The Debt is All too Much

July 17, 2007 2:43 PM

My debt suddenly snowballed out of control and I need help getting it back down and getting my payments made this month! Help me!

Over the course of the last three months, I've had a few things happen. First, I missed two payments that I thought I'd made. Then, I had some massive expenses come up, so I had trouble paying the full amount on time.

Now I'm super screwed. I have about 9k worth of credit card debt to pay down this month in the following bills:

Card A: 277.00 (Due 8.3)
Card B: 130.00 (Due 8.3)
Card C: 168.00 (Due 7.30)

Cell: 100.00 (Due 8.3)
Cable: 500.00 (Due ASAP)

Student Loan: 340.00
Rent: 315.00 (Due 8.3)

To make matters worse, we've been limited to 32/hrs week for full time workers at my job. I could pick up a second job, but as I travel for work a lot and work midnights, that's going to mess my schedule up. Also, I don't think finding a second job is going to help me get this paid for this month.

I would do a garage/yard/rummage sale, but I live in an apartment, and don't have the aforementioned garage/yard/rummage area. I could sell some stuff, but I've never sold on eBay or Craigslist and I don't know if I could get my things sold quick enough to help out.

I would also ask my SO, but that's part of the problem. He's getting paid weekly, so the paying of bills ends up late because he can't give me the full amount at the end of the month like I need. I'd like to shift one or two bills over to him to take care of, but when I mentioned it, he didn't seem to understand why I couldn't just take his money and take care of it.

I need all the help I can get!

posted by anonymous to work & money (14 comments total)

Craigslist doesn't have to take a long time. If you have anything you can sell, put it up on Craigslist and see what emails you get. Anything you have that's worth $100+ that people might want--iPod, digital camera, etc., I would start putting stuff up right away. You can arrange to meet someone away from your house, like at a Starbucks, and take a friend with you. Allow them to check out the item, and of course you'll take cash only. You could make some quick money to take care of a couple of those bills within a few days.
posted by rio at 2:50 PM on July 17, 2007

Try Craigslist. Not knowing ahead of time how it will work out is not an excuse not to try.

Is it possible to get your student loan into an emergency forbearance?

Also, for god's sake, CANCEL THE CABLE if you haven't already. I know that won't help you pay your current bill (though see if you can pay it in installments), but given your debt and necessary living expenses, you cannot afford it right now. It's a luxury that is throwing your basic financial health way off base.

Please understand, I am not trying to lecture or judge; I was once in a very similar position, so I know first-hand how difficult and scary this is.

I also recommend picking up a copy (either at your library or for a few bucks used) of All Your Worth. It can give you some immediate strategies for handling financial crisis, and some long-term strategies for moving into financial stability and health, no matter what your income. (And no, it won't arrive instantly to help you literally today, but I suspect you will still find it immensely useful in a few weeks.)
posted by scody at 3:04 PM on July 17, 2007

Are your cards maxed out? Could you do balance transfers to the lowest interest rate card, then make the minimum payment on that card?

How much money do you have available?

Also, cancel your cable. If you have $500 in charges, I imagine you have had trouble making payments to date. Cable is a luxury and it doesn't seem that you can afford it right now.

And, yes, start selling off your luxury items.

Are any of these debts for both you and your SO? He should come up with the cash now, if you're in such a desperate situation.

I highly recommend Get Rich Slowly. People in the forums there can help.
posted by acoutu at 3:04 PM on July 17, 2007

I know this won't help you this current month, but it strikes me looking at your numbers that you're paying a lot for cell and cable. I'm assuming those are accumulations of some missed months, but still. Can you get a better cell rate? Do you really need both internet and cable TV? Seriously?

You may be able to call some of the companies and tell them your problems. Sometimes people will be kind if you just communicate with them what's going on. They may let you make a short-term good faith payment for this month to tide you through (make sure if it's a credit card company doing this you understand the conditions). It doesn't hurt to ask.
posted by warble at 3:14 PM on July 17, 2007

Seconding asking for a payment plan.

Also, I was in a bind last year, and payroll advance is an option. The bank that has my checking account had the best rate. You'll have to pay back a big rate later, but it lets you defer things for a price. Of course, it's best to do this only if you know that you'll be able to pay it back later.
posted by Pants! at 3:21 PM on July 17, 2007

You really should divide those bills up if you live with your SO. I did this myself, took care of all the bills and just had him email me money every month. It worked for awhile, and maybe for a normal person it would have been no problem, but the fact is you have the responsibility to pay those bills and make sure they get paid, make sure he sends/gives you the money on time, etc. It's more work than you think and it took a lot off my mind when my SO eventually took over a couple of our bills. Seems like a little thing, but it can make a difference.
posted by heavenstobetsy at 3:22 PM on July 17, 2007

You don't need instant help from the internet, you need basic accounting/budgeting skills. I've been there myself.

Some things that come to mind:

If you're living that close to the edge, cable is a luxury. Even if it is your internet connection, there are much cheaper (or even free) ways to get on the internet in most cities. Kill the cable.

Ditto on the cellphone, if you have a land line as well. Again, regardless of how much these things seem like 'necessities', they are luxuries and you clearly don't have the budget for luxuries right now.

I'd argue that putting money you don't have on credit cards is another luxury, but that's not the story the credit card companies are telling and their version of the story is winning. Even so: if you can't meet the bills but you have three credit cards, something is wrong... this just invites you to spend money you don't have and end up right where you are.

The SO problem is a budgeting problem... you know he's getting paid weekly, so don't him for his share at the end of the month. If he's not cognizant enough to handle his own finances, ask him weekly before it gets to be a problem, and save the money up for the end of the month.

You'll get through this, this time, but if you don't get a budget worked out and figure out the difference between luxuries and necessities, you'll be back in the same problem again. Use the time you would have spent watching cable to read a basic home economics book from your library.
posted by foobario at 3:28 PM on July 17, 2007

See if you can consolidate all of your credit cards onto the one with the lowest interest rate. You may have to ask them to raise your limit. At least if you have to pay a late fee, you'll only be doing it on one card instead of three. If your credit card total is about $9K, you should be able to get your minimum payment down to about $360 per month (4%).

You have to pay your student load and your rent first. Cancel the cable and tell them you want a payment plan to pay it off over the next year.

Ditch the cell phone and land line. Get a pre-paid Tracfone or pre-paid T-mobile. You can get these for less than $10 per month if you limit yourself to important calls.
posted by JackFlash at 3:33 PM on July 17, 2007

Prosper. I would lend to you.
posted by Dec One at 3:40 PM on July 17, 2007

Here...this will work, but it will take work to pull off. I can't give you instant results -- nobody can. But you can do this, and it will work, if you stick to it.

There's fundamentally three things you need to do to dig yourself out of this hole. First, you need to get rid of as much of your debt as possible. Second, you need to stop yourself from acquiring more debt. Third, you need to at least temporarily increase your income. Don't think that I mean you do these one at a time, by the way. You need to do them all at once, because they're all related. Relax, it's not hard.

I'm gonna take those in reverse order. Your idea about selling on Craigslist or eBay is a good one. Craigslist is easier to do listings on (and free) but more of a hassle when dealing with buyers. eBay makes buying easy, but you're going to have to learn how to sell on it. Not difficult, but it's an investment of time. Either way, though, get it started. So what if it doesn't help you right away. You're going to need it for next month, too.

Also, consider sharing your story with Modest Needs. It's meant precisely for people like you -- honest, hard-working folk who just ran into a bit of a rough patch.

Now, selling off your belongings is not a sustainable method of getting out of debt. Eventually, you're going to run out of stuff to sell. So, you need to make sure no additional debt is snowballing up on you while you pay off what you have.

First things first: your cable and cell phone bills. If you're really paying $100 per month, you seriously need to reduce that, even if it means reducing your usage. Consider going prepaid, then you'll know (and have control over) exactly how much you're spending. Even if you're paying less than $100/month, see just how low you can go.

For the cable, cancel it -- relax, it's only temporary. If you're using cable for your internet connection, use the library instead, just for a few weeks while you get yourself back on your feet. Tell the cable company you want a payment plan. They want your money even if they have to wait, so they'll work with you.

Now for getting rid of debt. There's no a whole lot you can do to reduce the actual dollar amounts, but you can reduce the interest you're paying, and the number of companies you're paying to.

Hopefully your credit cards are with different banks, because it's balance transfer time. Which card has the lowest interest rate? Transfer as much of your debt as possible away from the highest interest card and onto that one. Transfer the rest (hopefully it all fits) onto the mid-level card. Hopefully, that's one less bill for you!

Next, if you have a good payment history with any of the cards (never missed a payment, never or rarely late), call them up and ask them to lower your interest rate. Seriously, just ask. "Can you give me a lower interest rate?" The absolute worst thing that'll happen is they say no, so what do you have to lose?

Now, aggressively pay off the highest-interest balance, and pay the others at the minimum (or preferably, the minimum plus the accrued finance charges). When the highest interest balance is paid off, take the money you were paying on it and add that to your next-highest balance's payment. Keep snowballing it downwards.

For the student loan, since that probably has the absolute lowest interest rate out of anything here, give it a low priority. Pay the absolute minimum on it every month until you free up more cash.

Hopefully that'll help you. If you'd like to ask me any questions about this, my email address is in my profile. (Please put something like "MeFi - Debt question" in the subject so it doesn't get drowned in the flood of spam.)
posted by CrayDrygu at 3:42 PM on July 17, 2007 [2 favorites]

Here are some of the things that I would do (and have done) in your situation.

1. Call up your student loan people -- today, if possible. Tell them that you don't think you're going to be able to make this month's payment, and ask them for a forbearance. If they grant it (and most student loan servicers will), you'll skip this month's student loan payment without being penalized.

2. If you have any family members or close friends that you can trust, ask them for help. It'll hurt your pride, but your situation is serious. Ask for a short-term loan to help tide you over. Agree on realistic payback terms, in writing, and be totally faithful to the agreement. Example: my mom once lent me $400 to help me with rent in a situation almost identical to yours. I told her up front that I wouldn't be able to pay her back right away, and she said, "OK, all I ask is that you pay me back $10 a month." It made me feel like an idiot to have to ask, but the truth was that I was a idiot for getting myself into that much debt to begin with.

3. Level with your SO about the seriousness of your situation. You just can't afford to be covering somebody else's share of the bills, even temporarily.

4. Hate me if you must but -- cancel your cable service. Not only does it seem like you can't afford to make the monthly payments ($500!?), but the money would be way better spent on killing the last of your credit card debt. If you put that $500/month towards your credit card debt, you might be able to get out of debt in the next year. Think about it: will it make you happier to (A) get this debt-monkey off your back, (B) watch re-runs of Seinfeld?

5. Start educating yourself about money and finances. Not to be harsh, but -- if you don't have a plan, you're going to be in the same situation all over again in a few months. Motley Fool's How to Get Out of Debt is a great place to start, and Get Rich Slowly is also a great resource.

A couple of final words for you. I've been in your situation before. Several times. And I would panic ("Holy shit I'm going to debtors' prison!), then figure out a short-term solution ("I know! I'll sell my all my books on eBay!"), then congratulate myself for averting the crisis ("Ok, well, I don't need to worry about that ever again").

But it kept happening. Every few months, I'd have some kind of financial crisis. The band-aid fixes just kept peeling off, because I wasn't solving the real problem -- my ignorance about finances (and the basic fact that I was spending more than I was earning). Once I realized that I needed to educate myself, make a plan, and stick to it -- that's when my situation really started to turn around.

So, to get to the point: I know you need to solve this problem now, and I hope the suggestions I've made above will help you to do so. But please don't just forget about this situation once you've solved the short-term problem. Take this crisis as an opportunity to resolve your financial situation in the long term.

Good luck.
posted by ourobouros at 4:11 PM on July 17, 2007

Card A: 277.00 (Due 8.3)
Card B: 130.00 (Due 8.3)
Card C: 168.00 (Due 7.30)

9k$ CC-debt and 575 monthly (minimum) payment?

While it is important to get rid of your CC-debt, listen to the advice here in the thread and evaluate your spending behavior you should try to get cards with long promotional periods (e.g. 0% APR for 6-12 months) or try to get a FOOL card with 10% APR. This _CAN_ be a tool to handle your debt better but if not used wisely you can easily accumulate more debt.

Yoyo
posted by yoyo_nyc at 4:29 PM on July 17, 2007

I'm not sure a credit card company would be as forgiving, but I recently accrued some medical debt. I don't have enough credit free to put it on a card, and I asked to work out a payment plan.

Given the amount of my debt (X), they said the minimum monthly payment they could offer was Y. I can't afford Y monthly at the moment, but she did say that as long as I keep them informed of my situation at the moment, and at least show that I am making an effort to take care of the debt, they won't send it to collection. I decided to send in what I *can* afford each month... even though I'm not officially using their payment plan, I am making an effort to pay on it, so that will keep it from collections.
posted by IndigoRain at 7:37 PM on July 17, 2007

I've been burned too. And sometimes having a role model can help. I have been regularly looking at http://www.thesimpledollar.com/
posted by metaswell at 1:23 AM on July 18, 2007