Should I Consolidate My High-Interest Debt?

[Music] brought to you by the every dollar app start budgeting for free today okay so we're going up on um we we started at 110,000 and we are at like 55 now uh 55 56 uh we started with about 12 debts and now we're down to about five uh we're working right now on a line of credit um when that one's gone it's with the bank and it has a much lower interest rate than some of our other debts so what we were thinking is instead of just um paying the minimum payment on the debts just taking the line of credit and wiping one out so that we're paying a lower payment to have more margin now I mean I know that that's transferring debt but it also is increasing our margin and it's not opening a new line of credit my husband and I have had some debate on this including if we were to do that should we do the car first because it has a bigger payment or anything like that and I looked on the Ramsey information and I didn't find anything specifically with open lines of credit definitely jump in to make sure I understand you before you go further cuz I don't want to lose where you're at so you're saying you've got five debts left and one of them is a line of credit that's open and are you wanting to transfer the other four onto that line of credit is that what you're saying that line of credit is $10,000 we have 2,900 left on it um all all of our other debts are around 12 or $133,000 so what we're hoping to do is kind of use it as a vehicle to get the payment much lower to be able to smack the amount faster so transferring your current debt into by basically putting it into the line of credit like she's asking and we know it's we know it's still debt but what we're hoping is that we can get more margin and more traction with it you're doing that because of the percentage rate or because you think it'll free up the other payments and it will because because the Master Card we have two Master cards and a Visa the two Master cards are both at about 125 and the Visa is about 133 uh the Visa is negligible because it's the same interest rate pretty much as the line of credit thinking I hear how you're thinking you're doing a lot of math and and and let me validate this because I understand what you're doing right now on a heart level like when you've been working the baby steps you do get to this point where you're like okay what can I do to work some magic here and you start moving eggs around and you're like I could do this I could do that and you start kind of the you start finding ways that you think will work better but really they're kind of veering you off course and here's what I would say here's why I wouldn't do this you're there's part of what you're saying that makes sense and I'll validate that yeah like if you have a high interest rate why wouldn't I move it to somewhere where there's a lowest interest rate if I can make all this form into one payment that's going to be lower than these other payments over here and free up some more money why wouldn't I do that I hear what you're saying however the negative side of this and it's a big negative one of the beautiful things about the debt snowball is you have all of these debts and you can list them smallest to largest and you can check them off your list and something that dopamine when you check one off the list is enough to keep you going to the next one I would much rather have five debts of $10,000 each than one debt of 55,000 I would much rather have three debts that's 5 15 and 20 than one debt that's 45 do you see what I'm saying like I don't want you to group these together because then you're not going to get the satisfaction of paying them off one by one because that is a grand motivator in this whole thing well and the line of credit it does max out at 10 so I mean we would still be paying off like the remainder of the balance on each like on each thing but it would just be like quite a bit less yes but at that point the difference is so negligible like at that point MoneyWise it's so negligible I you're grown you can do what you're you're going to do what you want to do but if you're asking my advice I truly think that you should keep these as are because if you run out the interest by the way anybody if you run out the interest on the debt snowball it's going to be negligible what matters is finishing it that's what truly matters so and my husband and I both thought that too we were like well you know it will make it like a little bit faster but the difference is only going to be you know a couple hundred bucks either way yeah and then you're dealing with a $10,000 chunk again whereas right now it's at 2,900 right yeah so you know and that way mentally you're kind of restarting like okay I thought this thing was almost gone now I've kind of like refilled it and I've got a big another big chunk of debt to pay off and I mean I don't even want to know what the difference in interest rate is is because we've seen the math on that so I I wouldn't do it gross say again she say it's gross is that what it's gross yeah it's gross the interest rate for the line of credit is like 11 and the interest rate for the credit card is like 27 yeah I mean I know these credit card rates but I will tell you that's going to light the fuel to get it done and I mean that's what I would do all I can tell you is what I would do and I stand by that yeah well and and and and so we have been consistent on that I mean we get this call lot it's not the first time we've heard that and again we teach discipline and momentum is is what is at the core of what we are teaching it's discipline for momentum so uh do what you're going to do people do but you called us and Jade laid it out by the book create your free every dooll budget today the simplest way to budget for your life