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Getting out of credit card debt
I'm over 25k in debt and I know I can get out of it but I need help please. Who's done it? How did you do it? I feel so overwhelmed.
Tue. Sep 25, 10:04am
One thing some people do successfully is take a second job, for instance an evening job. These usually aren't too glamorous, but if it's just for a few months.
Making two payments a month (which makes sense if you get a paycheck every week or two weeks) brings down the finance charges much faster.
Also, it depends on what the 25k went to. If you have a lot of stuff sitting in a storage locker, for instance, sell it on e-bay or through other ads. That way you get some money for the stuff AND you can stop paying monthly rent on the storage space. Ditto if you have >1 auto -- ask yourself if you really need a second one. Although not always practical, getting rid of a second vehicle reduces your reg. fees, insurance, gas consumption, etc.
Patience! It's just like losing weight -- you have to commit to lifestyle changes, and the debt goes down really gradually.
Tuesday, September 25, 2007, 10:27 AM
My husband and I paid 40k in credit card debt in the last 2 years. Plus at the same time we bought our first home, so this is in addition to our mortgage. 2 years ago I wouldn't think this would be possible, but we did it. First of all, I we got a line a credit with interested rate at prime for first six month, then it went up, but it was still better than credit card interest. Then we set up regular payment plan. In additon to that ALL additional money we got we put toward this debt. Tax returns, bonuses etc...We have not gone for holidays for 2 years!!! Our house needs new windows, and funiture, and we postponed that until we have money saved, since we didn't want to start the cycle of debt all over again. What we've done was hard and not for everyone, but we wanted to have children and did not think we could aford having children with the debt we had. Our motivation was great, that is probably why this plan worked. For others maybe a little bit more relaxed plan would work.
Tuesday, September 25, 2007, 10:36 AM
cut up all cards but one, and only use it for emergencies. Always pay off the full monthly balance and if, possible, double the payments in order to pay off the debt. When you write the check to the card company, add an extra $50-$100 to the check. You won't miss it and the $ is going to a better place.
Tuesday, September 25, 2007, 10:49 AM
One of the most important things is to cut your spending! I don't know what your situation is like but many people are spending more than they can afford to. I've paid off 20k in student loans in 2 years, but I don't spend much on extras, and all extra money goes to loans. Don't even think about making the minimum payments!
Tuesday, September 25, 2007, 10:55 AM
i used freedom point to consolidate my cc debt, around the same as yours. your credit score will lower a little for the first three months, but when your debt goes down and your available balance goes up, so does your credit score.
just make sure to keep on top of them--they didn't confirm a contract with one of my cc companies and it took 6 months and i finally got it resolved, but i suffered on my credit score because the cc company said i was late for 6 months.
on the other hand, one payment, lower every month for 5 years was worth it! they got my interest rates cut in half, therefore, more of my payment goes to the balanced owed, not interest.
with the laws that passed two years ago, they charge 3x the amount for the minimum payment--that's why i was forced to do something. now i'm two years into my payment plan and i don't have to worry about it.
keep in mind you will not be able to use those cards even if your have an available balance-they basically close them down. you also cannot apply for new cc's because that will void your agreement with the ones you are paying on. you also cannot apply for a car loan or a mortgage for 90 days.
let me know if you have any questions regarding this topic--i'd love to help.
disclaimer: i reserve the right to mispell, bring up old threads, change my mind, change my underware, and drink alcohol. ;)
Tuesday, September 25, 2007, 10:56 AM
Well the first step is to write it all down and create a plan. Right out which cards you have, the balances and their interest rates. If you can transfer any balances to a lower rate card do it.
Set a budget and determine how much you can apply to your credit cards each month to work to paying them off. You want to set it high enough that you are actually paying them off, but not so high that you are strapped at the end of the month and need to put charges on the card to get through till the next month.
Then you need to make the minimum payment on all your cards and then the rest of the amount you can pay apply to the highest interest rate credit card.
Card A: $10K @ 12% min payment $250
Card B: $5K @ 15% min payment $100
Card C: $5K @ 22% min payment $125
Card D: $5K @ 18% min payment $110
Budget determines you can pay $750 a month to credit cards.
So you pay $250 to Card A, $100 to Card B, $110 to Card D, and the remaining $290 goes to card C. Once card C is paid off keep paying the $750 a month, now $250 to Card A, $100 to card B, and $400 to card D.
Tuesday, September 25, 2007, 10:58 AM
WHO CAN AFFORD TO PAY $750/MONTH????
Tuesday, September 25, 2007, 11:05 AM
i'm the 10:56 poster using a consolidated credit service and my payments are $635/month for 5 years.
Tuesday, September 25, 2007, 11:11 AM
11:05 - anyone who takes home more than $750 a month has the potential. Duh.
Tuesday, September 25, 2007, 11:25 AM
1125-actually, you'd need to have $750 extra every month to afford that payment schedule. or have $750 being spent on "non-essentials"
the question was a bit rhetorical, an exclamation, an expression of shock.
duh. nice word to use. it furthers nothing but the notion that you are rude.
Tuesday, September 25, 2007, 11:31 AM
nature takes care of people like 11:25. Could you just imaging what living with that person would be like!!!!! OMG..
Tuesday, September 25, 2007, 1:01 PM
Yes, but if you are $25,000 in debt, you need to redefine "non-essentials."
Rent - yes, it is essential, but you could move to someplace with lower monthly rent.
Food - also essential, but you could make more meals based on rice and beans, and stop going out to restaurants completely.
Utility bills - you can cut down on your usage
Cable TV and cell phones - you can cut them or go to minimal plans
$750 * 12 months is $9,000. If someone has $25,000 in credit card debt, which is only getting higher b/c of interest, they better figure out how to find at least $750 extra a month. But if it's a goal, and is really necessary, it can be found. It's really just cutting back by all the stuff that they couldn't afford in the first place.
I work full-time, but babysit on occasion at night. I make $10/hour, which is very low considering that I'm an adult, and am capable of babysitting in wealthy areas. So, if they're out for 5 hours, I make $50. Say you babysat every Friday and Saturday night - that's $500 a month, "extra." Plus, you're not spending any money while you're there, so it's probably even more. And you can probably eat dinner for free while you're there.
Tuesday, September 25, 2007, 1:02 PM
you really don't have to figure out how to come up with an extra $750 a month. They've already been making the payments on the credit cards which is around that much a month. What they need to come up with is the extra money they WON'T be charging at Target or the grocery store anymore. Once i consolidated, it was a pinch at first, but there are ways to do it so you can pay those off with a lower interest rate and still buy the essentials you would have charged.
Tuesday, September 25, 2007, 1:09 PM
How much money do you spend on clothes, handbags, hair, nails, eating out, etc.? I'm always amazed when I watch these debt shows how much (borrowed) money goes toward these things. What got you into debt, I guess is the question. If it's 'stuff' sell it all and go on a spending moratorium!! It is a lot like losing weight - slow and steady with your eye on the prize!
Tuesday, September 25, 2007, 1:11 PM
Wasn't the $750 just an example not a recommendation?
Tuesday, September 25, 2007, 1:21 PM
Think of it this way- if you're comfortable with the amount you're paying a month, chances are you'll never get out of debt.
Pay as much as you can a month- make it hurt. Pay so much that you can't buy new clothes without saving up for a while and you can't make any impulse purchases. Pay so much that going out to eat is pretty much out of the question.
You do this for two reasons- the first is obvious- the more you pay, the faster you get out of debt. the second is less obvious, but just as important- you're teaching yourself not to spend money you don't have. When you do get everything paid off, memories of spending a year or two not being able to even go out for lunch are going to make you think twice about using those credit cards again...
Tuesday, September 25, 2007, 1:45 PM
1:21 I'm the 10:58 poster who used the $750 example and that's all it was was an example for illustration. Like someone else pointed out $750 a month is only $9000 a year. At that rate it would take almost 3 years at no interest with no additional charges or purchases or annual fees to pay off the credit card debt. Then if you figure say an 18% interest rate that goes up to 4 years.
Again the key is to do a budget figure the most you can pay without cutting yourself so short your going to be making charges at the end of the month. Yes that means potentially downsizing your car, your cable, your phone, reducing spending, etc. Then taking the max you can afford and setting your repayment schedule based on that.
Tuesday, September 25, 2007, 1:53 PM
This is 10:55 - 20k in 2 years - I put $600 on my student loan every month ($400 more than the required payment), besides all the household bills and car payments as well. Some months there was no extra money, but that's the way it needs to be. Any extra money (bonuses, income tax refund etc.) also goes 100% onto my loans.
I totally agree with 1:45 - you need to teach yourself to get by with less! I don't buy ANYTHING on my credit card unless I can pay off the bill completely that month! This doesn't mean I never buy anything for myself, but if I can't pay for it after making my loan payments, I can't afford it.
Tuesday, September 25, 2007, 1:54 PM
I got it 1:53p - that's what I was pointing out :) That it was a number used to to illustrate not a suggestion as to how much to pay.
Tuesday, September 25, 2007, 4:45 PM
11:25 here...wow, I point out that an inability to conceive of someone having $750 to cough up for debt payments is duh-worthy and I get called rude and hard to live with. At least, despite not being born into money, I've never had a problem managing my income and never been foolish enough to bury my head in the sand until my credit card debt ran me $750/month to maintain. I'd say that makes me a lot easier to live with than someone who needs to undo years of financial damage because they couldn't - or more likely, didn't want to - grasp the concept of compound interest and living within one's means. Sure, by the time you deal with the problem you need the CC for necessities like utilities, but only because you're still paying off the crap you ordered off the TV five years ago.
Tuesday, September 25, 2007, 5:39 PM
wow. maybe you're not rude, just bitchy.
Wednesday, September 26, 2007, 8:57 AM
I am so happy us foolish people can learn from ignorant, piece of coal up the butt girls like you. Did you ever stop to step outside of your box and put your closed mind in someone else's shoes for once instead of calling people "foolish" for credit card debt? Let's see, there's children, diapers, formula, vaccines, car repairs, college tuition, college books, food for the kids, divorce, single parents, illnesses that leave people without work, clothes, layoffs, companies down sizing, foreclosures are at a national all time high, LIFE HAPPENS! And because of it, people are forced to charge up their credit cards just to keep a roof over their head and food in their children's tummys. Until you've walked in their shoes and pulled that stick out of your ass, don't you presume to think people are "foolish" for doing whatever they have to do to get by. duh!
Wednesday, September 26, 2007, 9:07 AM
Depending on how much interest your paying and if your paying the min. amount I would say consolidate. A lot of the condsolidation firms talk to the creditors and get some of the interest charges dropped or cut. If you have high interest rates even paying $200 extra a month isn't going to get you out of debt in a year or 2. ANd if you take another job you'll just be tired all the time and is it worth it to pay an extra 300-400 a month? I don't think so. I consolidated a 20K debt about 11 years ago, used CCCS, and paid off my debt in 3.5 years and now have awesome credit with large credit lines. I never hold a balance and pay it off every month, my interest rate are also extremely low now. But it will take about 5 years after consolidating that you will start to see better offers and your credit rating will go up.
Wednesday, September 26, 2007, 10:17 AM
i couldn't agree with you more. I used Freedom Point (as stated earlier) and i am working very hard to pay my debt off. At least I am taking responsibility for my own debt and didn't choose to file bankruptcy on them or let them go to collections. We worked out a payment plan and more than lowered my interested in half!
Wednesday, September 26, 2007, 10:23 AM
I consolidated a debt of 21k and paid it off in 3 years and I only made 10.75 at the time and also paid rent and all that stuff. It is totally doable. You have to sacrifice and make adjustments and come up with a budget and only use cash. I had a weekly grocery budget, I never ate out, its just to expensive and I would have rather spent the extra money going to a movie. I think most people who buy coffee everyday don't realize how much $$ they are wasting. I used to get a drip everyday until I realized how much I spent a year, $730 a year just on reg coffee. You have to make a budget, be willing to give up things and not do much that costs money.
Wednesday, September 26, 2007, 10:29 AM
go to the oprah web page and check out the "debt diet". helped me!
Wednesday, September 26, 2007, 10:45 AM
9:07, I'm the one people turn to for advice on how to deal with their CC debt. It starts with stupid purchases like designer boots and $500 lamps and becomes groceries and phone bills down the line. If you hadn't bought the crap in the first place and weren't still paying it off when "life happened", you'd have money for the essentials and the unexpected. I don't really expect you to understand that though - you enjoy crying the blues too much.
Wednesday, September 26, 2007, 12:15 PM
if i were crying the blues, i would have filed bankruptcy on them or not paid them, but i take responsibility for my actions. don't you dare judge me or anyone else because a few people came to you for crappy advice because they bought $500 lamps and designer boots. you are assuming everyone spends like that and that's why they have credit card debt. you know what they say about assumption--makes and ass out of you and umption.
Wednesday, September 26, 2007, 12:27 PM
my friend's secretly-until-now drug-addicted husband of 3 years took her car and all the money out of their joint account and took off. she was left with 2 small children, a mortgage, a need for a car and no second income for all the bills....she resorted to maxing out her credit cards, taking out cash loans on a couple. it's been 2 years now since the bastard left and she's heavily in debt. i can tell you for a fact that this woman has not bought herself any thing like $500 lamps or any designer clothes/boots/shoes of any sort. she got into debt because "life happened". are you going to criticise her for not knowing everything about her husband? are you going to criticise her for not turning to welfare? are you going to criticise her for doing what she had to to get by? if she had a habit of buying things she couldn't afford, she never would have been granted the credit limits she had. "do not judge your neighbor until you have walked a mile in his/her moccassins."
Wednesday, September 26, 2007, 12:36 PM
12:36- one thing that can really help keep you out of situations like your friend's is to buy a house that you can afford on one income- That way, if one partner becomes unable (or in your friend's case, unwilling) to work, or gets laid off or whatever, you're still doing OK- things get tight, but you can make it through without resorting to credit cards.
There's a serious problem in the US with mortgage brokers lending the maximum that can be afforded, rather than the reasonable amount that takes emergencies into consideration. Call it free market or call it pedatory lending, buyer beware.
Wednesday, September 26, 2007, 12:49 PM
i don't agree that that can help her out of her situation. it may have helped her avoid the situation, but at the point when it became an issue for her to try to afford the mortgage without the help of her husband (whose income used to go towards the house and car payments), it was too late to figure out what she should have done. it doesn't make any sense to me to plan financially as if you're single when starting a family. she could not have afforded a car (with insurance, registration & maintenance costs), a house, clothes, food, school supplies and costs, child care, etc. on her own, with the income of a single parent. she would not have had 2 children if she, for even one second, thought her husband would do what he did. she was planning for a life with the man she loved who encouraged and supported the idea of building a family together (albeit under false pretenses...only noticable with hindsight). my point was that she only had credit cards to assist her and she used them. she could not take a second job because she couldn't afford that much child care. people actually do get inot debt without buying extravagant items or living lifestyles they can't afford.
Wednesday, September 26, 2007, 1:05 PM
absolutely! that's my point--i'm the 9:07 poster and that's how i got into debt. controlling husband used my cc to pay for child stuff and bills while he was pocketing money. i can't wait for the day when i don't have to buy shoes at walmart and payless and i can buy lamps at furniture stores. yes, some people get into debt foolishly. but not everyone!
Wednesday, September 26, 2007, 1:20 PM
My husband and I do not use credit cards. We save up to buy everything we need and if we don't have the money than we don't buy it. We do a zero budget which means that every penny we bring in we budget it. Getting out of debt is not easy. I would suggest that you check out Dave Ramsey and the Financial Peace University. He is on the radio and you can call and ask for help. He is straightforward and honest about debt. We do not need to rely on credit cards. If you have an emergency fund and 3-6 months of expenses saved then when life happens you are prepared. Just google Dave Ramsey and you will find the webpage. I am sorry for all those whose spouse ran off with the money. You can do this but it will be hard. I wish I knew then what I know now.
Wednesday, September 26, 2007, 4:03 PM
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