So, in my last post, JoeTaxpayer mentioned that it’s worth considering taking a loan against your 401k to pay off high-interest rate debt. I took a quick look at that, and it really does look like an appealing option - I could drop ~$10k of my debt down to 6% interest over a 5-year period. Dave Ramsey absolutely hates consolidating debt into lower rates, but I just don’t see the logic in that — if you do, would you mind explaining it to me?

I also took a look at some of the consolidation offers out there.. MBNA/Bank of America has a consolidation loan that allows you to borrow up to $50,000 at an interest rate of as low as 8.99%, and a term of as long as 8 years. Even assuming that I’d only qualify for an interest rate of 11.99%, this loan would be able to help us get our minimum payments down to our base income, and would make it easier for us to do a “debt snowball” style plan where we’d throw a lot more money at smaller debts (preferably the ones with higher interest rates), and could get us out of debt a lot faster. Unfortunately, they wouldn’t qualify us for the loan. Sigh!! If anyone has had experience with banks that are actually willing to look at your overall situation, budget, etc, and help you out with a loan at a reasonable rate, I’d love to hear about it!