How can I dig out of this hole fastest?
July 17, 2009 7:52 AM Subscribe
30k in credit card debt...Need Out. Talk to me about realistic options.
I asked a question like this a while back and was flooded with "you used the cards, pay up like a man" responses... please don't bother with those. I get it, okay? I made my bed, etc.
But here's the situation. I'm 30k in debt just on credit cards which range in interest from 0% to 28%. My minimum payments come to about $1200, which is a bit more than the interest on each. This is new, as three of my cards THIS MONTH all raised their minimum payments (thanks credit card protection act!)
But the problem is with mortgage, home improvement loan, 2 car payments, etc. we are stretched to our financial limit and whenever anything bad happens (like we just today got a huge tax penalty) we are fucked. But if we had the money that we pay to the credit card companies every month then we would be living well.
While not behind on any of our payments to anyone, we're stretched so thin that I'm even looking at bankruptcy. But I hate to nuke our credit scores like that.
Taking a second job I figured we could pay down the debt in 5 years, give or take. That's assuming that in this economy I can even find a second job.
But I know in the past I had a friend who negotiated with the credit card companies to pay off balances which, like mine, were years old and they'd paid more in interest than they ever charged. They were able to negotiate with the credit card company for 50-80% of the debt.
Even just doing this on a couple of my larger cards would save months of payment. And yes it will hurt my credit, but nowhere near the level of bankruptcy etc. As I have a house, cars, and not planning to make any big purchases for several years, I'm thinking taking a settlement and staying current on our bills, etc would be better for our credit than the looming delinquencies and possible bankruptcy.
So honestly, pretend I know nothing, and leave the morality of "You charged it, you owe it" on the sidelines. What are my options. CAN I pay a percentage to walk away from this debt? If so, what are the pros, cons, and methods for doing so?
And yes, I have totally learned my lesson...and will NEVER make this mistake again if I can just get out of this somehow. I just want this financial nightmare to be over so we can be financially stable again and perhaps even start looking at one of those fancy 401ks everyone's talking about...
I asked a question like this a while back and was flooded with "you used the cards, pay up like a man" responses... please don't bother with those. I get it, okay? I made my bed, etc.
But here's the situation. I'm 30k in debt just on credit cards which range in interest from 0% to 28%. My minimum payments come to about $1200, which is a bit more than the interest on each. This is new, as three of my cards THIS MONTH all raised their minimum payments (thanks credit card protection act!)
But the problem is with mortgage, home improvement loan, 2 car payments, etc. we are stretched to our financial limit and whenever anything bad happens (like we just today got a huge tax penalty) we are fucked. But if we had the money that we pay to the credit card companies every month then we would be living well.
While not behind on any of our payments to anyone, we're stretched so thin that I'm even looking at bankruptcy. But I hate to nuke our credit scores like that.
Taking a second job I figured we could pay down the debt in 5 years, give or take. That's assuming that in this economy I can even find a second job.
But I know in the past I had a friend who negotiated with the credit card companies to pay off balances which, like mine, were years old and they'd paid more in interest than they ever charged. They were able to negotiate with the credit card company for 50-80% of the debt.
Even just doing this on a couple of my larger cards would save months of payment. And yes it will hurt my credit, but nowhere near the level of bankruptcy etc. As I have a house, cars, and not planning to make any big purchases for several years, I'm thinking taking a settlement and staying current on our bills, etc would be better for our credit than the looming delinquencies and possible bankruptcy.
So honestly, pretend I know nothing, and leave the morality of "You charged it, you owe it" on the sidelines. What are my options. CAN I pay a percentage to walk away from this debt? If so, what are the pros, cons, and methods for doing so?
And yes, I have totally learned my lesson...and will NEVER make this mistake again if I can just get out of this somehow. I just want this financial nightmare to be over so we can be financially stable again and perhaps even start looking at one of those fancy 401ks everyone's talking about...
This post was deleted for the following reason: poster's request -- jessamyn
Response by poster: DDA: I've heard you should never take equity out of your house for credit card debt. I don't suppose there's anyplace that offers unsecured debt consolidation is there?
posted by arniec at 8:01 AM on July 17, 2009
posted by arniec at 8:01 AM on July 17, 2009
Best answer: Your creditors don't want you to default on your payments any more than you do. You've got some good leverage already insofar as you aren't behind on any payments. Have you already contacted each of your lenders to ask about renegotiation already? (If I read you correctly, you're asking if that's a good idea.)
Call each company you owe, starting with the credit cards, and explain your situation plainly. Simply ask to have your rates lowered, or your minimum payments reduced. It might not work with every company, but even if half of them agree, that'll ease your situation at least a little.
There are lots of great resources for negotiating tips at websites like Consumerist, Lifehacker, and all kinds of personal finance blogs.
Stay away from debt consolidation companies, most of them are scams that have you pay up front, tell you you don't have to contact your lenders, and then run off with your money after providing no service to you.
posted by Lifeson at 8:08 AM on July 17, 2009
Call each company you owe, starting with the credit cards, and explain your situation plainly. Simply ask to have your rates lowered, or your minimum payments reduced. It might not work with every company, but even if half of them agree, that'll ease your situation at least a little.
There are lots of great resources for negotiating tips at websites like Consumerist, Lifehacker, and all kinds of personal finance blogs.
Stay away from debt consolidation companies, most of them are scams that have you pay up front, tell you you don't have to contact your lenders, and then run off with your money after providing no service to you.
posted by Lifeson at 8:08 AM on July 17, 2009
Best answer: To negotiate with someone, you have to bring something to the table. Say for example that you owe one card $5k, and you call them and say, "can we make this go away if I pay you $3,500?" If they say yes, you've gotta have the $3,500 to send them. Do you? This is unclear from your question. If you do have some cash available, then yes, you can do this. Just be sure to get everything in writing. On the other hand, if you're just going to call and ask them to reduce your debt in order to make your life easier, I don't think you're going to get very far. What's in it for them?
As for the second job -- there's always something somewhere you can do to earn an extra buck. Deliver pizzas, wait tables, run the cash register at Homie D's. Find something like that to do for awhile, take ALL of that money, and use it to negotiate and pay down your debts. It will go faster than you think -- just be methodical and fanatical about it.
Good luck!
posted by spilon at 8:09 AM on July 17, 2009 [1 favorite]
As for the second job -- there's always something somewhere you can do to earn an extra buck. Deliver pizzas, wait tables, run the cash register at Homie D's. Find something like that to do for awhile, take ALL of that money, and use it to negotiate and pay down your debts. It will go faster than you think -- just be methodical and fanatical about it.
Good luck!
posted by spilon at 8:09 AM on July 17, 2009 [1 favorite]
Response by poster: Spilon,
Yes, that's what I'm thinking. We have a bit of money in a pension I'm looking at pulling out which gives us something to take to the table and do like you say, offer a lesser amount immediately to make it go away.
If we could get rid of two of them at even 75% of the balance then that could snowball to us saving up to pay down some of the smaller ones in full hopefully not totally nuking our credit by settling ALL of them.
posted by arniec at 8:13 AM on July 17, 2009
Yes, that's what I'm thinking. We have a bit of money in a pension I'm looking at pulling out which gives us something to take to the table and do like you say, offer a lesser amount immediately to make it go away.
If we could get rid of two of them at even 75% of the balance then that could snowball to us saving up to pay down some of the smaller ones in full hopefully not totally nuking our credit by settling ALL of them.
posted by arniec at 8:13 AM on July 17, 2009
Other thoughts: are you able to take advantage of any balance transfers to the 0% cards? Simply shifting a balance out of an interest-charging account will save you some cash, though make sure that you'll actually save money doing that since there's usually a 3-5% charge for transferring that.
Do you need both cars? I won't pretend that just everyone can give one up, but if you can get by sharing a vehicle, that'll remove one payment entirely.
Get Rich Slowly has lots of great articles on digging out of debt. JD had $30k in consumer debt and paid it off in 3 years; his story is very inspirational for a lot of readers.
posted by Lifeson at 8:15 AM on July 17, 2009 [1 favorite]
Do you need both cars? I won't pretend that just everyone can give one up, but if you can get by sharing a vehicle, that'll remove one payment entirely.
Get Rich Slowly has lots of great articles on digging out of debt. JD had $30k in consumer debt and paid it off in 3 years; his story is very inspirational for a lot of readers.
posted by Lifeson at 8:15 AM on July 17, 2009 [1 favorite]
Best answer: Call the company with the 28% interest and ask them to lower it. RIGHT NOW. I got my rate lowered that way; just a polite phone call asking for a better rate. Do this for every card, except the 0 interest one. Balance transfers to lower rate cards is an idea to consider. 28% interest is evil, and hard to get out from under.
Join a credit union. My credit union is able to work with me on banking issues on a personal level. Maybe a credit union or bank could help you consolidate into a lower rate.
Cut expenses to the bone, and then some. There are a bunch of great frugal living sites. Living frugally is not hard if you think of it as attaining the goal of financial freedom; in your case, freedom from debt would be incredibly sweet.
Sell stuff.
Good luck.
posted by theora55 at 8:18 AM on July 17, 2009
Join a credit union. My credit union is able to work with me on banking issues on a personal level. Maybe a credit union or bank could help you consolidate into a lower rate.
Cut expenses to the bone, and then some. There are a bunch of great frugal living sites. Living frugally is not hard if you think of it as attaining the goal of financial freedom; in your case, freedom from debt would be incredibly sweet.
Sell stuff.
Good luck.
posted by theora55 at 8:18 AM on July 17, 2009
Hi. My name is J.D. Roth. I am not a financial expert, but play one on the internets. I've written a lot about this subject (because I lived it), including articles on how to get out of debt. In my case, I was $35,000 in debt and floundering. I managed to get rid of my debt in 39 months.
Now that I sound like some sort of huckster (which I'm not, as M. Haughey, etc. will attest), let me give the best advice I can. You say that you've learned your lesson, but there's no way to actually know that until you've dug yourself out. You don't magically get yourself $30,000 in debt. It's a behavioral thing. As I say: I know. I did it too.
It sounds to me like you're still looking for magic bullets. You want to pay a percentage to walk away. Instead, I recommend taking a slow, practical approach that's going to require sacrifice and hard work, but which is assured to achieve your goals while also building good habits.
To get out of debt (or to build wealth), you need to improve your cash flow. There are two ways to do that: You can boost your income or you can decrease your spending. Ideally, you do both.
You mention finding a second job (though you also immediately try to rationalize it by blaming the economy -- don't do this, take responsibility, you can find a second job), which is an excellent thing to do. Anything you can do to raise your income will help you to make progress toward paying off your debt. Don't worry about whether you like the second job or not. Just work it. Remind yourself how much you hate being in debt and it will motivate you to keep going. (That's how it worked for me, anyhow.)
You can also find other ways to get infusions of cash. To get into debt, I'll bet you bought some stupid stuff, right? I know I did, and so did most of the other folks I know. Well, sell some of that stuff. Use Amazon, Craigslist, eBay, and garage sales to get rid of the stuff you don't use or need. You're not going to get what you paid for it, but you can't think about it like that. You cannot optimize. Your goal is to get out of debt, not make the most possible profit on your stuff. Use this money to pay off your debt, not to buy more stuff.
Boosting your income is just one aspect of this. Cutting your expenses is the second.
When I started digging out of debt, I didn't think I could cut my expenses. I was wrong. I learned lots of little ways. I ate out less often. I cut my cable from deluxe to basic. I canceled subscriptions. I started walking and biking instead of using my car. (Now I know I could use the bus, too.) We started a vegetable garden. I gave up some of my habits. I used to spend lots of money on books and comics and videogames. I gradually reduced that spending.
These spending reductions didn't happen all at once. In fact, they were slow coming. As I say, I felt like I didn't have anything to cut at first. But once I learned how to cut in one area, I could see how to cut in another.
By dropping my spending and increasing my income, I was able to improve my cash flow. And as I did this, I applied Dave Ramsey's debt snowball method to pay off my debt. Once I paid off my smallest debt, I attacked the next smallest, and then the next smallest, etc. This worked like a charm.
Anyhow, I think you're doing yourself a disservice by trying to find the "fastest" way to get out of debt. What you want is the best way, the way that's going to help you develop skills and habits that will serve you for a lifetime. It's like dieting. To lose weight successfully (and to keep it off), you need to learn to eat well all the time. The same is true with money. The advice I'm giving you hear can help you build skills that will last a lifetime.
But you're not going to get out of debt overnight. It's going to take years of hard work and sacrifice. When you're done, though, you'll be able to look back with pride -- and you'll have skills that will allow you to build wealth in the future.
posted by jdroth at 8:22 AM on July 17, 2009 [72 favorites]
Now that I sound like some sort of huckster (which I'm not, as M. Haughey, etc. will attest), let me give the best advice I can. You say that you've learned your lesson, but there's no way to actually know that until you've dug yourself out. You don't magically get yourself $30,000 in debt. It's a behavioral thing. As I say: I know. I did it too.
It sounds to me like you're still looking for magic bullets. You want to pay a percentage to walk away. Instead, I recommend taking a slow, practical approach that's going to require sacrifice and hard work, but which is assured to achieve your goals while also building good habits.
To get out of debt (or to build wealth), you need to improve your cash flow. There are two ways to do that: You can boost your income or you can decrease your spending. Ideally, you do both.
You mention finding a second job (though you also immediately try to rationalize it by blaming the economy -- don't do this, take responsibility, you can find a second job), which is an excellent thing to do. Anything you can do to raise your income will help you to make progress toward paying off your debt. Don't worry about whether you like the second job or not. Just work it. Remind yourself how much you hate being in debt and it will motivate you to keep going. (That's how it worked for me, anyhow.)
You can also find other ways to get infusions of cash. To get into debt, I'll bet you bought some stupid stuff, right? I know I did, and so did most of the other folks I know. Well, sell some of that stuff. Use Amazon, Craigslist, eBay, and garage sales to get rid of the stuff you don't use or need. You're not going to get what you paid for it, but you can't think about it like that. You cannot optimize. Your goal is to get out of debt, not make the most possible profit on your stuff. Use this money to pay off your debt, not to buy more stuff.
Boosting your income is just one aspect of this. Cutting your expenses is the second.
When I started digging out of debt, I didn't think I could cut my expenses. I was wrong. I learned lots of little ways. I ate out less often. I cut my cable from deluxe to basic. I canceled subscriptions. I started walking and biking instead of using my car. (Now I know I could use the bus, too.) We started a vegetable garden. I gave up some of my habits. I used to spend lots of money on books and comics and videogames. I gradually reduced that spending.
These spending reductions didn't happen all at once. In fact, they were slow coming. As I say, I felt like I didn't have anything to cut at first. But once I learned how to cut in one area, I could see how to cut in another.
By dropping my spending and increasing my income, I was able to improve my cash flow. And as I did this, I applied Dave Ramsey's debt snowball method to pay off my debt. Once I paid off my smallest debt, I attacked the next smallest, and then the next smallest, etc. This worked like a charm.
Anyhow, I think you're doing yourself a disservice by trying to find the "fastest" way to get out of debt. What you want is the best way, the way that's going to help you develop skills and habits that will serve you for a lifetime. It's like dieting. To lose weight successfully (and to keep it off), you need to learn to eat well all the time. The same is true with money. The advice I'm giving you hear can help you build skills that will last a lifetime.
But you're not going to get out of debt overnight. It's going to take years of hard work and sacrifice. When you're done, though, you'll be able to look back with pride -- and you'll have skills that will allow you to build wealth in the future.
posted by jdroth at 8:22 AM on July 17, 2009 [72 favorites]
On posting: You're 34. I'd recommend not pulling money from your pension to pay off debt. Most financial pros consider this a dumb move. I don't have training enough to know when it's dumb and when it's not (I think there are probably times it makes sense), but I'm almost certain that it's a bad move in your case. You need to address the behavior that got you hear and that keeps you looking for "magic" ways to make things go away.
Because lord knows I didn't do enough self-linking in my previous response, let me suggest that you might want to find some books on money management. I have two articles that list dozens of books:In particular, you should look at Dave Ramsey's The Total Money Makeover and Gerrold Mundis' How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. (They're going to tell you what I've already said above, but give you more specific instructions.) The Ramsey book is filled with religion, which may be good or bad depending on who you are. I'm not religious, but I just turned on my Bible filter and used the stuff that was appropriate for my situation.
posted by jdroth at 8:31 AM on July 17, 2009 [1 favorite]
Because lord knows I didn't do enough self-linking in my previous response, let me suggest that you might want to find some books on money management. I have two articles that list dozens of books:In particular, you should look at Dave Ramsey's The Total Money Makeover and Gerrold Mundis' How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. (They're going to tell you what I've already said above, but give you more specific instructions.) The Ramsey book is filled with religion, which may be good or bad depending on who you are. I'm not religious, but I just turned on my Bible filter and used the stuff that was appropriate for my situation.
posted by jdroth at 8:31 AM on July 17, 2009 [1 favorite]
I never had much luck negotiating a lower interest rate with the credit card companies. YMMV.
One service that helped me is the P2P loan service Prosper. I was able to take out a loan that consolidated debt from two high interest ( over 20%) cards into a single debt with 8% APR.
Even if you can't consolidate all your debt with Prosper, being able to remove 1 or 2 cards from your monthly payments can help a lot.
Another tool I use is this free Excel worksheet. It will help you figure out the cheapest and fastest order to pay off your cards. It's a nice way to visualize the snowball method that other posters have mentioned.
posted by iwhitney at 8:44 AM on July 17, 2009 [3 favorites]
One service that helped me is the P2P loan service Prosper. I was able to take out a loan that consolidated debt from two high interest ( over 20%) cards into a single debt with 8% APR.
Even if you can't consolidate all your debt with Prosper, being able to remove 1 or 2 cards from your monthly payments can help a lot.
Another tool I use is this free Excel worksheet. It will help you figure out the cheapest and fastest order to pay off your cards. It's a nice way to visualize the snowball method that other posters have mentioned.
posted by iwhitney at 8:44 AM on July 17, 2009 [3 favorites]
I can vouch for jdroth's advice (completely unrelated to his website, I've never visited it) (sorry JD,.. :)
A few years ago I found myself about $20,000+ in debt spread across 2 credit cards that had upped my interest rates to well over 30%. (unfortunately at the same time, I also lost my high paying job) .... It's taken a couple years, a lot of hard work (and a few unexpected lucky breaks) but I should be out of debt by this coming Xmas.
Here is what I did: .... (not sharing because I think its the best strategy, but it worked for me)
1.) cashed out my 401k (I recall it being about $5000) ... not the best move, but considering I cashed out when I did (before the market crash).. maybe not such a bad move after all)
2.) Being unemployed, I got rid of everything I owned (yes, everything) and moved into my brothers unfinished basement. (rent-free... yes, I realize you probably cant do this. ) Earned my keep by doing chores, dog-sitting and baby-sitting.
3.) After about a year of unemployment, I found a night-shift job. Started working that and also continued to do some random freelance consulting during the day... Didnt get much sleep :)
4.) Once the night-shift job was stable (IE=i was getting a regular paycheck) I moved back out on my own, into an apartment right across the street from the night job.... also started to look for a daytime job
5.) Found a day-shift job... so for 6months I worked 2 full time jobs with no days off (averaging about 4 hours of sleep a day) This was incredibly hard, both physically and mentally.
6.) Even making payments like I was, my interest rates were so high that I wasnt making any forward progress getting out of debt. A friend of mine let me transfer the remaining balances to her 0% cards,.. then I just paid her $500 to $1000 a month.
I'm currently back to just working a full-time dayshift job... and very poor... but if everything holds together (no major emergencies) and I continue to pay $1000/month through the end of the year, I should be nearly debt free. (and then next goal: start saving)
posted by jmnugent at 8:50 AM on July 17, 2009 [2 favorites]
A few years ago I found myself about $20,000+ in debt spread across 2 credit cards that had upped my interest rates to well over 30%. (unfortunately at the same time, I also lost my high paying job) .... It's taken a couple years, a lot of hard work (and a few unexpected lucky breaks) but I should be out of debt by this coming Xmas.
Here is what I did: .... (not sharing because I think its the best strategy, but it worked for me)
1.) cashed out my 401k (I recall it being about $5000) ... not the best move, but considering I cashed out when I did (before the market crash).. maybe not such a bad move after all)
2.) Being unemployed, I got rid of everything I owned (yes, everything) and moved into my brothers unfinished basement. (rent-free... yes, I realize you probably cant do this. ) Earned my keep by doing chores, dog-sitting and baby-sitting.
3.) After about a year of unemployment, I found a night-shift job. Started working that and also continued to do some random freelance consulting during the day... Didnt get much sleep :)
4.) Once the night-shift job was stable (IE=i was getting a regular paycheck) I moved back out on my own, into an apartment right across the street from the night job.... also started to look for a daytime job
5.) Found a day-shift job... so for 6months I worked 2 full time jobs with no days off (averaging about 4 hours of sleep a day) This was incredibly hard, both physically and mentally.
6.) Even making payments like I was, my interest rates were so high that I wasnt making any forward progress getting out of debt. A friend of mine let me transfer the remaining balances to her 0% cards,.. then I just paid her $500 to $1000 a month.
I'm currently back to just working a full-time dayshift job... and very poor... but if everything holds together (no major emergencies) and I continue to pay $1000/month through the end of the year, I should be nearly debt free. (and then next goal: start saving)
posted by jmnugent at 8:50 AM on July 17, 2009 [2 favorites]
Excellent advice from jdroth. Slow and steady wins the race. One more thing you probably should do, cut each of your cards into pieces and stop charging stuff. That won't get you out of debt but will help keep the debt from growing.
posted by caddis at 8:54 AM on July 17, 2009
posted by caddis at 8:54 AM on July 17, 2009
I want to echo what jmnugent said at the end there, about paying $500-$1000 per month in debt. When I started my journey, I was deficit spending. I spent more than I earned. My debt was increasing. If you would have told me I could have a POSITIVE cash flow of $1000 per month within four years, I would have laughed. Yet it happened, and through the basic steps I mentioned above. Like jmnugent, I built this positive cashflow slowly over time.
And the best part? Once the debt was repaid, I STILL had a positive cashflow of $1000 a month. Imagine what you could do with that! It's very fun watching that mortgage balance drop like a rock! :)
posted by jdroth at 9:05 AM on July 17, 2009
And the best part? Once the debt was repaid, I STILL had a positive cashflow of $1000 a month. Imagine what you could do with that! It's very fun watching that mortgage balance drop like a rock! :)
posted by jdroth at 9:05 AM on July 17, 2009
I've heard you should never take equity out of your house for credit card debt.
What about your two cars? I believe you can also use your retirement savings as collateral. Just call a bank or credit union and see what they can do for you. In the meantime you should probably do what others are suggesting and demand an interest cut or move to a zero percent card for as long as you can, but I would be skeptical about a credit company letting your transfer so much to a zero percent deal, but I may be wrong.
Is $622 too much a month for you? You may be able to get 10 year loan and shave that down to 4 hundred something. That's still a whole heck of a lot less than $1200 a month.
posted by damn dirty ape at 9:12 AM on July 17, 2009
What about your two cars? I believe you can also use your retirement savings as collateral. Just call a bank or credit union and see what they can do for you. In the meantime you should probably do what others are suggesting and demand an interest cut or move to a zero percent card for as long as you can, but I would be skeptical about a credit company letting your transfer so much to a zero percent deal, but I may be wrong.
Is $622 too much a month for you? You may be able to get 10 year loan and shave that down to 4 hundred something. That's still a whole heck of a lot less than $1200 a month.
posted by damn dirty ape at 9:12 AM on July 17, 2009
Response by poster: I understand what JDRoth is saying but that is again NOT the advice I'm looking for. That's the path I'm on, and I GET ALL THAT. Yes, I'm looking for shortcuts. No, not everyone thinks shortcuts are the way to go or even deserved, and perhaps I'll not find any. Nontheless, this question was 100% about shortcuts.
And I called HSBC, the company charging me 28%. They wouldn't take it down at all. They said a flat out no. And unfortunately the 0% card doesn't have the room to handle the HSBC balance.
If I cash out that pension and pay off HSBC alone ($7k) without a settlement then I would have that 9k limit added to my "total available credit" which will help my credit score...but I'd love to settle it, cancel that card, and never provide HSBC with any more business...
Any other ideas? That spreadsheet was great, BTW jwhitney!
posted by arniec at 9:20 AM on July 17, 2009
And I called HSBC, the company charging me 28%. They wouldn't take it down at all. They said a flat out no. And unfortunately the 0% card doesn't have the room to handle the HSBC balance.
If I cash out that pension and pay off HSBC alone ($7k) without a settlement then I would have that 9k limit added to my "total available credit" which will help my credit score...but I'd love to settle it, cancel that card, and never provide HSBC with any more business...
Any other ideas? That spreadsheet was great, BTW jwhitney!
posted by arniec at 9:20 AM on July 17, 2009
JD's website and advice here are what you need. I've also been following Blogging Away Debt for quite some time. The original blogger actually paid off her debt, so now somebody else has taken the reins.
It's kinda like losing weight - you don't need to go on a diet, you need an overall lifestyle change. Ignore the "Pay up like a man" bullshit - what's done is done. I wish you only the best of luck!
Just out of curiosity, do you really need two cars?
posted by futureisunwritten at 9:22 AM on July 17, 2009
It's kinda like losing weight - you don't need to go on a diet, you need an overall lifestyle change. Ignore the "Pay up like a man" bullshit - what's done is done. I wish you only the best of luck!
Just out of curiosity, do you really need two cars?
posted by futureisunwritten at 9:22 AM on July 17, 2009
I just wanted to point out that you are not going to be able to negotiate with the credit cards until you are a few months behind. They have no reason to lower your payments if you are still up to date.
To get out of this, you will have to take a credit score hit. If you want to negotiate a lower rate, you will need to get 60-90 days behind. Once the companies see that you are unable to pay the bills, they will negotiate. They do not want your account to go to collections where they will get paid pennies on the dollar for your debt. This will be the motivation for them to negotiate.
The good news is that a few late accounts will only significantly affect your credit score for 2 years. It will be on your report for 7 years, but the weight of the bad mark should be minimal after 2 years (if you continue to pay on time after negotiating)
posted by ShootTheMoon at 9:25 AM on July 17, 2009
To get out of this, you will have to take a credit score hit. If you want to negotiate a lower rate, you will need to get 60-90 days behind. Once the companies see that you are unable to pay the bills, they will negotiate. They do not want your account to go to collections where they will get paid pennies on the dollar for your debt. This will be the motivation for them to negotiate.
The good news is that a few late accounts will only significantly affect your credit score for 2 years. It will be on your report for 7 years, but the weight of the bad mark should be minimal after 2 years (if you continue to pay on time after negotiating)
posted by ShootTheMoon at 9:25 AM on July 17, 2009
Response by poster: Yeah, we need two cars. It's not luxury, it's the means to travel to work (and we live 30 miles from our workplaces, which are miles away from each other).
And no, we can't save money by moving closer to work. The closer we live to the city the higher property costs are, and taxes on those properties. And no, there is NO mass transportation, we don't live in a fancy area like Chicago with all them trains ;)
posted by arniec at 9:26 AM on July 17, 2009
And no, we can't save money by moving closer to work. The closer we live to the city the higher property costs are, and taxes on those properties. And no, there is NO mass transportation, we don't live in a fancy area like Chicago with all them trains ;)
posted by arniec at 9:26 AM on July 17, 2009
arnie, I'm also on the path that JD and others in this topic have gone down, and working Dave Ramsey's plan.
There aren't shortcuts. At least not ones that work. Debt consolidation is a mistake, bankruptcy is a mistake, "debt management" firms are a mistake. It all sounds great, but it will get you into much worse trouble in the end. You can't beat this with math. You can't outthink this. You have to change your behavior. You don't want this answer. I know that because you've already said it. But it's the only answer you're going to get from me and JD and people like us who are in the situation and or have been through it.
It's hard, yeah. It might take a while. But it's worth it.
posted by joshrholloway at 9:33 AM on July 17, 2009
There aren't shortcuts. At least not ones that work. Debt consolidation is a mistake, bankruptcy is a mistake, "debt management" firms are a mistake. It all sounds great, but it will get you into much worse trouble in the end. You can't beat this with math. You can't outthink this. You have to change your behavior. You don't want this answer. I know that because you've already said it. But it's the only answer you're going to get from me and JD and people like us who are in the situation and or have been through it.
It's hard, yeah. It might take a while. But it's worth it.
posted by joshrholloway at 9:33 AM on July 17, 2009
CAN I pay a percentage to walk away from this debt?... They wouldn't take it down at all. They said a flat out no.
As you are finding out, the answer probably is no. The reason many credit card companies won't lower interest rates or extend more credit to customers is because many, many people are not paying back the money they borrowed.
If you don't want to pay what you owe, spend less, or make more, you may be left with only the option of refusing to pay. It will go to collections, they may take you to court, and it will destroy your credit, but that may be all you've got when you take the other options off the table.
So, I guess this isn't advice so much as it is an explanation about why you are not able to convince lenders to accept less than you owe. J.D. Roth has got it right, when you are ready to accept it as truth.
posted by Houstonian at 9:39 AM on July 17, 2009
As you are finding out, the answer probably is no. The reason many credit card companies won't lower interest rates or extend more credit to customers is because many, many people are not paying back the money they borrowed.
If you don't want to pay what you owe, spend less, or make more, you may be left with only the option of refusing to pay. It will go to collections, they may take you to court, and it will destroy your credit, but that may be all you've got when you take the other options off the table.
So, I guess this isn't advice so much as it is an explanation about why you are not able to convince lenders to accept less than you owe. J.D. Roth has got it right, when you are ready to accept it as truth.
posted by Houstonian at 9:39 AM on July 17, 2009
Response by poster: Houstonian, you misunderstand. I didn't try to settle with HSBC, I did what others suggested and tried to have them lower my interest rate which was (and is) 28%.
And it's simply not true that there are no other options. Bankruptcy is a viable option. Settlement, if offered, is a viable option.
There's not just one way to do anything, and this question was looking for alternative ways.
My credit score is not as important to me as this big red number that represents my net worth; if nuking my credit (bankruptcy) brings me to a net worth of 0, that would be a gain in my book.
posted by arniec at 9:45 AM on July 17, 2009
And it's simply not true that there are no other options. Bankruptcy is a viable option. Settlement, if offered, is a viable option.
There's not just one way to do anything, and this question was looking for alternative ways.
My credit score is not as important to me as this big red number that represents my net worth; if nuking my credit (bankruptcy) brings me to a net worth of 0, that would be a gain in my book.
posted by arniec at 9:45 AM on July 17, 2009
I just want to chime in to say the I agree with JD's point's also. I'm in the final weeks of paying off a little over $20,000 in credit card debt and it's taken me a little under a year to do it.
It takes a lot of patience and determination but it's very doable.
My question to you is this: since you already have most of the things you'd need to have a good credit score to get (ie a mortgage and car loans), why are you so concerned about maintaining your credit score? You said yourself that you won't be making any large purchases anytime soon so what's the difference?
You can negotiate a "pay-off" of your balances with credit cards but it will come at a cost to your credit score. It seems like you're more concerned with your credit score than getting rid of your debt. Whichever one you place a priority on is up to you but I would concentrate on getting rid of the debt rather than the credit score.
I need to replace my 10 year old car with 152,000 miles on it and would love a nice 42" TV but I'm not going to buy any of that or anything other than necessities until I'm paid off.
Take a deep breath and realize that you can do this. The most important thing is to communicate with your debtors. Call them once or twice a week and ask for a reduction in your rates. Escalate it and escalate it again. "This card is costing me too much per month. I won't be able to pay you for much longer at this interest rate. Can we find a way to lower my rate please?". Keep stressing the fact that they may not get paid if they don't lower the rates.
Good luck!!
posted by eatcake at 9:46 AM on July 17, 2009
It takes a lot of patience and determination but it's very doable.
My question to you is this: since you already have most of the things you'd need to have a good credit score to get (ie a mortgage and car loans), why are you so concerned about maintaining your credit score? You said yourself that you won't be making any large purchases anytime soon so what's the difference?
You can negotiate a "pay-off" of your balances with credit cards but it will come at a cost to your credit score. It seems like you're more concerned with your credit score than getting rid of your debt. Whichever one you place a priority on is up to you but I would concentrate on getting rid of the debt rather than the credit score.
I need to replace my 10 year old car with 152,000 miles on it and would love a nice 42" TV but I'm not going to buy any of that or anything other than necessities until I'm paid off.
Take a deep breath and realize that you can do this. The most important thing is to communicate with your debtors. Call them once or twice a week and ask for a reduction in your rates. Escalate it and escalate it again. "This card is costing me too much per month. I won't be able to pay you for much longer at this interest rate. Can we find a way to lower my rate please?". Keep stressing the fact that they may not get paid if they don't lower the rates.
Good luck!!
posted by eatcake at 9:46 AM on July 17, 2009
@arniec
I'm sorry the info I provided wasn't what you were looking for. Your post said not to lecture, so I didn't. (Not that I would have -- I've been in your shoes, so I have no room to criticize.) But you asked for "realistic options". You also said to pretend you know nothing. So that's what I did, and that's what I gave you. I'm sorry if you feel like it's lecturing you or that you GET ALL THAT. If that's the case, your post isn't clear.
There aren't really any great options for you. You're doing the right thing by asking companies to work with you. But my little brother is in a very similar position to the one you're in (but much deeper in debt), and he's tried all sorts of things (debt settlement, etc.) only to find that each step makes the problem worse. He's well and truly fucked at this point because he kept trying to take shortcuts. If, when he started, he'd followed the sort of advice you're getting in this thread, he would have been able to manage, I think. (Well, and if the housing bubble had never happened.) But now he's found that each step along the way, the shortcuts he takes end up costing him more and more money. It's a sort of nightmare.
I'm not saying that it's impossible to find some way to walk away for x% of your obligation. I just think it's highly unlikely.
posted by jdroth at 9:48 AM on July 17, 2009 [2 favorites]
I'm sorry the info I provided wasn't what you were looking for. Your post said not to lecture, so I didn't. (Not that I would have -- I've been in your shoes, so I have no room to criticize.) But you asked for "realistic options". You also said to pretend you know nothing. So that's what I did, and that's what I gave you. I'm sorry if you feel like it's lecturing you or that you GET ALL THAT. If that's the case, your post isn't clear.
There aren't really any great options for you. You're doing the right thing by asking companies to work with you. But my little brother is in a very similar position to the one you're in (but much deeper in debt), and he's tried all sorts of things (debt settlement, etc.) only to find that each step makes the problem worse. He's well and truly fucked at this point because he kept trying to take shortcuts. If, when he started, he'd followed the sort of advice you're getting in this thread, he would have been able to manage, I think. (Well, and if the housing bubble had never happened.) But now he's found that each step along the way, the shortcuts he takes end up costing him more and more money. It's a sort of nightmare.
I'm not saying that it's impossible to find some way to walk away for x% of your obligation. I just think it's highly unlikely.
posted by jdroth at 9:48 AM on July 17, 2009 [2 favorites]
Just a note, I'm not saying you can't settle with your debt collectors. I know it's possible and a good strategy in many cases. I'm just saying don't hire some company to do something you can do yourself.
posted by joshrholloway at 9:49 AM on July 17, 2009
posted by joshrholloway at 9:49 AM on July 17, 2009
I took a second job that I am currently in "training" for. It is a freight job at home depot. I work 8pm-12pm and will make about the same amount an hour as I did when I was in high school.
Whatever. This is going to help me pay down some medical bills that my family currently has. I do not care about the job in the slightest but will do it properly every night as I can smell and see that money helping my family out.
I hope you get your mess sorted out and wish you luck, but jdroth has good advice you should really take to heart.
posted by Gravitus at 9:50 AM on July 17, 2009 [1 favorite]
Whatever. This is going to help me pay down some medical bills that my family currently has. I do not care about the job in the slightest but will do it properly every night as I can smell and see that money helping my family out.
I hope you get your mess sorted out and wish you luck, but jdroth has good advice you should really take to heart.
posted by Gravitus at 9:50 AM on July 17, 2009 [1 favorite]
Best answer: I believe personal bankruptcies come in two forms: Chapter 7 and Chapter 13. For Chapter 13, you still pay your debts, so it does not meet your standards. To file for Chapter 7, you first take the Means Test.
- If you pass: You may (or may not) qualify for Chapter 7 bankruptcy.
- If you fail: You cannot file Chapter 7.
A Means Test calculator is here. You will need to enter a lot of financial information.
posted by Houstonian at 10:05 AM on July 17, 2009
- If you pass: You may (or may not) qualify for Chapter 7 bankruptcy.
- If you fail: You cannot file Chapter 7.
A Means Test calculator is here. You will need to enter a lot of financial information.
posted by Houstonian at 10:05 AM on July 17, 2009
One thing to keep in mind about asking to settle your debt for X% of what you owe. If you do this, you will most likely be facing taxes on the amount your debt was reduced. IIRC, this reduction is considered income and is taxable.
posted by onhazier at 10:09 AM on July 17, 2009
posted by onhazier at 10:09 AM on July 17, 2009
A friend of mine declared bankruptcy a few months ago and he's already getting credit card offers.
Another friend declared a few years ago (debt was result of husband's terminal illness) and she was dismayed to find that the credit card debt that got written off was considered income by the IRS.
posted by mareli at 10:15 AM on July 17, 2009
Another friend declared a few years ago (debt was result of husband's terminal illness) and she was dismayed to find that the credit card debt that got written off was considered income by the IRS.
posted by mareli at 10:15 AM on July 17, 2009
Best answer: So I'm going to be unpopular for this one.
I'm in a similiar situation, so take that as you will.
Everyone always talks about how important their credit rating is.
With the shift we're seeing in creditor behaviour and the lockdown on credit, my argument is that your credit score doesn't mean much anymore.
That doesn't mean ignore your debts. But it does mean that we should all start to have a reasonable discussion the feasability of getting out from under massive amounts of unsecured debt.
In the past, paying down debt was the same as saving cash. You had an emergency spending cushion on your free cards, or the ability to get a loan to make ends meet.
Nowadays, Cards get closed, limits are slashed. Credit is being ratcheted back across the board.
This in turn makes the importance of your credit score less significant. If you can't get creidt, it doesn't really matter WHAT your credit score is.
You need to be able to pay for your necessities. Food, Healthcare, electricity, shelter. Ideally, with cash. If you can't pay for it with cash, then you need to ratchet back your lifestyle. Unsecured Debt Repayment should be prioritized below the necessities.
So you're left with a huge CC balance. The sword of damocles, threatening to destroy your credit rating.
My recommendation is to move beyond worrying about your credit rating. It's already fucked. You just don't know it yet. Given the state of the economy, the risk of a disruption to your income, the likely outcome is that there will be a hiccup, and you'll fall behind.
You're already bankrupt. It sucks, but it's true. It's just a mater of time until you declare.
Save your cash. Pay the minimums on your cards. Can't pay the minimums, skip one and ask for a chargeoff. (Sidenote - The CC companies won't offer you shit unless you're delinquent.. Which is moronic if you ask me)
Accept that your lifestyle will take a hit. Accept that your credit rating will take a hit. Try to come to terms with the fact that you'll need to move to a more frugal lifestyle. Prioritize the important aspects of your life above the physical acquisition of things.
In a secure economy I believe it is possible to pay off massive amounts of unsecured debt. With the uncertainty that we're facing now, I think it's irresponsible to try unless you have a nest egg locked away.
So yeah, this is the irresponsible answer to your question. But I think it's the more realistic one.
posted by Lord_Pall at 10:15 AM on July 17, 2009 [4 favorites]
I'm in a similiar situation, so take that as you will.
Everyone always talks about how important their credit rating is.
With the shift we're seeing in creditor behaviour and the lockdown on credit, my argument is that your credit score doesn't mean much anymore.
That doesn't mean ignore your debts. But it does mean that we should all start to have a reasonable discussion the feasability of getting out from under massive amounts of unsecured debt.
In the past, paying down debt was the same as saving cash. You had an emergency spending cushion on your free cards, or the ability to get a loan to make ends meet.
Nowadays, Cards get closed, limits are slashed. Credit is being ratcheted back across the board.
This in turn makes the importance of your credit score less significant. If you can't get creidt, it doesn't really matter WHAT your credit score is.
You need to be able to pay for your necessities. Food, Healthcare, electricity, shelter. Ideally, with cash. If you can't pay for it with cash, then you need to ratchet back your lifestyle. Unsecured Debt Repayment should be prioritized below the necessities.
So you're left with a huge CC balance. The sword of damocles, threatening to destroy your credit rating.
My recommendation is to move beyond worrying about your credit rating. It's already fucked. You just don't know it yet. Given the state of the economy, the risk of a disruption to your income, the likely outcome is that there will be a hiccup, and you'll fall behind.
You're already bankrupt. It sucks, but it's true. It's just a mater of time until you declare.
Save your cash. Pay the minimums on your cards. Can't pay the minimums, skip one and ask for a chargeoff. (Sidenote - The CC companies won't offer you shit unless you're delinquent.. Which is moronic if you ask me)
Accept that your lifestyle will take a hit. Accept that your credit rating will take a hit. Try to come to terms with the fact that you'll need to move to a more frugal lifestyle. Prioritize the important aspects of your life above the physical acquisition of things.
In a secure economy I believe it is possible to pay off massive amounts of unsecured debt. With the uncertainty that we're facing now, I think it's irresponsible to try unless you have a nest egg locked away.
So yeah, this is the irresponsible answer to your question. But I think it's the more realistic one.
posted by Lord_Pall at 10:15 AM on July 17, 2009 [4 favorites]
Follow jdroth's advice. There *are no shortcuts*. Bankruptcy will ruin you emotionally. Your credit is going to get trashed unless you do anything but pay in full on time. If a FICO number isn't as important to you as your personal well-being, you can choose who gets your money first. The *LAST* people who should get your money are the ones who are the least willing to work with you. Not getting a check from you will make them a lot happier to deal with you.
You are not bankrupt. You are scared and confused. Please listen to people who have been there and come out of it - jdroth's story is similar to mine. You can get there, it takes a lot of work and a lot of patience, but you *can* do it. Dave Ramsey is a helluva motivator and his teachings are sound.
posted by bensherman at 10:15 AM on July 17, 2009
You are not bankrupt. You are scared and confused. Please listen to people who have been there and come out of it - jdroth's story is similar to mine. You can get there, it takes a lot of work and a lot of patience, but you *can* do it. Dave Ramsey is a helluva motivator and his teachings are sound.
posted by bensherman at 10:15 AM on July 17, 2009
Can you lower your mortgage payment (which has a much lower interest rate) & apply the the difference to your credit card each payment?
posted by canoehead at 10:32 AM on July 17, 2009
posted by canoehead at 10:32 AM on July 17, 2009
A friend of mine declared bankruptcy a few months ago and he's already getting credit card offers.
Indeed, someone who has no debts and cannot declare bankruptcy for the next several years is considered a good credit risk.
I went the credit counseling route with my $50,000 in credit card debt. There are a lot of shady operators out there (I was never fully satisfied with mine; they made a lot of mistakes) but they did get my interest rates and payments reduced significantly. The rates I got ranged from 0% to 10% with most under 5%. This was ten years ago, so perhaps things have changed and you won't get deals that good now, but it seems to me like it's worth a try if you can find a reputable counselor.
posted by kindall at 10:44 AM on July 17, 2009
Indeed, someone who has no debts and cannot declare bankruptcy for the next several years is considered a good credit risk.
I went the credit counseling route with my $50,000 in credit card debt. There are a lot of shady operators out there (I was never fully satisfied with mine; they made a lot of mistakes) but they did get my interest rates and payments reduced significantly. The rates I got ranged from 0% to 10% with most under 5%. This was ten years ago, so perhaps things have changed and you won't get deals that good now, but it seems to me like it's worth a try if you can find a reputable counselor.
posted by kindall at 10:44 AM on July 17, 2009
Best answer: I was in a similar position to you a few years back. I had more than $20,000 in credit card debt with high interest rates. I would pay the most I could afford every month (more than the minimum payments), only to have monthly fees obliterate whatever progress I had made in paying down my debt.
In December 2005, based on a recommendation in an AskMe thread, I signed up with a credit counselor named Take Charge America. I spoke with a counselor on the phone, reviewed my monthly budget and determined how much I could afford to spend towards paying down this debt. Amazingly, I ended up with a monthly amount that was even less than I had been paying before. TCA then negotiated with my various credit cards to lower my interest rates. Every month I paid TCA directly and they disbursed payments to my debtors.
I am happy to say that as of this month, I have completely paid off my credit card debt. Best of all, I did it without having to declare bankruptcy or taking out a personal loan.
posted by turaho at 10:45 AM on July 17, 2009 [1 favorite]
In December 2005, based on a recommendation in an AskMe thread, I signed up with a credit counselor named Take Charge America. I spoke with a counselor on the phone, reviewed my monthly budget and determined how much I could afford to spend towards paying down this debt. Amazingly, I ended up with a monthly amount that was even less than I had been paying before. TCA then negotiated with my various credit cards to lower my interest rates. Every month I paid TCA directly and they disbursed payments to my debtors.
I am happy to say that as of this month, I have completely paid off my credit card debt. Best of all, I did it without having to declare bankruptcy or taking out a personal loan.
posted by turaho at 10:45 AM on July 17, 2009 [1 favorite]
Best answer: FYI & FWIW
http://www.nytimes.com/2009/06/16/your-money/credit-and-debit-cards/16credit.html
"He was paying fitfully on his card, which was canceled for delinquency. In April, HSBC offered him full settlement at 20 percent off. He declined. A few weeks later, it agreed to let him pay half."
posted by Wood at 10:50 AM on July 17, 2009
http://www.nytimes.com/2009/06/16/your-money/credit-and-debit-cards/16credit.html
"He was paying fitfully on his card, which was canceled for delinquency. In April, HSBC offered him full settlement at 20 percent off. He declined. A few weeks later, it agreed to let him pay half."
posted by Wood at 10:50 AM on July 17, 2009
For Chapter 13, you still pay your debts, so it does not meet your standards.
This is only partially correct; it's true that Chapter 13 does set up a repayment schedule, but most most times the creditors are required to take a "haircut" on the various debts and whatever remains of the debts is discharged if you successfully complete the Chapter 13 plan. The OP will definitely want to consult with a bankruptcy attorney before going this route.
posted by rkent at 10:58 AM on July 17, 2009
This is only partially correct; it's true that Chapter 13 does set up a repayment schedule, but most most times the creditors are required to take a "haircut" on the various debts and whatever remains of the debts is discharged if you successfully complete the Chapter 13 plan. The OP will definitely want to consult with a bankruptcy attorney before going this route.
posted by rkent at 10:58 AM on July 17, 2009
Response by poster: Taking a couple of the recent answers combined...
Has anyone else worked with Take Charge America? A quick Google does not appear that they are a scam, but any good company that tries can bury such Google results.
Because if TCA or someone like them could make my $1200 payments, say, $800, by lowering interest rates (which as we've seen HSBC won't do for me), and I could take the remainder and build that savings account with 3 months of income in case of emergency (such as loss of job), and I could still be out of debt in 2-3 years....that might well be worth it.
And like another person said, forget credit scores. As I'm sure most people posting here know, the way credit scores are calculated is changing and they won't tell us to what or how... So if using a counseling service lowers my FICO...I don't necessarily care. I just want the debt gone so if unexpected bills come up I'm not in a panic.
My only other question would be that since what credit I have available currently IS my means of handling emergencies, if TCA or someone else starts negotiating for me, would all my cards be instantly canceled? If nothing else, having a true credit card (versus a debit card) for purchase protection is a useful thing...but I can do without it if it means getting out of debt and paying less interest.
posted by arniec at 11:06 AM on July 17, 2009
Has anyone else worked with Take Charge America? A quick Google does not appear that they are a scam, but any good company that tries can bury such Google results.
Because if TCA or someone like them could make my $1200 payments, say, $800, by lowering interest rates (which as we've seen HSBC won't do for me), and I could take the remainder and build that savings account with 3 months of income in case of emergency (such as loss of job), and I could still be out of debt in 2-3 years....that might well be worth it.
And like another person said, forget credit scores. As I'm sure most people posting here know, the way credit scores are calculated is changing and they won't tell us to what or how... So if using a counseling service lowers my FICO...I don't necessarily care. I just want the debt gone so if unexpected bills come up I'm not in a panic.
My only other question would be that since what credit I have available currently IS my means of handling emergencies, if TCA or someone else starts negotiating for me, would all my cards be instantly canceled? If nothing else, having a true credit card (versus a debit card) for purchase protection is a useful thing...but I can do without it if it means getting out of debt and paying less interest.
posted by arniec at 11:06 AM on July 17, 2009
Could you sell the 2 cars and buy used ones instead? I'm thinking something that has 4 wheels and an engine and gets you from A to B.
Are there any other things in your house you could sell? TVs, furniture, anything? If there is, I'd try and make that number as big as possible to get that debt down as small as possible as soon as possible.
Also, you say "we" but is the debt your own fault? If so, maybe there is some serious resistance from your partner in battling this debt with all guns blazing. That might be hampering you to sell everything you can in order to still keep up appearances with the neighbours.
Call each credit card company to see which is most interested in percentage of lump sum right now versus some minimum payments for a little while longer. Maybe some will take the bait. Maybe you'll have to stop the minimum payments for a while so that they take you seriously, but that might be a separate question you should ask metafilter about its feasability.
posted by fantasticninety at 11:11 AM on July 17, 2009
Are there any other things in your house you could sell? TVs, furniture, anything? If there is, I'd try and make that number as big as possible to get that debt down as small as possible as soon as possible.
Also, you say "we" but is the debt your own fault? If so, maybe there is some serious resistance from your partner in battling this debt with all guns blazing. That might be hampering you to sell everything you can in order to still keep up appearances with the neighbours.
Call each credit card company to see which is most interested in percentage of lump sum right now versus some minimum payments for a little while longer. Maybe some will take the bait. Maybe you'll have to stop the minimum payments for a while so that they take you seriously, but that might be a separate question you should ask metafilter about its feasability.
posted by fantasticninety at 11:11 AM on July 17, 2009
Best answer: According to my friend who recovered from a similar situation, if the regular customer service reps at the credit card company refuse to lower your interest rate, you may want to try to be connected to their internal collections department, even though you're not delinquent yet. The collections representatives sometimes have more authority to adjust your rates.
At some credit card companies they have hardship programs available if you are wary of credit counseling services. They will ask lots of questions about salary and monthly expenses to determine whether you qualify. You may have to be 60 days late or more in order to qualify, though (obviously an important consideration, but something within your control). In some instances they may require you to agree to have your card canceled because they're usually dealing with people who are extremely delinquent, but they'll often lower your interest rate considerably (like, down to 5% or even 2% in a case I'm aware of) and will agree to a reasonable monthly payment that will pay off your debt in 60 months or a similar term. For my friend who enrolled in a program with one of the major credit card companies, it hurt her credit score pretty significantly at first, but within a couple of years her FICO score was back up to around 700. It hurt, but nowhere near as much as bankruptcy would have. If it were me I wouldn't consider a hardship program unless I had a guarantee in writing from the company of the new lower rate for the term they agreed upon and a formal agreement that the debt would be considered settled in however many months.
Best of luck!
posted by lbo at 11:18 AM on July 17, 2009
At some credit card companies they have hardship programs available if you are wary of credit counseling services. They will ask lots of questions about salary and monthly expenses to determine whether you qualify. You may have to be 60 days late or more in order to qualify, though (obviously an important consideration, but something within your control). In some instances they may require you to agree to have your card canceled because they're usually dealing with people who are extremely delinquent, but they'll often lower your interest rate considerably (like, down to 5% or even 2% in a case I'm aware of) and will agree to a reasonable monthly payment that will pay off your debt in 60 months or a similar term. For my friend who enrolled in a program with one of the major credit card companies, it hurt her credit score pretty significantly at first, but within a couple of years her FICO score was back up to around 700. It hurt, but nowhere near as much as bankruptcy would have. If it were me I wouldn't consider a hardship program unless I had a guarantee in writing from the company of the new lower rate for the term they agreed upon and a formal agreement that the debt would be considered settled in however many months.
Best of luck!
posted by lbo at 11:18 AM on July 17, 2009
Your credit cards upped your minimum payments? Call them and close the accounts. You don't need credit cards anymore, that's what got you in to this mess in the first place. Tell them you're closing your account under the old terms with the old payment amounts. I did this with a couple of mine, so it's worth a try.
Secondly, pay only the minimum payments and squirrel away every extra cent you can. You can't rely on using your credit cards in an emergency. As soon as you get the balance paid down, they'll lower your credit limit so you're always close to being maxed out and can't use it in an emergency. Once again, this happened with a couple of mine. Besides, if you go through credit counseling, they'll make you close all the cards anyway.
Do you have kids in daycare/after school care? If so, when you add that cost to the second car payment, gas, and insurance, one of you is working for nothing, maybe less. 30 miles each way is a long ass commute. Run the numbers and see if one of you can quit your job and stay home full time. I know this sounds counterintuitive, but stick with me. If you're not both working, get rid of the second car. Your tax burden will be lower, too.
My husband and I both worked very long hours. At the end of the day, we were both so exhausted that we ended up getting take-out or going out to eat all the time. Even if we didn't go out, we would grab things at the grocery store that were super quick to prepare, and that stuff is expensive. Cooking everything from scratch is WAY cheaper than even buying a box of Hamburger Helper (shudder) and you'll eat better, too. If one of you stays at home full time, you have plenty of time for a vegetable garden (if you have a yard). Seriously - go full on Little House on the Prairie. Buy groceries at Costco and learn how to can your own fruits and vegetables. Freeze everything you can. Learn to sew so you can mend your clothes instead of buying new ones. By doing all this, we discovered that we saved more than I brought home per month, and we don't even have kids.
Finally, STOP BUYING STUFF. You don't need it. Whatever it is, you don't need it.
posted by ValkoSipuliSuola at 11:19 AM on July 17, 2009
Secondly, pay only the minimum payments and squirrel away every extra cent you can. You can't rely on using your credit cards in an emergency. As soon as you get the balance paid down, they'll lower your credit limit so you're always close to being maxed out and can't use it in an emergency. Once again, this happened with a couple of mine. Besides, if you go through credit counseling, they'll make you close all the cards anyway.
Do you have kids in daycare/after school care? If so, when you add that cost to the second car payment, gas, and insurance, one of you is working for nothing, maybe less. 30 miles each way is a long ass commute. Run the numbers and see if one of you can quit your job and stay home full time. I know this sounds counterintuitive, but stick with me. If you're not both working, get rid of the second car. Your tax burden will be lower, too.
My husband and I both worked very long hours. At the end of the day, we were both so exhausted that we ended up getting take-out or going out to eat all the time. Even if we didn't go out, we would grab things at the grocery store that were super quick to prepare, and that stuff is expensive. Cooking everything from scratch is WAY cheaper than even buying a box of Hamburger Helper (shudder) and you'll eat better, too. If one of you stays at home full time, you have plenty of time for a vegetable garden (if you have a yard). Seriously - go full on Little House on the Prairie. Buy groceries at Costco and learn how to can your own fruits and vegetables. Freeze everything you can. Learn to sew so you can mend your clothes instead of buying new ones. By doing all this, we discovered that we saved more than I brought home per month, and we don't even have kids.
Finally, STOP BUYING STUFF. You don't need it. Whatever it is, you don't need it.
posted by ValkoSipuliSuola at 11:19 AM on July 17, 2009
if TCA or someone else starts negotiating for me, would all my cards be instantly canceled?
My cards were not canceled, but I was not allowed to use them. Which was fine since I had maxed them out anyway. The monthly budget they helped me create included an amount that went directly into savings which became my emergency fund.
I apologize if I sound like a shill for TCA, but I wasted two years in credit card repayment stasis before I broke down and asked for help. If I hadn't seen this thread, I might have ended up calling someone else, but as it turns out working with TCA has been great. If I could change anything about my experience, its that I wish I had called them sooner.
posted by turaho at 11:23 AM on July 17, 2009
My cards were not canceled, but I was not allowed to use them. Which was fine since I had maxed them out anyway. The monthly budget they helped me create included an amount that went directly into savings which became my emergency fund.
I apologize if I sound like a shill for TCA, but I wasted two years in credit card repayment stasis before I broke down and asked for help. If I hadn't seen this thread, I might have ended up calling someone else, but as it turns out working with TCA has been great. If I could change anything about my experience, its that I wish I had called them sooner.
posted by turaho at 11:23 AM on July 17, 2009
A couple of things. Debt consolidation, debt mediation etc is only going to be beneficial if you change your financial lifestyle - if you don't, there's a very real risk you'll end up in a bigger hole.
You could go the delinquency route in the hope that the companies will freeze the debt at a lower interest rate and/or accept a percentage of the total debt in full settlement. It's unlikely to work with all companies, though. In many cases, the debt is on-sold very quickly once you're in default and you'll be dealing with a collections agency rather than the original creditor - they'll eventually accept a lower amount in full settlement but they can also be extremely aggressive about collection.
Before you make a decision, check what constitutes an "act of bankruptcy" in your state. You don't want to come to arrangements with some of your creditors only to find one of your other creditors petitioning for your bankruptcy.
It sounds like you have basically no equity in anything - that's going to make it extremely difficult for you to find a quick solution through refinancing your debt.
You're saying that if you had the $1200 per month you're paying to credit card companies you could live well - but that whole $1200 isn't going to vanish. You may be able to reduce it, but you won't be able to eliminate it without some variation on bankruptcy. My concern is that you're underestimating how much you'd need to reduce your repayments in order for your debt to be sustainable and that many options would give you relief for a few months but not be manageable in the long term.
posted by Lolie at 11:41 AM on July 17, 2009
You could go the delinquency route in the hope that the companies will freeze the debt at a lower interest rate and/or accept a percentage of the total debt in full settlement. It's unlikely to work with all companies, though. In many cases, the debt is on-sold very quickly once you're in default and you'll be dealing with a collections agency rather than the original creditor - they'll eventually accept a lower amount in full settlement but they can also be extremely aggressive about collection.
Before you make a decision, check what constitutes an "act of bankruptcy" in your state. You don't want to come to arrangements with some of your creditors only to find one of your other creditors petitioning for your bankruptcy.
It sounds like you have basically no equity in anything - that's going to make it extremely difficult for you to find a quick solution through refinancing your debt.
You're saying that if you had the $1200 per month you're paying to credit card companies you could live well - but that whole $1200 isn't going to vanish. You may be able to reduce it, but you won't be able to eliminate it without some variation on bankruptcy. My concern is that you're underestimating how much you'd need to reduce your repayments in order for your debt to be sustainable and that many options would give you relief for a few months but not be manageable in the long term.
posted by Lolie at 11:41 AM on July 17, 2009
There may be ways to reduce your amount owed or your interest rate as some have mentioned, and you should of course pursue them. I can't help you much with that personally except to encourage you to take any opportunity to lower your interest rates.
But whatever you do, and however it ends up, you're still going to have to pay a good deal of money, and it's going to take years.
You ask, "How can I dig out of this hole the fastest?" You have to ruthlessly manage your cash flow.
Ideas to spend less: Refinance any loans that you can (I'm guessing you can't). Depending on the vehicle and how underwater you are, sell it and buy something older and cheaper, or a motorcycle. Even if you don't have mass transit there are sometimes vanpools available for your type of situation. An example: I have a 25-year rustbucket of a car that's worth *maybe* $2000 or so. It's perfectly reliable, though, and any repairs are still far less than car payments. Don't eat out. Decrease your grocery budget by only buying on sale and stocking up on loss leaders (we buy 6 Sunday newspapers at a time to clip the coupons). Grow your own food. Don't go out, spend more time at home. Get books from the library. Do your own car maintenance. You say you're a caffeine addict. I rather like the stuff too. Perhaps you like to buy yours as coffee; that can add up. I buy caffeine by the bottle at 90 200 mg pills for something like $4. Lasts months. That and all the water I can drink for free does me great. Now, I don't like coffee, and I'm not real fond of soda either. But if I were trying to save money drinks of any sort would be the first to go--they're *expensive*!) Spending less means you're going to look poorer to people, and you may worry about losing "status". You're going to have to accept that.
Spending less generally means you're going to have to sacrifice and go without stuff. It sucks, but it is what it is. The more you sacrifice, the faster the debt goes away. Looking at your posting history, I'm not sure if I'd bet on you being able to do this (buying a convertible?). Hopefully you disagree with me violently enough to prove me wrong. :) Bring it on; if it takes you getting mad at me to help you get out of debt I can take it. :)
Ideas to make more (some based off your profile): take a second job. Start a blog and sell advertising. Write software and sell it. Sell off your Star Wars collectibles (surely they're not appreciating in value at 28%!) You can buy them, or ones very much like them, in 5 years or so if you're really all that put out. Be careful that the ideas in this list don't make you spend too much money--don't invest a ton of money into a business right now. Luckily cheap hosting, etc. is totally your friend right now. You say you're a teacher, can you do private tutoring?
Thoughts on time:
Often, time and money can be interchangeable. In your case, you're short on money so you're going to have to spend more time. When you spend less, you're spending time looking for the best deal, time doing things you'd prefer not to do or *not* doing things you'd like to do. When you make more, you're spending time on activities that earn you money, either immediately or an investment in (near or far) future earnings. You're a bit strapped to worry about investing too much in the far future (for example, paying for more education). Just as you should be doing with *every* expenditure, ask yourself at every use of your time whether it's the most productive use of it. This undertaking is going to (or at least should) dominate your life for the next few years. Perhaps you're used to more spare time; it may be a rough transition but you need to use all that time to help dig yourself out.
In closing, don't discount the importance of reading a lot of sites on frugality/debt reduction such as the aforementioned Get Rich Slowly and The Simple Dollar--but don't spend too much time on the internet--you have money to be making and it's not going to happen with you sitting on your ass! There are a ton of people in the same boat or worse off. There are a ton of people who have to make lots of sacrifices like, say, selling off things they love or not having any free time for years. Hanging out with them does a few things for you. It keeps you from forgetting and spending money when you're constantly reminded about your quest, and it also makes it easier to sacrifice when there's a ton of people with you who don't give a damn if you can't go out with them, or you have a car that needs paint, or you always bring your lunch to work. They can help you, too.
Good luck.
posted by RikiTikiTavi at 11:45 AM on July 17, 2009
But whatever you do, and however it ends up, you're still going to have to pay a good deal of money, and it's going to take years.
You ask, "How can I dig out of this hole the fastest?" You have to ruthlessly manage your cash flow.
Ideas to spend less: Refinance any loans that you can (I'm guessing you can't). Depending on the vehicle and how underwater you are, sell it and buy something older and cheaper, or a motorcycle. Even if you don't have mass transit there are sometimes vanpools available for your type of situation. An example: I have a 25-year rustbucket of a car that's worth *maybe* $2000 or so. It's perfectly reliable, though, and any repairs are still far less than car payments. Don't eat out. Decrease your grocery budget by only buying on sale and stocking up on loss leaders (we buy 6 Sunday newspapers at a time to clip the coupons). Grow your own food. Don't go out, spend more time at home. Get books from the library. Do your own car maintenance. You say you're a caffeine addict. I rather like the stuff too. Perhaps you like to buy yours as coffee; that can add up. I buy caffeine by the bottle at 90 200 mg pills for something like $4. Lasts months. That and all the water I can drink for free does me great. Now, I don't like coffee, and I'm not real fond of soda either. But if I were trying to save money drinks of any sort would be the first to go--they're *expensive*!) Spending less means you're going to look poorer to people, and you may worry about losing "status". You're going to have to accept that.
Spending less generally means you're going to have to sacrifice and go without stuff. It sucks, but it is what it is. The more you sacrifice, the faster the debt goes away. Looking at your posting history, I'm not sure if I'd bet on you being able to do this (buying a convertible?). Hopefully you disagree with me violently enough to prove me wrong. :) Bring it on; if it takes you getting mad at me to help you get out of debt I can take it. :)
Ideas to make more (some based off your profile): take a second job. Start a blog and sell advertising. Write software and sell it. Sell off your Star Wars collectibles (surely they're not appreciating in value at 28%!) You can buy them, or ones very much like them, in 5 years or so if you're really all that put out. Be careful that the ideas in this list don't make you spend too much money--don't invest a ton of money into a business right now. Luckily cheap hosting, etc. is totally your friend right now. You say you're a teacher, can you do private tutoring?
Thoughts on time:
Often, time and money can be interchangeable. In your case, you're short on money so you're going to have to spend more time. When you spend less, you're spending time looking for the best deal, time doing things you'd prefer not to do or *not* doing things you'd like to do. When you make more, you're spending time on activities that earn you money, either immediately or an investment in (near or far) future earnings. You're a bit strapped to worry about investing too much in the far future (for example, paying for more education). Just as you should be doing with *every* expenditure, ask yourself at every use of your time whether it's the most productive use of it. This undertaking is going to (or at least should) dominate your life for the next few years. Perhaps you're used to more spare time; it may be a rough transition but you need to use all that time to help dig yourself out.
In closing, don't discount the importance of reading a lot of sites on frugality/debt reduction such as the aforementioned Get Rich Slowly and The Simple Dollar--but don't spend too much time on the internet--you have money to be making and it's not going to happen with you sitting on your ass! There are a ton of people in the same boat or worse off. There are a ton of people who have to make lots of sacrifices like, say, selling off things they love or not having any free time for years. Hanging out with them does a few things for you. It keeps you from forgetting and spending money when you're constantly reminded about your quest, and it also makes it easier to sacrifice when there's a ton of people with you who don't give a damn if you can't go out with them, or you have a car that needs paint, or you always bring your lunch to work. They can help you, too.
Good luck.
posted by RikiTikiTavi at 11:45 AM on July 17, 2009
I wanted to second the suggestion to look into credit counseling. I was able to repay about $15k through CCCS. (Consumer Credit Counseling Service? Something like that.) They negotiated to reduce my interest rates and stop the accumulation of fees. My payments went down and I successfully paid it all off. I do not use credit cards now, or even have one (except for a store card that is used to get discounts on work clothes). I save up for things and then buy them. It's a wonderful feeling.
posted by oblique red at 11:54 AM on July 17, 2009
posted by oblique red at 11:54 AM on July 17, 2009
What are your skills? Are they more marketable somewhere else at a premium? I had some debt and went to work in a shithole in West Africa for 6 months. Made more money, spent none because all my food and accommodation was taken care of. Sold my car before I left. It sucked being away from home for that time, but I came out of it with zero debts, a nice chunk of change and a good addition to my resume. It would have taken me much longer to pay off my debts otherwise.
posted by IanMorr at 12:14 PM on July 17, 2009
posted by IanMorr at 12:14 PM on July 17, 2009
Another thing you could do before making any decisions is research what a bankruptcy trustee in your state would require you to do - what you'd have to liquidate, what payments you'd need to make, etc. Then try to come up with a plan for paying off your unsecured creditors which is fairly close to that.
One word of warning about ignoring individual creditors - if you ultimately find yourself having to enter some kind of bankruptcy or insolvency arrangement, one thing which will be examined is whether you have made preferential payments to any of your unsecured creditors during the pre-insolvency period over which the trustee has jurisdiction. The trustee will have the power to void certain transactions made during that period, so be careful about disposing of assets and totally ignoring some unsecured debts while paying others.
posted by Lolie at 12:21 PM on July 17, 2009
One word of warning about ignoring individual creditors - if you ultimately find yourself having to enter some kind of bankruptcy or insolvency arrangement, one thing which will be examined is whether you have made preferential payments to any of your unsecured creditors during the pre-insolvency period over which the trustee has jurisdiction. The trustee will have the power to void certain transactions made during that period, so be careful about disposing of assets and totally ignoring some unsecured debts while paying others.
posted by Lolie at 12:21 PM on July 17, 2009
You're saying that if you had the $1200 per month you're paying to credit card companies you could live well. That is the part that leaped out at me. This means you really haven't learned your lesson. If you had an extra $1200 a month you would just spend it living well. Before long you would be right back where you are now.
You and your spouse should be saving at least $1200 a month.
Listen to jdroth.
posted by JackFlash at 12:42 PM on July 17, 2009 [4 favorites]
You and your spouse should be saving at least $1200 a month.
Listen to jdroth.
posted by JackFlash at 12:42 PM on July 17, 2009 [4 favorites]
Best answer: This means you really haven't learned your lesson.
Unless I'm completely misreading the OP, it seems like he knows he's in trouble, he's already stopped making the bad decisions that got him there in the first place, and he's actively paying off his debt. His issue is that he is stretched so thin that he has no money left over to put into savings, meaning he is one major emergency away from declaring bankruptcy.
Not only that, but if you have $30,000 of credit card debt at an average APR of say 25% and you can only afford to pay $1,200 a month, you will have your debt completely paid off in about twenty years. That's two decades of praying that no major unexpected expense comes up.
Like I said earlier, I've been there and it isn't fun.
They say the first thing you should do when you realize you've dug yourself into a hole is to stop digging. But what do you do after that? It's incredibly difficult to swallow your pride and ask for help. I wasted two years trying to do it myself when asking for a boost was all I needed. I'm really lucky there were people who were ready to help instead of clucking their tongues and saying I hadn't learned my lesson.
Which is to say, I have flagged the hell out of your comment, JackFlash.
posted by turaho at 1:39 PM on July 17, 2009 [1 favorite]
Unless I'm completely misreading the OP, it seems like he knows he's in trouble, he's already stopped making the bad decisions that got him there in the first place, and he's actively paying off his debt. His issue is that he is stretched so thin that he has no money left over to put into savings, meaning he is one major emergency away from declaring bankruptcy.
Not only that, but if you have $30,000 of credit card debt at an average APR of say 25% and you can only afford to pay $1,200 a month, you will have your debt completely paid off in about twenty years. That's two decades of praying that no major unexpected expense comes up.
Like I said earlier, I've been there and it isn't fun.
They say the first thing you should do when you realize you've dug yourself into a hole is to stop digging. But what do you do after that? It's incredibly difficult to swallow your pride and ask for help. I wasted two years trying to do it myself when asking for a boost was all I needed. I'm really lucky there were people who were ready to help instead of clucking their tongues and saying I hadn't learned my lesson.
Which is to say, I have flagged the hell out of your comment, JackFlash.
posted by turaho at 1:39 PM on July 17, 2009 [1 favorite]
Dammit my math is wrong. It won't take twenty years to pay off that debt. But my point still stands.
posted by turaho at 1:43 PM on July 17, 2009
posted by turaho at 1:43 PM on July 17, 2009
FIRSTLY, YOU ARE NOT FUCKED. Stop with that thinking, take a breather, sit down and figure out your situation.
Going through similar situation now, what is working for me:
-Personally I think debt snowball is a bad idea (due to mathematics, it'll cost you more)
-Make. A. Budget. First, make a list of your debt liabilities. Second, living liabilities (rent, utilities, things you cannot live without). Lastly, bare essentials, food, clothing, etc.
-After you make a budget, look for places to cut expenses. For me, the biggest expense (after rent and debt payments) was food. Cable, phone bill, downgrade.
-Look for things to sell, odds is that you don't need and/or use most of the stuff you have.
-Call your credit card, ask for a lower rate. Another thing is to look for balance transfer offers which comes with fees, but if you calculate accordingly, it can save you a lot of money.
-Stop using the cards. Stop buying crap.
-Sell the two cars. Get cheap used car (if you can).
-And, the most difficult part...keep track of your spending.
Personal financial Management takes practice really, and it appears to me that you haven't really sat down and went over your finances.
Another option, if you don't have kids, is to downgrade your living situation. Sell the house, use the money to pay off the mortgage, loans, etc...Move to a cheap apartment for a year or two, to get back on your feet. The housing market is not going go anywhere for awhile.
posted by pakoothefakoo at 1:59 PM on July 17, 2009
Going through similar situation now, what is working for me:
-Personally I think debt snowball is a bad idea (due to mathematics, it'll cost you more)
-Make. A. Budget. First, make a list of your debt liabilities. Second, living liabilities (rent, utilities, things you cannot live without). Lastly, bare essentials, food, clothing, etc.
-After you make a budget, look for places to cut expenses. For me, the biggest expense (after rent and debt payments) was food. Cable, phone bill, downgrade.
-Look for things to sell, odds is that you don't need and/or use most of the stuff you have.
-Call your credit card, ask for a lower rate. Another thing is to look for balance transfer offers which comes with fees, but if you calculate accordingly, it can save you a lot of money.
-Stop using the cards. Stop buying crap.
-Sell the two cars. Get cheap used car (if you can).
-And, the most difficult part...keep track of your spending.
Personal financial Management takes practice really, and it appears to me that you haven't really sat down and went over your finances.
Another option, if you don't have kids, is to downgrade your living situation. Sell the house, use the money to pay off the mortgage, loans, etc...Move to a cheap apartment for a year or two, to get back on your feet. The housing market is not going go anywhere for awhile.
posted by pakoothefakoo at 1:59 PM on July 17, 2009
It sounds like a second job would be the best thing for you. Just a few hours somewhere per week could create an additional couple of hundred dollars a month. Once you start getting ahead on payments, you are also paying less interest, so your payment on the principal comprises an increasing amount of the payment if you keep the amount consistent. A second job strikes me as the very least painful solution.
Cheaper cars might be a good idea too. At least look into it. If you can sell your present cars, clear $1000 on each, and buy something that's good enough for the meanwhile as a commuter car, you'll knock $2K off that debt right away.
posted by Miko at 2:01 PM on July 17, 2009
Cheaper cars might be a good idea too. At least look into it. If you can sell your present cars, clear $1000 on each, and buy something that's good enough for the meanwhile as a commuter car, you'll knock $2K off that debt right away.
posted by Miko at 2:01 PM on July 17, 2009
Your basic dilemma is that your expenses outweigh your income, so it's simple, reverse it.
But, just how important is it for you to pay these off? You have all sorts of options, all of which will be uncomfortable:
- Call every creditor and (nicely) ask them to lower your rate. Then identify the credit card with the least rate. Call them back and (nicely) threaten them that you're going to stop paying unless they they match your best rate.
- Walk through your house and make an itemized list of everything that you haven't used at least within the last month. Then, sell all of those things on craigslist or ebay.
- Then walk through your house and down grade everything that's not essential. 50 inch tv? sell and replace with a used 20 inch tv. That beautiful hardwood dining room set? sell and replace with used ikea.
- Look at all expenses, and cut everything. try over-the-air broad casts, instead of cable. try checking out books and movies from the library. cut out all eating out. with some planning you can keep all meals easy, cheap, and convenient.
- advertise 1 or 2 rooms of your house for rent on craigslist or classifieds.
- rent out your garage
- start a garden
You probably know this but, ever cent of your excess money should be going to the creditor with the largest interest rate. All others should only get only minimum payments.
I can keep going, if you wish.
posted by TheOtherSide at 4:16 PM on July 17, 2009
But, just how important is it for you to pay these off? You have all sorts of options, all of which will be uncomfortable:
- Call every creditor and (nicely) ask them to lower your rate. Then identify the credit card with the least rate. Call them back and (nicely) threaten them that you're going to stop paying unless they they match your best rate.
- Walk through your house and make an itemized list of everything that you haven't used at least within the last month. Then, sell all of those things on craigslist or ebay.
- Then walk through your house and down grade everything that's not essential. 50 inch tv? sell and replace with a used 20 inch tv. That beautiful hardwood dining room set? sell and replace with used ikea.
- Look at all expenses, and cut everything. try over-the-air broad casts, instead of cable. try checking out books and movies from the library. cut out all eating out. with some planning you can keep all meals easy, cheap, and convenient.
- advertise 1 or 2 rooms of your house for rent on craigslist or classifieds.
- rent out your garage
- start a garden
You probably know this but, ever cent of your excess money should be going to the creditor with the largest interest rate. All others should only get only minimum payments.
I can keep going, if you wish.
posted by TheOtherSide at 4:16 PM on July 17, 2009
Remember: you aren't your bankroll. The lifestyle changes are just that: changes. You will survive. I make 100k a year and I've learned to live comfortably on 20k a year.
I am not a saint. I used to be the biggest consumer in the world. But, you know what, I sold 80% of my stuff, stopped shopping, simplified my life in obscene ways, and I'm honestly more happy than I've ever been in my life.
posted by TheOtherSide at 4:21 PM on July 17, 2009 [4 favorites]
I am not a saint. I used to be the biggest consumer in the world. But, you know what, I sold 80% of my stuff, stopped shopping, simplified my life in obscene ways, and I'm honestly more happy than I've ever been in my life.
posted by TheOtherSide at 4:21 PM on July 17, 2009 [4 favorites]
Take Charge America worked for me. My first job after the Bachelor's Degree led to multiple credit card offers that I happily applied for, spending well above my means for no reason.
Realizing too late that I would never get ahead, I contacted them at the behest of one of my creditors that recommended them...oddly enough in a past due bill.
I had roughly $25K in credit card debt and within five years had them all paid off.
There are a few rules. All the accounts are canceled and the cards become inactive. No more charging. You CANNOT apply for any credit during the payback period; this will terminate your agreement(s) with TCA. I believe there are exceptions for a vehicle and/or a mortgage. (things you *have* to have.)
Because you are paying off debt without creating any new debt, your credit score will benefit.
Good luck. YMMV.
posted by bach at 10:03 PM on July 17, 2009
Realizing too late that I would never get ahead, I contacted them at the behest of one of my creditors that recommended them...oddly enough in a past due bill.
I had roughly $25K in credit card debt and within five years had them all paid off.
There are a few rules. All the accounts are canceled and the cards become inactive. No more charging. You CANNOT apply for any credit during the payback period; this will terminate your agreement(s) with TCA. I believe there are exceptions for a vehicle and/or a mortgage. (things you *have* to have.)
Because you are paying off debt without creating any new debt, your credit score will benefit.
Good luck. YMMV.
posted by bach at 10:03 PM on July 17, 2009
I think you should stop worrying about your credit score and try to get rid of your debt.
posted by bbyboi at 6:47 PM on July 19, 2009
posted by bbyboi at 6:47 PM on July 19, 2009
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posted by damn dirty ape at 7:59 AM on July 17, 2009