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I read somewhere if you owe more money than you make in a year there is no way to get out of debt. Is this true? I have been in debt for a long time. I make a good salary but I have never managed my money well. Every time I thought I would go under I found another credit card or loan to keep me going. I was getting by making minimum payments but last year I lost my job. I found a new job but took a 25% paycut.
All my credit limits are maxed out. I survive by making minimum payments, alternating who I pay late and charging expenses when I have any room on a card. I have cut expenses every way I know. My work schedule makes a second job virtually impossible.
I make $56,800 and I owe $65,000(not counting my mortgage). I had a session with CCCS but it doesn't seem like their plan does much for me. I am around $300 a month short of being able to live and make my minimum payments. I know if I keep charging I will never get out of debt but I don't know what to do. Is my situation hopeless? Any suggestions will be greatly appreciated.
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drowning100

You'll need to post your income and expenses for everyone to see where you are, then everyone will give you ideas and advice on how to improve your situation.

Stockbuyer2
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I read somewhere if you owe more money than you make in a year there is no way to get out of debt. Is this true?

It is absolutely not true.

What needs to happen is a reduction of expenses such that a person does not continue to spend more than s/he makes. Then significant debt paydown can occur.

When I got my first job after graduate school, I had $35K in debt and I made $39K a year. It took me about 4 years or so to pay down $23K of that (the rest is ed loan) and save about 1/3rd of that in an efund.

It may take some time and perserverance, but I would argue that the only time it really *is* hopeless is when credit cards total 2 or 3X one's salary. That is probably an amount that is difficult to get out from under.

-b-
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No, it is not hopeless.

But you may have to take in a roomie or something to help out with household expenses.

Please post details. There are people here who've gotten out of worse situations, and I know you can join them!


Keep hanging on, and post often.


Mare

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No. of Recommendations: 7
It is not hopeless.

BUT you will have to make some serious lifestyle changes. More cuts than you care to make. You will have to be truly committed to change and willing to accept major changes in your view towards possessions, spending and money in general.

If you are committed to being debt free, YOU CAN DO IT.

As someone already suggested, post your itemized monthly budget and let us take a whack at it. Be sure to describe your family situation (married/single, kids, etc.). Do you own your home or rent? Be sure to post balances of all loans with terms (interest and length/type of loan).

MLK58 has quite a testimony. She got out from under something like $132k in debt. Her life changed and now she is debt free! She is one of my heroes. The actual proves the possible. You can do it too!
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MLK58 has quite a testimony. She got out from under something like $132k in debt. Her life changed and now she is debt free! She is one of my heroes. The actual proves the possible. You can do it too!

Aw, shucks!

But yes, my DH and I got out of $137,932 in unsecured debt, plus (I never really talked about this on the board because it was too embarassing) another $80,940 in 401(K) loans and a loan I took out to buy into my law partnership. That total was definitely more than our combined annual income, but we got out in 40 months.

It was not easy, nor was it fun, but it was the best thing we've ever done and it feels GREAT to be on the other side!

Here is my Happy Dance post: http://boards.fool.com/Message.asp?mid=18984128&sort=recommendations

And here are some earlier ones you might find helpful:
http://boards.fool.com/Message.asp?mid=15238717&sort=recommendations
http://boards.fool.com/Message.asp?mid=16603175&sort=username
http://boards.fool.com/Message.asp?mid=16823312&sort=username

It CAN be done!



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It was not easy, nor was it fun, but it was the best thing we've ever done and it feels GREAT to be on the other side!

It CAN be done!


Yes, it can. DW and I paid off almost $90K in debts in two and a half years. We now OWN our home and are within $50K of owning our business and property valued at somewhere in the $500K range.

It takes perserverence. It takes determination. It takes motivation.

Most of all, it takes a change of attitude.

Once you look at yourself in the mirror and say, YOU ARE GETTING OUT OF DEBT, DA*NIT!!! you are more than halfway to becomming debt free.

Good luck and STAY MOTIVATED!!!

JB

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No, it is not hopeless. You've already started by admitting there's a problem and you need help with it. You'll have to make some difficult choices and do some stuff that's not fun, but you can get out of debt.
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"Any suggestions will be greatly appreciated."

You must go into a "shutdown mode: reduce expenses to the absolute minimum to sustain life, and pour every remaining penny beyond those expenses into debt reduction. Many, many ways to do it, but my strategy would be to literally do nothing that cost anything (beyond the essential bills to sustain life) until I had those debts paid off. Cold turkey is tough, but once you are out of debt, YOU will be in charge. I work in a place where some of the management try and use monetary threats ("no bonus this year" for example) as a motivator for those in dire financial need. We could care less if they don't give us a bonus, because we have no debt, and aren't beholden to anyone. its a pretty good place to be - and YOU WILL GET THERE! Good luck, and remember, your BEST credit is your own cash.
johnmoni
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I read somewhere if you owe more money than you make in a year there is no way to get out of debt. Is this true?

No, it's not true. And wherever you read that, don't ever read it again...they're idiots! Just look at mortgages for example. That's a form of debt and it's normal to have a mortgage that is over 2 times your annual salary.

As the others have suggested, post your income and monthly expenses and we can give you some advice on how to cut expenses. If you're uncomfortable with this, just take a look back at the history. Lots of people have done this and gotten some great advice here.

When you're this far in debt, plan on making a lifestyle change to overcome the debt. The most important part of the process is your perception of the change...whether you feel it is chaining you down from all your fun or whether it is liberating you from the biggest source of stress in your life.

-Agg97
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It is NOT "hopeless" - it is just that most people who owe more than they earn in a year have developed very bad spending and budgeting habits and don't ever take the steps needed to get out of debt. Plus, there's the psychological part that is just plain depressing - makes you want to just give up and declare bankruptcy.

It IS intimidating. It IS difficult. But it IS NOT "hopeless" or "impossible".

Post details - there are a lot of smart people on this board who can make suggestions. Marital status? If married, possibility of dual incomes? You owe $65,000 - credit cards, personal loans, car payments, I assume - be specific by type, amount owed, available credit limit, and what the interest rates and minimum payments are.

Then, post your expenses - rent, electricity, phone, food, gym membership, etc. You may want to cross-post on the budgeting board.

Your last resort might be to declare bankruptcy, but you need to explore all your other options first.

In summary, my suggestion is: Post Details!

jrsmith13
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Wanted to add, there are some good books on this subject that helped me gain a perspective and the courage to tackle the problem, maybe will be of use to you - my favorite is Jerrold Mundis, "How to Get Out of Debt and Live Prosperously", also "Your Money or Your Life" (forget author), and Mary Hunt(?) "Debt Proof Living".

All of these will make you know you're not alone and may offer ideas you hadn't thought of to turn the tide to the good.

Plus keep reading this board, lot's of stories and ideas here!

Best wishes,
Ghizwiz
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