planning a wedding and would love to own something when we get married (condo, townhouse, house..) I have no credit and he has thousands in debt. Do we use a debt consolidator? What should we do first?

Answer 1

Absolutely do not use a debt consolidator! All it does it turn several debts into one, but it doesn't prevent you from running up more debt, like when you buy a house. If you default on the consolidated debt, you could lose everything, including the house. Your best bet is to rent for now (it doesn't matter if it's a house or apartment).

As for what to do first, you should save at least $1000 in an emergency fund, in case the car breaks down or something comes up in which you would normally use a credit card. Put the money in something you can easily access, such as a savings account in your bank. Once you do that, pay off all of your debt as quickly as possible, starting from the smallest amount to the largest. This should be all credit card debt, car payments, and student loans if you have any. Pay the minimums on everything except the smallest debt, and pay as much as you can towards that one until it's paid off. Then, once the first debt is paid, do the same to the second smallest and so on until they are all gone. The amount of debt you have will determine how long this process will take.

Once you are out of debt, go back to your emergency fund and turn that $1000 into 3-6 months of expenses. This extra money should prevent you from going back into debt. Once you have that saved up, go ahead and save as much as you can for the down payment on a house or condo or whatever you want to get. As for the mortgage, it's best to get a 15 year mortgage (not a 30 as most people get) with a fixed interest rate. Make sure you roll in the taxes and insurance into the mortgage payment.

What will this give you in the end? No debts of any kind, 6 months of savings in the bank in case of emergencies, and a house with a mortgage that can be realistically paid off in a short amount of time. You can even start putting money away in a retirement fund and possibly even a child's college fund. Doesn't that sound better than living paycheck to paycheck and hoping nothing comes along that will put you in an even bigger financial hole?

Answer 2

Can you afford the debt? Can you afford a new house payment? Those are your determining factors- dont use a debt consolidtion company unless you are in serious trouble like about to file BK- if you get a signiture loan at a low rate you could consolidate all debt if you qualify that would be like a 5-10 year term and would be your best bet.

Answer 3

I am assuming you are asking this question because the debt keeping you from getting a mortgage? If so then you need to take care of that before even thinking about buying a house.

If you are not current on the bills, then you need to talk to a non-profit credit counseling company. They will work with you two and get you back on track. Otherwise if you can afford it pay down as much as you can as quickly as you can on the debt.

Answer 4

Well first of all it is going to be a very good idea to find away to get the debt out the way that you both have at this time. Because when buying a home that is a life time investment and that is not something easy just to walk away from when times get hard. I might suggest that trying to get the other things out the way is more important, even though everyone thinks about owning there own home.

Answer 5

Get out of debt before the wedding. A good way to get credit started is to get a car put in your name. So, if your parents/relatives have like an old junker that they would sell you for whatever amount you can pay them, putting it in your name gets you credit. The next step is to get a credit card (ONLY ONE) and use it ONLY when you have the money in the bank for your purchases. And, do on-line banking, which allows you to pay off the credit card immediately after your purchase (get a card from your credit union/bank and you'll be able to pay off the card easier).

Creating a monthly budget of all your joint expenses and your joint income should help you plan out what "luxuries" you can afford, and should also help you peck away at his debt.

Also, I recommend getting a place that one of you can afford. You never know what might happen, and if one person looses a job, if the housing costs more than a single income, you could be in big trouble.
Good luck.

Answer 6

Go to a loan place or a debt consolidator and consolidate and make you payments. Don't miss one. If you can pay extra on it when you can. But only do that if you made sure to get a contract that doesn't have penalties for early payment. You should come out of this fine and it will make you credit rating better.

Answer 7

You need to be honest with yourselves & understand why you're in this position. You need a plan to get out of it. You need a plan for the rest of your life.

If you don't take responsibility for this you'll continue in and out of debt for the rest of your life. A failed marriage could also be born from this disaster.

After you know where you're going you may go to a debt consolidator. But if you really grab a hold of this thing...... you may not need to.
Be real. Be determined. Plan. Work your plan (always).

Answer 8

1st-Check you own credit. (Fix issues if you can)
2nd-Make payments on time.
3rd-Cut your debt quickly by paying extra on the small balances and/or high interest debts (look for quick wins first). 4th-Save the money for the wedding if you really want to have a nice one. Don't let it get you into deeper debt that it will take you years to pay off and make you regret the expense.
Good Luck!!!

Answer 9

I would suggest you to join a debt settlement company who will negotiate with your creditors on your behalf and bring down your principal debt by around 30% to 70% depending on your credit companies.
You can make affordable monthly payments and be out of debt within 3-36 months. There are no hidden costs and upfront fees associated with the monthly payment options.

Check this debt settlement company who helped me out with the same unsecured debt situation.

http://www.debtfreeafterall.com

Good Luck

Answer 10

Debt consolidation frequently leads to bankruptcy. Personally, I would never legally marry someone who had a massive amount of debt.