Hello, I'm on a really rough road here.I know that I am heading for financial difficulty. I have credit card debt coming out of my a** and I've been to the bank and they can't help. I've also tried a debt consolidation place and I was told I'm not in enough trouble. I KNOW I am in trouble. Any advise? I really learned my lesson about credit cards!! I am 28 years old and have a total card debt of about $13,000!!! I guess I am learning the hard way. Any advise is very welcome.John
Any advise is very welcome.There's no magic for getting out of debt. Cut down on the High Livin' and stop using the credit cards. Make the minimum payments on all your cards except one. On that one send all the money you can to it each month. After it's paid off concentrate on the next one.
Any advise? I really learned my lesson about credit cards!! I am 28 years old and have a total card debt of about $13,000!!! I guess I am learning the hard way. Any advise is very welcome.First, try and relax. It takes time to get out of your situation. If it makes you feel any better, a lot of us are older (and supposed to be wiser) but are in a lot more trouble than you.Second, do NOT charge another thing! If you can get a card with a lower interest rate, you can transfer some or all of the balance and begin paying as much toward your debt as possible each month. You may even already have a card with available credit you can use. Most credit card companies will offer you a great fixed rate if you let them know you are interested in a balance transfer.Third, cut your expenses to the absolute minimum for awhile. There are many great ways to do this posted on the Managing Your Finances boards:http://boards.fool.com/Boards.asp?fid=10009Finally, do what you can to earn a little extra income. Put as much as you can toward your debt each month. You can also find ways to do this on the boards.Use a credit counseling only as a last resort. Using them will most likely impair your credit rating.
dear bass,i'm new to fooldom myself and my husband and i are currently staring at 17,000 CC debt and are right now seriously researching and considering ways and options for dealing with it. i'm not expert and others here who have successfully dug their way out of the hole will have plenty of good advise too, but here are some management options we've come up with based on having just read 'the 9 steps to financial freedom' by suze orman and exploring the advise here on fool:option 1: to look at all your cards and arrange them start from highest interest rate down. call each one and ask them to reduce your credit rate (don't except a rate higher than 10-12%) and tell them you'll move the balance to another card if they don't. having done that with all the cards arrange them again starting from highest rate and budget to pay all but the highest rate off at the minimum plus an extra $10, and give the highest one as much as you can over and above that amount till it paid off, then shift down to the next highest and do the same again, etc etc, till you're out of debt.option 2: find a card that's offering a good low rate for balance transfers (be careful cause many offer different rates for balance transfers and new purchases) and transfer all your balances over to that one card, thereby consolidating, and pay off the maxium you can per month till the debt is gone. but see the various cautions on boards and in the fool editoral section on reducing debt as there are many little bits of trickery to avoid when signing up for a new card to transfer balances.option 3: if you're paying off your own home: consider a home equity loan. the interest is tax deductable, which is an advantage, but the caution here is that you have to be confident you can pay it off successfully as this is a secured debt.none of these options will work in the long run if you don't stop using the cards. suze orman says to cut them all up right away, which my husband and i are going to do just as soon as we decide how to do this and transfer the balances over. we'll keep one strictly for emergencies, but not in our wallet (too tempting when around a fabulous 'sale' item!)hope this helps and good luck, meera (alias bihbicat)
I am 28 years old and have a total card debt of about $13,000!!! Welcome to the Fool. Debt is always relative to your income. We have folks on here with six figure amounts. My total was twice yours just four years ago.The first steps are to track your expenses, attempt to lower your interest rates as much as possible, and devote everything you can to paying off your balances.If you can at least make the minimums then you're not doing as bad as you think. Consumer organizations like CCCS can help negotiate payment plans for you but they will ruin your credit in the process.Keep reading the board...lots of people have been there and done that.
I'm on a really rough road here.I know that I am heading for financial difficulty. I have credit card debt coming out of my a** and I've been to the bank and they can't help. I've also tried a debt consolidation place and I was told I'm not in enough trouble. I KNOW I am in trouble. Any advise? I really learned my lesson about credit cards!! I am 28 years old and have a total card debt of about $13,000!!! I guess I am learning the hard way. Any advise is very welcome.Hi John!First, lemme tell you that the best thing you're doing now is addressing the problem. Far too many people ignore the problem figuring it'll just go away by itself, and that never happens.While you've got a substantial amount of debt, Fools here have reduced and eliminated far greater amounts than yours, and you can do it too. Have you tried calling your credit card company and tried to lower your interest rates? If you've got a good payment history, the odds are you'll find that a simple phone call can make a huge difference on the spot.Then, your next step is to be absolutely sure that you're not adding any more debt to what's there. You've got to be very diligent about not charging, so you can work on chipping away at that balance.After this, I'd urge you to sit down and get a clear picture of exactly how much comes in and what goes out on a regular basis. Use a spreadsheet or a pencil and paper, whatever it takes. By getting a focus on this, you can then start realizing where you can cut things that aren't necessities in your life. Nothing is too small to cut out, and with each cut, you add that extra amount to your monthly payment with the goal of sending as much as possible over and above the minimum payment.Finally, see where you can increase income via other means. This may include finding an extra part time job with the income dedicated solely to debts. Another avenue is finding items you no longer need and selling them online at eBay, half.com, etc.It takes determination and dedication, as well as some creativity. You can do this, John, and we'll be here to help you along the way.Good luck!Tony...but I still am...Off2Aruba
John:Lots of people have walked down this road.First of all, stop using the credit cards. Don't carry them, freeze them in some water. Just stop. Go to a cash system only.Sit down and record every cent that you spend. Warning, this can be horrifying. Look carefully at what you ARE spending on and where you can cut expenses.Cut expenses. Cell phone, cable, selling books that you don't have room for or don't need. Half.com is a great place to sell books.Start carrying your lunch and stop eating. Okay you can eat out a little...List your cc debt in order of highest interest and amounts due. You need to do be paying minimum payments on all of them except the one that causes the most pain or the smallest amount. Your choice. Sometimes it is easier to pay off a smaller bill and then start sending all extra money to the next bill. You might want to look around at the explanation of the snowball method. AND, you have to find a way to determine WANTS vs NEEDS. You should be paying for housing, food and things like that. This is a tough one for people. If you are a real impulse spender, then put off any other decisions for a few days. If it is not a necessity, then don't buy it.The worst thing is identifying the problem and then seeing where your money is leaking out.Good luck.Catleen
pay all but the highest rate off at the minimum plus an extra $10Why the extra $10? You do not need to do that. Just the minimum will do. And if you have 4 cards, without that extra $10, you can pay an extra $30 to the card you are attacking at that time.I hope this made sense.Louise
Why the extra $10? You do not need to do that. Just the minimum will do. And if you have 4 cards, without that extra $10, you can pay an extra $30 to the card you are attacking at that time.Any of you bored math scholars out there? We've always paid an extra $10 in addition to the minimum because it can knock years off debt re-payment. We verified this using a debt calculator. However, I don't know which is better when using the Snowball method. Is it helpful to pay the extra $10 per card or should it be put toward the card you are trying to pay down first? Maybe I can figure it out using the debt calculator. I'll let y'all know.
Well, according to my debt calculator, paying the extra $10 toward each card helps tremendously in our situation. With the extra $10 per card, we would have our debt paid off 6 months earlier and save $5,771.32 in interest. This is on a very large amount of debt so I'm not sure what the affect (effect?) would be on a much smaller amount.
Regarding aurorasa's remarks in the last few messages on this thread: money is fungible. It doesn't care who you owe it to. So, if you owe a bunch on a bunch of cards, and have only a limited amount to pay, you pay the least in interest if you pay the minimum on the lowest interest cards, and whatever you've got left over (let's call that the maximum) on the highest card. There are variations depending on whether your rate will change and if you can make balance transfers without penalty, but that's the basic idea.Now, for psychological reasons, people may not wish to operate this way. Suppose you have 8 cards and you feel overwhelmed, but want to try to crawl out from all that debt. Then, you may wish to attack the minimum balance cards first, just so that you feel better when you only owe on 7 cards, and then 6, and so on. This can not be discounted, even though it may not be the best financially.
Now, for psychological reasons, people may not wish to operate this way. Suppose you have 8 cards and you feel overwhelmed, but want to try to crawl out from all that debt. Then, you may wish to attack the minimum balance cards first, just so that you feel better when you only owe on 7 cards, and then 6, and so on. This can not be discounted, even though it may not be the best financially. Very true. We have several "little cards" with small balances that we've chosen to pay off first because we think it will boost our morale to write that many fewer checks per month and own less credit cards. It gives us a chance to have a few little "happy dances" before beginning to tackle the big stuff. All psychological but very important to help keep us on track and feel like we're accomplishing something.
Just the minimum will do.Not always ... I have a card that charges more in interest than the minimum monthly payment. Ugly but true.Hugs!t.
Best wishes -- this is a long road, and it's hard, but it does have an end. When I got out of school, I was a few grand in CC debt. Even with a nice job, I managed to put myself even more in debt, because I was living the high life (now that I had a fat paycheck every week, why not buy that new computer/furniture/vacation!?). It finally hit me when I was about $12K in debt that I had to do something. I was able to transfer everything to one card with a low-ish rate (9.9%). After that, no more charges. Paid off the card over a long time. Now it's gone. I'm coming up on having $10K in the bank now, which is a great feeling. Of course, all that money's going to evaporate once the wife goes back to school, but hey....You can get out of this mess. Knowing you're in a mess and caring enough to make some sacrifices are the key parts of the deal.
However, I don't know which is better when using the Snowball method. Is it helpful to pay the extra $10 per card or should it be put toward the card you are trying to pay down first?I am not a math scholar, nor do play one on TV. However, just pay the minimums on whichever card has the lowest interests rates and attack the highest-interest-rate card with every available dollar. That will save you money in the long run.Louise
tootru:Man, I would lose that card so fast it wouldn't know which way was up. But I am sure that you are working on that...Catleen
I would lose that card so fast it wouldn't know which way was up.Yep, it's at the top of the snowball list now that I got my worst owie interest rate dropped by 9 points ... (hey, it's down in the teens now!).Hugs,t.
Well, according to my debt calculator, paying the extra $10 toward each card helps tremendously in our situation. With the extra $10 per card, we would have our debt paid off 6 months earlier and save $5,771.32 in interest. This is on a very large amount of debt so I'm not sure what the affect (effect?) would be on a much smaller amount. I was hoping I wouldn't have to wait too long for this answer. *g*But...in your calculation did you figure that extra $30 to go towards the highest interest card too? Kim
Hi, John. Lots of great advice here, starting with relax! You're already doing the right thing.The only thing I have to add is a gentle reminder: if you can't take care of your normal living expenses without whipping out a credit card, you are living above your means. It's one thing to use them as a tool, but you really shouldn't need them to get by.Spend a month or two with zero (yes, zero, take a deep breath, you can DO this ;-)) charges, track every single cent you spend right down to the $0.25 for the newspaper and start making a realistic budget for yourself. Then you can get a solid idea of where you are vs. where you want to be and build your debt reduction plan. The success of which we can't wait to help you celebrate...Tamarian
But...in your calculation did you figure that extra $30 to go towards the highest interest card too? Nope, I sure didn't. I posted a correction immediately after my original post. It works out better to NOT pay the $10 and put that money toward the credit card you are paying down first.
You are in a common bind that many young Americans fall prey to!First of all, if you have MS Money or Quicken, they both have features that help you analyze your debt and create a plan for debt reduction - I have tried both and frankly, neither of them is all that user friendly, but of the two, I recommend MS Money - it is written for the lay person rather than Quicken which uses a lot of acctg jargonIf you don't have either of these programs (for God's sake, don't go out and BUY one on credit! shame on you for even thinking it!)...you can create a debt reduction plan the old fashioned way - pen, paper and calculator...!Write down every cc you have on a list; include the balance, the interest amount, the monthly payment.Then survey the list...and pick the highest interest acct to begin paying off first. For all other cards you will pay the minimum amount of balance due and on this card you will make as high a payment as possible to start paying on NOW. Also, stop using this card completely and if at all possible, wean yourself from using your other cards as well. Use the motto, if you don't have the cash, you can't buy it! Learn restraint!Look at your monthly budget...how much money can you pay on this card every month? Evaluate your spending for the last say, two months...where can you save $ to go against paying off your highest interest card? Evaluate what you are buying on all those cards and eliminate that spending if you can! Once you pay off the highest interest card, take the $ you were using to pay it off and slap it on the next highest interest card on down the line till you are debt free! This might take you a year or two to do, but each time you write that check to pay down debt, you will be one step closer to DEBT FREE!!! and free from that sinking of felling of failure...None of this new - read any of the popular books out there, whcih you can GET FROM THE LIBRARY
First and most obvious thing is to get rid of those credit cards. A consumer credit counseling service might have options, negotiate with your creditors and work up a plan that keeps both you and the creditors happy. I was in a similar fix and banks usually turn a deaf ear, the thinking being they have heard every excuse in the book when it comes to not paying a debt. Oftentimes the simple and truthful fact of NOT HAVING IT to pay goes unnoticed.
IMHO:Get rid of your credit cards. Tighten your belt until the debt is gone. Never use credit cards again and be happy LATER when you are out of debt.
I feel your pain! I joined a multi-level marketing, cosmetic company and found myself 10,000 in the hole! You could get a loan, but here a long-term solution.1. Cut up the cards, live within your means. 2. You may have to sell some things that you really don't need or use, but could use the money to pay debt.3. Consider contacting an agency called "Consumer Credit" They will help you deal with your creditors.4. Pay down the highest interest account first, while making the minimum payments to other cards. Once one card is paid off, apply that payment to another card and so on. 5. When you finally finish paying off all that debt, start saving those payments, voila, your new next egg.Good luck, don't give up.PS Friends of mine contacted creditors and asked them to lower the interest rate.Queenofnot
John, you sound like my daughter who just graduated college in 6K debt and is flipping out. It's not the end of the world although it feels like it right now. THe important thing is you must learn to buy things the old fashioned way.... save for what you want.....and at the same time you will save the high interest rate on cards, save the hassel of bill paying, save the stress of NOT paying the bills, save your credit record.....get the picture?Either personally contact each card company or get a company to do it for you, and arrange to make lower payments on each card, knowing that all credit on these cards will probably be cut off at this time until paid off. If they don't freeze credit useage, you need to either cut up your cards or hide them in a bureau drawer from yourself.Make a payment every month without fail even if it's not the total monthly amount due. Pay off the smaller card balances ASAP and then double or triple payments on the larger ones. In the future, only use a card whose balance has to be paid off each month.....it helps curb impulse spending but at the same time allows you to have a card when it's absolutely necessary.If you have a home and can conslidate the loan into it's equity it would save you some money in interest, but it makes it awfully easy to get yourself back into the same situation again.Good luck, and you can do it. Just learn we live in an "instant gratification" country with all our fast food, and tend to do the same with our material purchases. A good slow cooked meal is much more enjoyable and putting off purchases till you can buy them with cash will also make them much more enjoyable.Good luck, and keep your chin up.....I had ONE card with $10,000 one time and all due on the 1st of the month in total.Lee
You are not as bad off as I was four years ago. I was probably closer to $20k. You need to check into a debt management program. The one I used was Genus. They are on the web at http://www.genus.org. They were charging me $2 per creditor to make my payments for me. I paid the same amount every month and they reduced the interest on one to 0% and another to 6%. Let them take care of all of your loans and credit cards except one. Be faithful with that one and pay it down. Most people need at least one card to do anything today.The second thing that I recommend is to start a home business. You need to create income besides what you make. I am working on building my business, http://www.iemComm.com.If you would like to talk more, just send me an email at firstname.lastname@example.org.I am in the midst of writing a book to help people that are in your situation based on my experiences.Thanks,Richard
Simple solution. Pick the most preditiry,highest rate card, with the most uncoperative attitude and move all the debit there. Make shure it is a big national company with offices far away from where you live, and after legal advice charged on the card, File Bankruptcy. You keep your house and business tools, a car and even a small credit card to leave in good condition. Now learn your lesson, and do not do it again, following all the advise on the board for your future. In about 2 years you will get credit again, if you are a good boy and in 7 it disapears off your record. They want to make you a debit slave, and extend credit to people that should not have it in the first place, or too much. Invest the maybe $300.00 you now are paying in interest, and retire in 20-25 years. I believe that the Bankruptcy law was made in part to teach lenders a lesson, and so let the lesson begin
First, my story:I'm around your age, and, by December 1998, I had about $17k (CDN) in debt and felt just like you. Then, I bought (probably on credit) a book called Your Money or Your Life by Vicki Robin and (now, the late) Joe Dominguez. It really changed the way I thought about money and especially about the true power of money (i.e., financial independence).Although I was skeptical, I followed the advice in the book and now I'm debt-free and I invest about 14% of my gross income monthly into an RRSP (which, of course, lowers my taxes thus allowing me to invest more each year).My advice: cancel all credit cards except one that has no annual fee (even if you have a balance, you can cancel the cards - don't worry, they'll still send you the bills.) Pay off your highest interest cards first. I found that paying them off one by one like this gave me a sense of accomplishment. Believe me, seeing "0" balance on a credit card statement gives you much more pleasure than a new lamp from IKEA.Finally - and this may sound a bit nuts - start investing. I started with the magnificent sum of $25 a month. It's a psychological thing: it tells your mind what your goal is and keeps it right there in front of you.It's gonna hurt. Cutting back when you've been living beyond your means is painful. But, it's amazing what you discover (or rediscover). For example, I read a lot and I was spending a fortune on newspapers, mags, and books. Now, I go to the library and every time I check something out I almost start giggling because I feel like I'm stealing.One last thing: I'm also from MB (I'm in BC now) and I once had a great girlfriend in Portage la Prairie. Hope you're keeping warm there.Good luck, and read the book . . .fyi, my email is email@example.com
Hey John,Most everyone has some experience with living beyond their means--the ease of credit now makes the lesson harder. Have you read TMF stuff on credit cards and debt? On personal money management? That is a good place to start. For openers: 1. Cut up your cards now. 2. Figure out where your money is going--recap last two months of expenses. If you are running up debt for living expenses, you will have to either earn more or live less--smaller place, cheaper food, etc--or both. If it is spent on extras, then those go. 3. See if you can transfer all balances to one card with low interest. Check out Wachovia Bank. 4. Make payments on the card the priority after your nonnegotiable expenses. 5. If you have to reorganize your life to pay off the principle over and above the interest, you need to do that. 6. Don't focus on how much you have left to pay off, focus on making those monthly interest amounts go down. Good luck.SMA
Hi, John. This is my first post to ANY Internet board, but I couldn't resist responding to yours.I was in the same situation that you are in now...a couple of times, actually. When I decided that I was really tired of living that way, I took offensive action, and I have completely turned my situation around.The first thing that you need to do is cut up the credit cards. Some people won't do that as long as they have an outstanding balance, but you need to do it now regardless (if you haven't done so already).I know that you said that you have gone to the bank and various agencies for assistance, but have you called your credit card companies directly and asked them (threaten them) to lower your interest rate? If you have any accounts that have been open for a while, they might consider you a valued customer and work with you. Tell them that if they don't lower your rate, then you will take your balance and roll it to another credit card. To most credit card companies, getting a smaller percentage of interest from you would be better than getting no interest from you at all.The next thing that you could try, if your credit card company(ies) don't satisfy you, is to apply for a lower interest rate credit card and consolidate all of your outstanding debt onto that card. Pick a card with no annual fee. If you can't get a high enough credit line on the new card to hold the total amount of debt from all other cards, first transfer the balances from the highest-interest cards and keep the other card(s) for the time being...or I should say keep the statements, because you have already cut up the cards...right?!Pay as much off every month as you can. It is going to take a lot of time, so be patient.Also, realize, John, that if you find a credit card with a low interest rate, the rate will most likely be a "catcher" rate, and you might have to change credit cards when the initial rate would default to a higher rate (usually within 6 months). It's a real juggling act! But it can be done. Be disciplined enough to cut up all the cards as soon as you receive them. Keep the statements for the account information, but CUT THE CARDS UP!! That will prevent you from ever charging on the new accounts.And pray and ask God to give you wisdom in handling your finances! He said that if we would ask for wisdom, then He would give it to us.He gave it to me and I have now been completely debt-free, except for my mortgage, (and loving it) for over a year! And I have gone through a divorce and have sole custody of my two children. (And my ex is lousy about paying his child support.)You can do this, John. If you have really gotten to the place in your life where you don't want to live this way anymore, then you will have the motivation to work through it.The benefits will be endless...believe me!!
From one who's been there, 13K Credit card debt is not really a big deal, depending on how you handle it. Do you have equity in your home? Will you in the next year or so? What is the rate? Do you still get preapproved offers for platinum cards at 5% or so?If you have no house with equity, tear up your cards and keep making the payments, a little extra on your highest rate. If you have a home worth $150K+, then one year's 5% inflationary year will enable you to get halway out of credit card debt by absorbing it into a home equity loan. The advantages to this are that the interest rate MAY be lower, MAY be more stable, ARE more tax deductible, and ARE simpler and more restrictive. Simpler and more restrictive is the key here. You can't buy a dress or new reciprocating saw with an equity line that is maxed out. You can't get an on-the-phone increase in 1 hour or less. You only make one payment, rather than several, so it's harder to accidentally be late. So goal #1 should be to change the DIRECTION of your credit card debt. From increasing to stable, then from stable to decreasing, then from decreasing to nonexistent. Baby steps.Meanhwile, do a budget. If you know exactly how much your life costs now, and how much it could cost at best, you take that difference and apply almost all of it to ONE debt, month after month. If you find your REQUIRED bills exceed your income, then, my friend, time to consider selling assets to eliminate debt. If it can be avoided, though, I recommend it.
If you have a home worth $150K+, then one year's 5% inflationary year will enable you to get halway out of credit card debt by absorbing it into a home equity loanAND put your unsecured debt into your house. Then if fail to make a payment you loose you home.Not a good idea.Besides you are moving your debt around and risking your home in the process.john
Consumer organizations like CCCS can help negotiate payment plans for you but they will ruin your credit in the process.***************************************************************However, if your credit is already in the sewer, the CCCS costs a lot less that some of the debt reduction companies.Cthomas
Dear Credit Card Bind:First, line up all your credit cards. Pick one, lock it in the deepfreeze and use only for emergencies. Next, take a pair of scissors and cut the other cards in half. Now, pull out all the bills, look at the balances and the interest you are paying. Keep making the minimum payments except on the one with the smallest balance. Pay a little extra on it till it is paid off. Take that payment and add it to the payment of the next smallest. When that is paid off, take that payment and apply it to the next up the line. In the meantime, DON'T PUT ANYTHING ON CREDIT!!! Once you have gotten the payments under control, don't use the card unless you absolutely have too and pay it off when the bill comes in. Pay cash for everything you can. If it isn't a necesity, and you don't have the cash, save for it. DON'T USE THE CREDIT CARD for everyday purchases.
You might want to borrow from any life insurance policies you might have and use that to pay off a card or stagger the use of that money to pay the monthly amounts plus extra (more than the minimum) so you don't have to use your regular monthly income to apply to that debt. This could buy you some time until you can go back to your financial institution and show them what you have done to cut into your debt load.This could help change their mind about not helping you. Make them part of your team... not the one you're playing against.
The best plan is to follow theses steps:1) Cut up the damn cards tonight.2) Any credit card offers you get, tear them in half and stick them in the postage paid envelope and send them back.3) Take the credit card with the highest interest rate and pay 20% more than what your payment is. pay all the others at 5% over the payment due. Search yourself and you will find that there is always something you can cut back on to move some cash to your debts. Go to the movies only once the month and share a soda or drink water. cut back on the sodas or don't eat out as much. It will take some time to payoff the bills, but remember you did not run up the bills overnight either.4) Approach the creditors yourself, ask them to suspend the interest or finance charges, some will just for asking. Offer to settle for less up front. Maybe they will take $750.00 of a $1000.00 debt now rather then take a chance that you will default.These worked for me, I owed $32,000.00 and payed off all of it in 3 years.
Hey John, you have heard the term 2nd job. Not much fun, but it can help pay the bills.Jack
Contact the Consumer Credit Counseling Service. This is a non-profit organization that will provide both advice and intervention with creditors for a very modest fee (ten years ago, it was on the order of $10 per month). After putting myself and my wife through college and paying my mother in law's mortgage for three years (don't ask), I was $72K in debt (!) at a time that I was earning less than half that per year. CCCS helped us deal with the immediate problems of crushing debt and harassing phone calls and got us on the road to fiscal recovery. Over time, we were able to eliminate our debt, repair our credit to the point where we could by a house, and learn some priceless budgeting skills.Best of luck to you John -- you will survive this and by asking for help you are well ahead of the game.
Thanx to everyone!!! I would never have guessed in a million years how many helpful people there are out there! This was my first post and not my last. I now know what I have to do and what my options are. I never really knew what they were until now.Thanx againJohn
Here's what I learned froma past "Fool" email... (THIS STUFF REALLY WORKS!!!)Debt happens. And there are a lot of organizations that want to help you get out of it. The best known nationwide credit counseling service is the Consumer Credit Counseling Services (CCCS). It bills itself as a non-profit debt counseling service and has provided much-needed advice to those in serious debt. Here's how it works: If a debtor's situation is dire enough (they accept only the hardest-luck cases), CCCS will help develop a debt repayment plan for a reasonable monthly fee, which could be as high as $50 based on your overall debts and income. (Should you use the services of a for-profit organization, do not use one that asks for a large up-front fee.) CCCS contacts your creditors on your behalf and gets them to lower monthly payment requirements and either notch down interest rates or do away with them altogether. Why the generosity? Creditors don't want you declaring bankruptcy and defaulting on the debt altogether. Fools should know from whom the advice comes if they consult with CCCS. The organization is largely funded by "the credit industry" -- read: creditors, many of whom are credit-card issuers. They'll talk about a lot of options, but they'll never mention bankruptcy. Some customers have nicknamed CCCS the "Credit Card Collection Service," saying the organization is more concerned with getting the creditor paid quickly than insuring that the debtor has enough monthly income on which to live. The debt repayment plans they peddle encourage customers to turn over their paychecks each month for CCCS to dole out among creditors. The organization decides whom to pay and how much. Listen to their advice, adapt it to your needs, but never hand over control of your monthly income. In many instances you can negotiate lower rates on your own. But if your creditors number in the double digits, you may find it exceedingly difficult to get all of them to lower interest rates or work out an acceptable payment schedule. That's where the services of CCCS can come in handy. It has relationships with nearly all unsecured creditors and can usually negotiate lower rates. If you do sign up for a debt-repayment plan from CCCS or any other organization, follow through. Should you renege on the plan, it can show up as uncollected debt on your credit report for seven years -- a red mark almost as bad as bankruptcy. CCCS, and other organizations like it, develop debt repayment programs. (If you are in serious debt, read through our 9 Ways to Pay it Back.) There are other companies that offer to repair your credit rating -- usually for a large up-front fee. Fools, there are only two things that will improve a bad credit record: time and re-established credit. Debt doctors, credit repair clinics, and such organizations cannot remove negative information from your credit report if it is accurate, no matter how much you pay them. If you find information on your credit report that is outdated or inaccurate, contact the credit bureau directly to have it changed. *****There is only one tragedy greater than standing in your driveway at 6 a.m. on a Saturday selling your Flowbee haircutting system for five bits to an early-bird shopper. That is to be still paying it off on your Visa when this transaction takes place. That's exactly what will happen if you pay by the guidelines put forth by your purveyor of plastic, otherwise known as Paying The Minimum Amount Due. Fools don't pay by their rules. Revolving credit cards (unlike American Express, which requires you to pay the full balance each month) require only a minimum payment of just 1.5% to 2.5% of your outstanding balance each month -- a calculation cleverly designed to prevent you from paying off your balance before the apocalypse. Seriously, pay by their rules, and it'll take you 44 years and 1 month to pay down a balance of $4,500, even if you don't put another penny on the card once you reach that limit. And how much will $4,500 in cullottes, New Kids on the Block CDs, and products guaranteeing they'd permanently remove unwanted hair or make desirable hair grow end up costing? About $17,000. As we urge in Step 2 of 13 Steps to Investing Foolishly, the best financial decision you can make is to pay down your debt -- before you even start investing. Ask your kid, your niece, or the tike behind you in line at the grocery store, "Which sounds better, losing 18 percent of your cash a year, or making 12 percent on every buck you sock away?" Go ahead. We'll wait. In fact, while we're waiting, we'll do the math. Take an investor who comes into a sudden $3,000 windfall. Although she has $3,000 in debt, she has heard about the great returns she can get in the stock market. If an average year on the stock market pushes holdings up 12%, can she beat the 18% growth rate on her debt? Nope. A decade later, her debt has grown to over $15,000, her investments have grown to over $9,000. Though she started with enough money to eliminate the debt, she's now in the hole over $6,000. Until she sells those stocks. Then she'll have to pay 30% of the profit back to the government in capital-gains taxes. So she's actually out more than $9,000. So you see, Fools, that money in your savings account earning 1.5%, that can of change atop your dresser, even that portfolio that is bringing in above-average returns will not beat the interest accruing on your credit card. So roll up the dimes and pennies, dip into that savings account, even hold off investing, and pay down that debt. Use our Fool credit card calculators to figure out what it will take. Make a plan, and then stick to it.
>Hey John, you have heard the term 2nd job. Not much fun, but it can help pay the bills.This reminds me of my big weekend plans....Sunday I interview at Home Depot for a part time job to help pay down my debt. Do you believe they pay something like $12 an hour for sales and $13.50 an hour for cashiers?!!! What an excellent part time job.
I KNOW I am in trouble. Any advise?John, I was there once too. Am still recovering. I went to a place in my town called "Consumer Credit Counseling". They set things up with my card holders for a slower payment rate. They had me cut up my cards right there, right now, so I couldn't use them any more. It is amazing how many things we buy that we don't need when we have that piece of plastic in our pocket.Good luck on your journey.
Thanx to everyone!!! I would never have guessed in a million years how many helpful people there are out there! This was my first post and not my last. I now know what I have to do and what my options are. I never really knew what they were until now.Hi John!You've found the most helpful and supportive board in all of cyberspace, and we're glad that you'll continue to be here with us!Looking forward to more posts from you!Tony...but I still am...Off2Aruba
The way that I got out of credit card debit was to go to my credit union and ask for a loan. Credit unions are good. You get good interest rates. Since I didn't have an account there, I had to open a savings account. From then on, getting approval for the loan was easy. I made monthly payments and in a little over a year, it was paid off. What a good feeling! Now all I do is pay the credit card bill when it comes in. I always make sure that I am able to pay for it before charging it. That helped me. I was only about $2,500 in debt, but a debt is a debt and one less bill to worry about is definitely a stress reducer. I hope this helps you out.
Start carrying your lunch and stop eating. LOL! I think this is a bit drastic for debt repayment! ;)Teri
Don't focus on how much you have left to pay off, focus on making those monthly interest amounts go down.This one bit strikes me as being great advice -- I'm going to add an "interest paid this month" column to my debt paydown spreadsheet so I can watch that interest total shrink! Thanks for the idea!Tanaquil
A group that can really help you is called the Debt Relief Clearinghouse. They can be reached at 800-779-4499 or www.debtreliefonline.com. I have checked them out extremely carefully and what they do is exactly designed for your situation. They will take all of your high-interest credit card debt and consolidate it into one payment at much lower rates-typically 0-9%, so you can pay your debt off in two-three years. they are NOT making any new loans of any kind--no new credit cards, home equity or debt consolidation loans. They also do this by improving your credit record, not making it worse like Consumer Credit Counseling Services (CCCS) do. Debt Relief even rebates half your fees if you pay on time through what they call the Good Payer program, which no other organization that I know about offers. If you want to call me to ask more questions before you call them, I'd be glad to help. I am at 914-722-0032. I hope this helps. Jordan
Has anyone had experience with Dept Relief Clearing House? I am considering my options to reduce the interest rate on my BAD CREDIT Debt (I have a lot of it). I have checked out their website and I am cautious of it "sounds too good to be true". What is the hidden expense and why don't I get a black mark like the CCCS option? Any and all help greatly appreciated.
I also am looking for the right thing to do, every here says get a better job, or claim BK.....I ahve a job, I don't want another.....I will not claim BK....I want a way to clear this debt up, without paying 20 years and 100K in interest....
jowillgoLet me start out by saying I'm no expert but here are my thoughts.You mentioned expenses associated with being able to re-rent your house and getting stuck with a $900 electric bill. Hopefully your new renters are more responsible and you will not have these expenses again.I wish there were some way to go faster but if you don't want to get a second job for added income then you have to work with what you have. You said that you're paying your bills at $1300 a month but your only making $800 to $1000. Is your husband paying the difference?Some suggestions that have been mentioned on the board before are selling things. Do you have any assets that you could sell to get the snowball rolling?If you go to the library check out books by........1. Amy Dacyczyn - Tightwad Gazette Series2. Mary Hunt3. Johnathon Pond....and any other that you can find on saving money.Someone either on this board or on the LBYM board (which also is an excellant source of cost cutting ideas) was talking about that instead of a second job they made cutting their expenses a second job. Someone might remember who wrote it and let you know.Above all else do not charge anything else. You cannot borrow your way out of debt.If your at least making the payments I would count yourself fortunate that at least you can do that. There are many who have come to the boards in the short time I've been here who have not been able to do even that.If you want to answer any of the above questions maybe others can help some more. Good luck.Stockbuyer2
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