Debt Problems - Can anyone offer advice on debt problems?

Can anyone offer advice on debt problems?

My wife and I are 25 years old, we have over $50,000 in revolving debt, paying an average apr of 15%. We have decent credit as we pay our bills on time, but we are not able to get a loan because of our credit available / credit in use ratio. We pay over $1500 per month just in credit cards and pay out a total of $4500 per month in regular fixed bills, not including gas and food and entertainment. At this point we are just trying to continue to make our payments on time, but we have been living off of this credit; borrowing from peter to pay paul and now we are reaching all of our credit limits. What is the answer to manage this without bankruptcy? We work as much as possible and have no assets to sale or pull equity from. Our net household income annually is $55000. Any advice (other than suicide, lol)?

Public Comments

Manage your money more carefully. Stop spending too much on junk stuff that won't do you any good.
If you are absolutely unable to get a debt consolidation loan from your bank then I'd say try contacting Consumer Credit Counseling. It may look slightly bad later down the road when you try to buy a house but I wouldn't concern myself with that too much since you won't be getting a home loan anytime soon. CCC will call each creditor and work out a deal where they'll lower your required monthly payments and even lower the interest rate for you until you get it all paid off. It's the next best thing to prevent bankruptcy.
there is a company called star one credit....look into them
Most credit counselors will tell you time to budget you funds. Find some way to increase income etc etc. Some may suggest bankruptcy but the laws have changed Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged. All I can offer is some links to free services from the FTC to help you with this problem. http://www.ftc.gov/gettingcredit/ What you need to know about your credit. http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm Govt approved credit counseling agenciess. If you work with an approved agencie, they can buy you the time to keep from going under. Hope this is of help.
Well, you are right, suicide is not an option. So - 1) no new purchases - live within your means 2) pay all bills on time 3) try to single out one bill to focus on - start with the highest interest one - and make more than minimum payments to get that guy paid off 4) next target - your new highest interest bill - and apply the previous payment to the current payment here - and knock this guy out 5) etc etc etc ******** yeah I know, easier said than done - BUT I have a 21% interest card which pays 5% on grocery/gas/pharmacy purchases In the last 2 years - I have paid zero interest - because I pay it off every month - and my payback - over $400 It can be done - all the best have a great 2008
Look closely at all of your expenses, including food and entertainment, and see where you might be able to cut back - put that amount on the highest interest credit card each month. And don't buy ANYTHING that you don't absolutely need to survive - no new boots because you like them, only if your old ones have holes in them - forget Starbuck's, take your own thermos - pack your lunch - you'll be surprised at how those few dollar savings can add up. And if you need to replace a car, look at low price cars including used ones, not at a new SUV or Lexus or something - or drop back to one car and use public transportation. It's going to take quite awhile to dig out of the mess you've gotten into. You can do it. You have a decent income. Good luck.
I am very sympathetic to your situation. It's one many young couples find themselves in these day of cheap credit. Unfortunately, there is no magic answer - really. A credit consolidation company is only going to take all your little bills and make one big bill, plus of course, their fee. While I believe that you are doing everything you can to minimize expense, you simply have to do more. Some of these may seem minor (like bringing lunch to work, NO eating out, NO entertainment expense), but also some very difficult decisions include selling one of your vehicles (if you own more than one), or selling and buying a cheaper one. Cancelling the cable TV for a year, shutting off lights that arent necessary or replacing bulbs with lower wattage, stopping the daily newspaper are little steps that add up quickly. If possible, consider renting a room in your home to a college student, renting a garage space to someone with a classic car. Just realize that today is Jan 1. A year from now, your goal should be to be at 25-50% less in debt than you are today. Believe me a year goes fast, and the "starvation diet" will be uncomfortable for about 3 weeks, then you'll be fine. Maybe even a part time job for 6 months just to get you over the "hump" Lastly, start selling stuff you dont want or need on ebay. Do your due diligence as to the price you need to list it at to ensure a quick sale. Click the advance search on ebay and check the box that states completed auctions only. What people ask for an item has little to do with what they actually sell for. I applaud you for not considering bankruptcy like so many others who think it's just as easy to walk away from their debts. Your credit score is as valuable as your reputation. Good Luck and HNY PS. Here's a great little financial calulator website that I have used for years. It's full of good ideas (like how much quitting smoking or stopping Starbucks is worth). It's free and has no ads or spam http://www.hughchou.org/calc/
you need to pay more on your credit card payments instead of just mim payment due, for example if you got 4 cards pay the min on the 3 cards with the biggest amounts an pay more on the small one till payed off then tackle the next card an so on ,, quit spending money on frivalas things an do things that dont cost money dont go out to eat all the time eat at home an take your luches to work with you for example if you go to kfc an get a 2 pc chicken dinner ,you can go to grocery store and buy a whole chicken for what you payed for that one dinner same thing as a hamburger at a hamburger place one hamburger will cost what it will cost to buy 1lb of hamburger at a grocery store when you go to buy something look at it an say do i really need this ,, i have been down this road before
Firstly, how WONDERFUL that you are WAKING up at only 25. If you can rid yourself of this debt in the next 3 to 4 years, you'll have a liftetime in front of you of pure weatlth. Took me till I was 45 (3 years ago) when I realized that we were $78K in debt on credit cards alone. (not to mention our house and car). When I first realized all this I just about had a stroke - no kidding. 3 years later and I am happy to report that we have just under 16,000K in credit card debt. I am still working on it but expect to be out of debt completely in less than two years. You need to change your mindset and treat this as a war, because that is exactly what this is. You have a huge battle, but you CAN do this. You are up against credit card companies with billions to back them, all their high end marketing to CONVINCE you that you need some dumb trinket, and off you go into debt. It's horrible. Here is what I did to fight my battle. 1. CUT up all credit cards (save one for an EMERGENCY purposes only). You will NEVER get out of debt if you continue to use them. So don't. NOT for anything. Don't even carry the one that you keep for emergency purchases (like a car repair) on your person. You don't need the temptation. If I can't pay for something in cash, I don't buy it, period. This was the hardest thing for us to get over. Its a mindset that you must learn to grab hold of. 2. Keep track of every penny that you spend. If you have MS Money or some other inexpensive money tracking software, begin using it TODAY. You will be AMAZED at where you are spending your money. Run the reports monthly to see where your money is really going. What's the point of using a tracking system if you don't REVIEW where your money went? You will find a million places to begin cutting. Example; if you have the internet, you don't need a daily paper coming to the house. Wife getting her nails done? She can do them herself. Cable TV, cut it out altogether or reduce the package - there are probably tons of channels you never watch anyway. In other words, if you are tracking what you spend, you WILL find a ton of places that you are both comfortable disposing of while you fight this battle. 3. Call EVERY credit card company that you have accounts with and ASK them to reduce your interest rate. (I took two days off from work 3 years ago to do this and several of them DID just by asking.) If you are paying on time, you may find that many of them will reduce your rate just by asking. If they don't reduce right now because of your overal debt ratio, TRY AGAIN in a couple of months. Mark your calendar, call them again and ask again. I did - it worked. This will save you HUNDREDS of dollars over interest to these slobs. (yes, that is what they are). 4. Look around for creditors that are willing to give you excellent interest rates for balance transfers. BE CAREFUL though, because many of them are only for a period of time. I found one (MBNA) that offered me a ZERO percent interest on balance transfers for 12 months & one for 18months. I took them up on it. I transferred 15K to two different MBNA accounts (30 grand total), and had one at zero % for 12 months, the other 15K was at zero % for 18 months. The trick is to watch your calendar LIKE A HAWK and as soon as you approach the end of that period you have to have a plan to do something with the remaining balance. Either pay it off or find another card that will allow you a balance transfer at another lower rate. Essentially what I did was put 30K over 2 cards at ZERO interest. This saved me a TON of money. But I was diligent and made certain that when the intro period was over, I found another card (one of my other credit card holders actually) that offered me a 4.99% interest for LIFE if I did a transfer. That is what I did. The point is, you have to watch these dates and USE the credit card companies to YOUR advantage, not THEIRS. Cause that is what they COUNT ON. Most people don't watch the dates and then when the intro period is over the credit card company starts raking in the interest. I play the game, I just play it MY way now. Also, if you end up doing a balance transfer with a new credit card company, they will send you a credit card. CUT it up the MINUTE it arrives. You are doing this SOLELY for the benefit of the transfer and you dont want to be tempted to use the cards on new purchases. The purchase APR will be much higher than the balance transfer APR. 5. I also had a 401K with over 30K in it. I made a painful decision and because we needed immediate relief on our monthly outgoing expenses, I borrowed 16K from my own 401K to pay down some of the biggest card balances. The monthly payment on these credit cards was more than the payment back to my 401K, so I got immediate relief by a reduction in outgoing expenses of a little over $200.00 per month. I have one year left of payments back to my 401K and then I will have an additional $389.00 per month in my paycheck. Cant wait! As soon as that happens, I'll be putting that $389.00 right onto the remaining last credit card in addition to the normal monthly payment. 6. The remaining credit cards that were left, (there were six left), I paid the minimums on 5 of them and made double payments on the one that had the highest interest rate. When that card was completely paid off, I took the amount that I was paying monthly to that card, added that to whatever amount I was paying on the 2nd highest interest card and paid that off. With each card that you pay off, you repeat the same process. Take all the previous monthly payments add them to the payment on the next card and so on and so on. You will eventually pay them all off. 7. Don't try to pay extra on multiple cards all at once or you will get nowhere. When a general fights a battle he does not break up his troops and send them to 10 different places. Each troop would be defenseless and ineffective. He puts ALL his men in one place and they fight one magnificent battle to end it all. Your finances are the same. Put all your effort on one card at time, pay it off and move on to the next card (battle). 8. Whenever you find yourself with any extra money, as much as possible you should be putting it towards your highest credit card as an extra payment. If you get a bonus from your jobs, income tax refunds, birthday money - whatever, use it to pay down the debt. Seems extreme but trust me on this, you don't want to get to the point that I did and wake up in your 40's one day realizing that its even more out of control. If you can truly get this in check now over the next few years, you will honestly have a lifetime of freedom and wealth staring you right in the face. Paying out what you are paying each month to these sickening credit card companies (who by the way are getting FILTHY RICH ON YOUR HARD EARNED MONEY) is what they thrive on. Time to start using them to YOUR advantage and making it your personal goal to stick it back to them. You will feel really great about yourself that you achieved this on your own without going bankrupt and you will have the financial world by the cahones (if you know what I mean!) Good luck to you and your wife and START TODAY!!
I can bet the peach pie I am about to eat that $20,000 to $30,000 is a car. If I am right, sell it and by something cheap that works. I listen to finance shows and the people that call in with that much debt have expensive cars. After that, list the debts from smallest to largest and pay the minimums on everything but the smallest. Attack the smallest with everything you've got and then move on up until the largest debt is paid off. As far as the consolidation loan is concerned, going into more debt to pay off existing debt is not going to help. I would call the credit card companies and negotiate a lower interest rate. That will shave off a little bit.
The advice from coolman293472 is absolutely the best on here. Even if you have to eat a few thousand by paying off the big car payment --- DO IT --- and start applying that money towards the debts. Buy a CHEAP run - around town car to get around with. (If you have two cars with large payments - get rid of both of them!) 1. Make absolutely minimum payments on ALL of the debts and put enough into a savings account to build up $1000 that you are NOT going to touch unless it is a dire emergency (something that you, in the past, would have used a credit card. 2. Follow the rest of coolman293472's advice. Get started .... and good luck!
well i just answered a fellows questions that is 100k in cc debt to make you feel better. With posting an aswer in here is a good way to start. I would suggest a financial planner, look at those non profit ones, you will get through this even if you pay 6k is a good start AND hopefully your incomes will increase over the years too. good luck