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Comment by davo11 | Hacker News Reader

Rather than keep the 6K separate, pay the 6K on one of your cards (the one with the highest rate) and do a cash advance on the card every time a payment is due, this will decrease your interest a bit.

You're probably paying 20% on your cards to, currently you have a yearly income - on paper anyway - so banks will still talk to you, so look at minimizing the interest, some options are 1) get a personal loan for around 5 or 6% (not sure of the current rate in the US) from a bank 2) get one of those cards with a 2% transfer rate for 6 or 12 months and transfer all your debt to one of those cards then stick it in your sock drawer

30K probably seems like a lot now, but it's not much in the scheme of things just do all those unpleasant expense minimization techniques and watch every penny and it will be gone in no time.

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He needs that 6K to live on until he can find more income. If you pay 6K on the credit card you still owe the minimum payment next month only now you're broke. At the margin he will have to declare bankruptcy. This is a cash flow budgeting problem: many bootstrapping startups face these kinds of issues.

As for getting a personal loan he's broke and has no assets: I would be cautious about falsifying a credit application.

He needs to focus immediately on income: focusing all of his efforts to earn many times more than $600 (6 months of 20% interest on 6K) over the next six months will be more useful than more debt juggling.

No, if you put the 6K on the card, you're limit is still the same, but you are charged less interest. You can then take money off the card as you need it and you are then paying interest on the current balance. e.g.

Balance = 20,000 Payment of 6,000 Balance = 14,000 - interest is now calculated on this balance next week take out 500 Balance is now 14,500

and so on.

'will be more useful than more debt juggling.' it's not juggling debt it's minimising you're costs. Not minimising your costs is the difference between having enough cash to be a startup for another 6 monts or not

30,000 @ 20% interest = $6,000 p/a 30,000 @ 3% interest = $900 p/a

To maintain the 30,000 debt on a card you'd have to come up with 6,000 a year if it's a personal loan it costs you $900 a year - so fo a couple of phone calls you can change your costs by more than $5,000.

'I would be cautious about falsifying a credit application.' I never suggested any falsification, this is debt management 101.

This can be a a slippery slope: you put the 6K back on and you borrow more than 6K again. For folks who are in debt it's a safer habit to switch to pay as you go.

As to taking out a new loan when he doesn't have a steady source of income and no assets to offer as collateral it can be difficult to be entirely candid on the application and still get the loan. In hindsight your creative writing may be construed as fraud.

So your saying it's a crime to reduce how much money you have to repay?

I was assuming he would be obtaining some sort of income, either a job or some new contracts. If he doesn't the 6K will buy a couple of months, there is no fraudulent intent, the debt still exists, it's merely minimising your costs. As others have said credit cards are a nasty way to fund a startup, but financial institutions make them easy to obtain, likewise they make obtaining lower cost methods of obtainin capital difficult, and who can blame them - 20% versus 3% why wouldn't it be structured as such. I find these comments interesting that there is any resistance to getting a personal loan, it has been made so difficult, the banks buy their money at 1% and sell it at 20% on credit cards, what a game. Personal loans are unsecured and go by the ability to repay and credit history. I'm assuming patryn20 has a credit history by repaying his cards on time and will obtain a method to repay the loan, to keep repaying at credit card rates would be foolish.

It's only a crime to falsify the application. I agree with you that "personal loans are unsecured and go by ability to repay and credit history." In the absence of reliable income it's hard to accurately represent an "ability to repay." He would be much better served in the near term to find new sources of income. Without them he is destined for bankruptcy.

I agree new sources of income are required, but also a debt management startegy is required. As I mentioned before, the debt as it stands is costing $6000 a year or so, it would be very easy to cut that down to $1000 a year or so (that's just the interest), if you can get the interest down to $1000 a year then the other $5000 can go on repaying the principal and hey presto it's gone in 6 years by making a phone call or two with absolutely no change in what you are paying. If you can make the repayments pre tax money then it's even easier.

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