Q: Is it better for me to consolidate our debt on a credit card with an interest rate of 9.9% or to take out a three-year loan at 12% interest? Thank you for your help.

--Timothy, Vidor, Texas

A: Great question! In order to illustrate, I'm going to assume you have $12,000 of credit-card debt and are weighing the two options you highlighted. First off, a three-year, 12% loan would require a monthly payment just under $400. If you can afford that type of payment each and every month, this might be a solid option. I like that this strategy has a definite beginning and end date. However, the risk is that you build back up your credit-card debt that you consolidated and then end up with credit-card debt and your "tried-to-consolidate" loan. That's bad news and often happens. If you fear this scenario, then I would opt for the lower-interest credit card. If you make similar payments of about $400 per month, you'll still end up debt free in three years (or less) and that is just plain good! Plus, you would also save a little over $400 in interest over the higher interest rate consolidation loan. No matter which direction you head, it should all start with a focus on the basics: living within your means. Putting together a budget you can live with is the cornerstone of financial success.

June Lantz Walbert is a CERTIFIED FINANCIAL PLANNER practitioner with USAA Financial Planning Services. She is also a lieu­tenant colonel in the U.S. Army Reserve with 20 years of service. Walbert's basic branch is Air Defense Artillery. She writes a weekly advice column, " Ask June " on military.com. Follow June @AskJune_usaa.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP and CERTIFIED FINANCIAL PLANNER in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.  

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