Reply #3: Cons

[Lydia Leftcoast]

of a consolidation loan: the tendency to run up more debt on your now freed up credit cards. Besides, home equity loans are dangerous: You could lose your house if one of you loses their job.

One method that seems to work for me is to pay off the smallest debt first as fast as you can, making only the minimum on the larger ones. As each debt is paid down, add what you've been paying on it per month to the next largest debt and pay it down. Etc.

e.g. Debt 1: $1000
Debt 2: $5,000 (minimum payment $60)
Debt 3: $10,000 (minimum payment $120)

Pay down Debt 1 in two $500 installments while paying the minimums on 2 and 3

When Debt 1 is gone, start paying $560 a month on Debt 2.

When Debt 2 is gone, start paying $680 a month on Debt 3.

(Some people suggest paying off the one with the highest interest rate first, but either way, concentrate on one debt at a time instead of making minimums on all of them. I saw a presentation that showed how making only minimum payments on a $3000 debt could stretch it out over 20 years.)

etc. etc.

The important thing is that you can't run up any more debt, which can be hard when you feel like a Third World country, rich in resources but burdened with debt.