Getting rid of your debts...
polycounter lvl 17
Hey I was wondering if anyone else has been in this situation and/or has advice on it. I have student loans, car payments and credit card debt that makes for some pretty formidable amount per month, and while I'm working towards the promotion diligently, I'm wondering if anyone has advice, tricks, companies, etc that help bring these debts down in a more efficient manner than doing the usual payment plans...?
Replies
My personal priority order was car payment first, credit card second, and student loans 3rd. Student loan companies are familiar with people not paying on time because it happens so often, and so are easier to deal with if you miss a month or something like that.
What I did was put my extra money into my credit card debt, sometimes even choosing to not pay my student loans some months and instead putting the 3-400 dollars towards the credit card.
I am in the same situation and I just consolidated all my student loans. I should have them all paid off by the time I turn 57. YAY!!!!
But yeah pay extra when you can on your credit cards and get that balance to $0.00 but when you get it to a $0.00 balance don't cancel the card as it will show that on your credit report. Keep it open and it will continue to show good credit history.
Do you have mortgage to deal with as well?
One good trick that doesn't help pay off much faster, but does help build good credit is to always pay more than the minimum. Even if it's just a $1 over. From my understanding there's basically just a checkbox somewhere that says, "Paid more than minimum" and so paying $1 over, checks that box and helps build credit.
Minimum payments are dangerous because they do not reduce the amount you owe, they just keep the collectors off your back. Only making minimum payments will keep you in debt indefinitely. It's basically a penalty for owing them money.
<u>Before exploring debt consolidation options:</u>
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figure out how much money you are dedicating to your debt per month, and figure out how long it will be before all these loans are paid off. Keep these two numbers handy:
-dollar-amount per month
-number of months
When talking to the consolidation specialist, ask them how much they can reduce the number of months and/or the dollar-amount of each payment. Also, ask them what their fee is.
See if you can get rid of monthly payments of any kind. Netflix, reduce rent, sell your car lease ect ect. The more cash you can open up to dedicate to debt consolidation then the faster you can get back to normal life.
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<u>Things you should never do:</u>
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*bad* Withdrawing cash against your credit card. This is not the same as buying something!! This style of borrowing starts incurring penalties instantly, and the rate is much higher. DON'T EVER MAKE THIS MISTAKE.
*bad* Only make minimum payments per month on all your debt.
*bad* Ignoring payments. Collections can garnish wages directly from your salary if it comes to that. Especially if it's debt associated with medical bills.
*bad* incurring more debt while you pay off existing debt.
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When I had my first job I got a credit card. I ran up a $3000.00 bill and did all the 'wrong' things listed above. The way I got out of it was making huge payments way above the monthly payments.
I did a calculation after i was out of debt, and relaised that i had spent +$3000.00 in debt penalties to borrow $3000.00. Basically, by using my credit card irresponsibly I paid double for things I bought.
Now I'm the opposite. i pay off my cards each month. i only have cards that report my responsible spending to the credit agencies each month, and I make sure that my credit score is going up instead of down. Borrowing money should serve you, not hurt you. In one year my score has gone from 641 to 718.
-R
My general rule of thumb is to pay off the highest interest debts first, as these are the ones that will generally burn you over time. If your credit is shaky, it's not uncommon to be paying 20% interest on a credit card. The minimum payments won't even cover the interest for this. You'll be falling behind. I don't want to lecture anyone in basic math, but high interest rates can be a real killer.
Take into account that for $1000, at twenty percent interest, you'll owe $1200 after one year, $1440 at the end of two years, $1728 at three, and $2073 at four years. So what you would owe doubles every four years. Sure, by making the minumum payments this ammount will be a bit lower, but consider that if you take four years to pay off the debt, you'll end up spending double what you initially took out. Ouch.
Tranfer any high interest credit cards to other cards that will give you a break in the rates for transfers. You'll see the adds all of the time along with your bill, stating discounted rates for balance transfers. These rates are usually lower than 10%.
Other than that, cut back on your spending. If you're buying new games, comic books, music, eating out, clubbing, or whatever regularly, this can very quickly add up to hundreds a month. Just watch what you spend. I'm not saying to be a hermit, but for me if I ate out every day at lunch, that would be $200 bucks a month easy. Instead if I just eat out once or twice a week, it ends up being more like $60, meaning I've got an extra $140 to pay off bills.
Just try pinching pennies for six months, and you should have quite a bit more money to pay off bills. You really have to learn to live within your means, and it's better to start those habits early rather than declaring bankruptcy at 25 and being screwed for the next decade.
I choose to deal with the fact that I will be in debt for the rest of my life (school loans now, a mortgage eventually) and make the minimum payments without worrying about it. Sure I am spending a lot on interest, but I am happy and I dont have to "suffer" for any period of time by pinching pennies and eating ramen.
Maybe restrict your entertainment to "X" dollars a month max.
I know they have some decently large and clean roads on the east side... Unlike over here where I continually have to watch for pot holes.
Part of the issue is that I find we dont have a steady way to watch our spending with CC and Debit cards. No longer can you note the spending in your check book which at least gives you a visual idea of where all your money has gone recently. If you are lucky enough to have a PDA, the extra 30 seconds or so to mark what you spent at each place can help you decide where money leaks are. Versus just seeing total sums spent after the fact.
Pseudo, your nothing but a wannabe serf!!
Pay off the highest interest first, whilst making minimum payments on the others.
Switch to an interest free credit card, do a balance transfer. That'll kill interest for 6-9 months. HOWEVER, it'll probably be the highest interest after that, so still try to pay it off first.
If you have a credit card, and you are paying off a car, and then you get a new card with an interest free lump sum, take that and pay off a chunk of the car with it.
When anyone EVER offers you interest free money, TAKE IT.
Find out what eats most of your income. What are your expenses, what you spend on fun, is there money left over for you to save. Find out how much you spend on fun, and see what you can cut. What I learned through from my experience was that one, don't count on making more money, because it usually doesn't work as expected, two cut what you don't need. Save ten percent of whatever you make each month. Example, you use high speed internet, and have the expensive cable package. Cut the cable package if you don't use it to the fullest, keep the high speed internet. Spend less on fun. Get a forbearance on your student loans if your credit cards or car loan is out of control. Use that money to fix that issue. Get one if your student loans are not letting you pay off your credit cards as well, especially if it can reduce them or eliminate them. See if you can reduce what you spend on food, and I don't mean starving yourself, I mean cutting out junk that isn't healthy and keep your utilities as low as possible each month. Something as simple as turning off your PC or PC monitor when you are not using it will save you money. If you don't believe me try it, and no it won't kill your system, I shut off my monitor every time I don't use it and it has lasted me over eight years. The budget will show you what you are doing, but it only works if you are honest with yourself. Do you eat out all the time, things like that is what you need to know on paper. When you see how much spending ten bucks a week on fast food does to your budget you might decide you want to spend that money on other things like say toys, or upgrades to your PC. So if you spend 100 on fun for example that's money you could have used on your plastic problem.
Those debt assistant companies usually help people get more screwed because all they want is their share, and usually the solutions they offer can't be kept by the person in the long run so they get screwed even worse. Also they like to to get their clients to enter a blind agreement and sign their rights over to them. They will make you make a budget, and try and make you stick to it, even if you can't, they will charge you for this as well. This is shit you can do yourself and you can talk to your creditors, but be careful because their help sometimes fuck up the payment plans they set up for you, so you always need to be on top of them. Don't pay the minimum on your credit cards because it's pointless and a waste of money. Most of the minimum goes to the finance charge and not your balance. If you have to pay 100 try and pay 150 so in a few months the finance charge goes down.
When you are done with your debt, get in the habit of paying yourself ten percent of your wage a month, and save. Look into things like Roth IRAs so when you get old you are not working your butt off at Walmart for crap pay.
Pseudo what happens to you when life happens and you have to deal with some illness or other unexpected event. Shit happens all the time so just be careful, it's real easy to lose the income you get and then making that again isn't always possible.
Alex
get rid of the 'extras'
*text msg'ing/internet/media stuff on your cell phone
*cable TV (NO IT IS NOT NEEDED!
*downgrade your internet to a cheaper package/company or worse case, get rid of it if you have free access at university
try buying cheaper generic brand stuffs(a lot of generic brands are the same as name brands, like here, the Food Lion grocery store brand milk is the same as Southern Belle, same factory. Same with Corn Pops, there's only one factory in the US for those. generic brand comes from the same factory)
try to not drive around as much, walk if you can
eating fast food can chew through your money fast
cut down on/cut out soda
cut back on booze/cigarettes (i hear groaning from the crowd)
if your credit card interest is high, call them and see if you can set up so that it can be lowered if you make payments on time (may take 6+ months to go in effect but 15% is better than 25%).
if your bank is screwing you (im looking at you US Bank!) then look into switching to someone else.. my friends use US Bank and have been dicked over many times(especially since this is a college town and US Bank is partners with the university). see who's good by asking people you know. good bank service can keep you aware of your current situation so you dont overdraw and all that. for instance my bank (Citizens Bank of Morehead) is swifter with showing my AVAILABLE balance(pending transactions already taken out) whereas US Bank just shows the balance(pending transactions not taken out yet). sure good bookkeeping habits are best but little things like that can help a lot in the long run. i know a few people who have been burned by their bank showing one balance when they actually have much less than what is shown.
dont whip out the credit card so often
get rid of any magazine/netflix/etc subscriptions
dont really have to starve to save money(been there, done that, very very bad). just do without some bling until you can get things a bit more controlled.
an appropriate lyric from Thee More Shallows' "Dutch Fist,"
fast forward two hundred years / the dutch fist has adjusted it's grip / the bank branch fat managers' bosses / are using credit like they used to use the whip
which is true, of course. in the western world, while we live in affluence, people are trapped in cages of their own desire.
none of blathering commentary really applies to the necessary stuff like student loans... but you know what i mean. spend on credit only as much as you absolutely need.
aaand here's to the least helpful response in this thread! whoopeee
Gav
Go without the things you don't need.
Minimize the things you do.
Own more than you owe.
Don't buy a brand new car. Don't smoke. Don't eat out everyday. Don't buy the plan with all the extras. Don't watch cable...etc. Don't skip payments. Sell any old items to help buy new ones. Basically just learn to spend less, wisely, and save. It's a skill most companies don't want you to know...it's bad for business.
I only have so much debt that I can easily pay off if I chose to. Having a good credit score is useful in this society. I haven't gone as far in life as many, but I'm happier knowing the things I own belong to be, instead of borrowing a life I can't afford. But, sometimes I wonder if employers look for the guy in the most amount of debt.
On the same note, don't sell things you can't live without, eg. your food or computer or clothes or XB360.
And try not to worry about it so much and live the simple life. I actually feel a lot healthier now that I have given up drinking for a while. And I have more money and I don't break myself or make a fool of myself.
Since I'm unexperienced with debt, can't really give you good advice. But.. I've known some people who were shifting their debts to the newly opened credit accounts that offered low intro or low fixed APR, some with even 0% in first year. So, as Rick said, if you can get those cards and use them to pay off your high interest debts, you might be able to save good money that would otherwise go on paying lots of interest.
When I graduated from College and got my first job in the industry, I moved in with my parents (ack!). Not every 22 year old's dream, but I had a free roof over my head and free food. During this time I put probably 90% of my salary toward my credit debt and car loan. Six months later I was out of debt, owned my car, and moved out of my parents' house.
Since then, I have yet to owe any money. I only have one credit card which I use to build my credit score. Anything I buy, I buy in full. Even if it is thousands of dollars, I save for it.
Remember they don't give out loans/credit out of the goodness of their heart, they do it because they know you will fuck yourself over. So probably now is a good time to start eating packet noodles and playing online games instead of 360 etc
I've been doing that for 29 years and everything is fine
Advice for myself is to buy some shelves for my kitchen, so I can put food on them. The problem with Japan is you can eat out every day for next to nothing. It is more expensive to buy food.
Some good advice in this thread, but don't cancel your cable... you need something to do while sitting in your bare apartment while all your friends are out drinking their wages.
Soap Box: (come on you didn't think you'd get a post out of me without the soap box?)
- I don't think hiding from credit is the right way to go about things. It won't get you out of debt it will only keep you from racking up any kind of credit. You need clean credit for big ticket items and not having any credit history makes you almost as much of a risk as having bad credit. "I can get fat from eating food so I'm not going to touch it!" I think the key thing is moderation, and stay away from the crap.
- Credit's not for everyday spending or even for the occasional buying spree, it should be there to cover things you can't cover on your own. A trip to the ER, unexpected dental costs, repairs to just about anything, you lose your job, rent is due and its out on the street if you don't pay it. In olden time that's what savings was for but everyone lives pay check to pay check so that doesn't happen. The problem is that we're all told that we live in a great country and everyone will be a rock star millionaire by the time they're 20. You know who tells us that, credit card companies heh =P
Getting out of debt:
- Interest rates just took a dip, theres a chance that you can refi those student loans and get a much lower rate, especially now that you aren't such a risk. Don't go for low monthly payment loans, you want to chip away at that principle as fast as possible so make double payments, just keep in mind that whenever you refi you reset your loan and you pay mostly interest for the first part of the loan.
- Now might be a good time to look into getting a house since rates are down, prices haven't fallen that much in our area and it doesn't look like they will. I know what you're saying "Jesus vig more debt? seriously what the hell are you thinking?" I can only speak from experience. 5 years ago I bought a condo it's value has gone up and up every year and this year I refi'ed (a healthy chunk of that went to get out of the loan I was in, it always does, bastards) BUT I paid off both my cars, and wiped my credit slate clean.
- I fully endorse getting a line of credit and or a credit card. I've had some big expenses pop up at difficult times and I was able to get around them because of those two options. Just don't treat your credit card like your debit card and you'll be in good shape. If you do find yourself reaching for the credit card to pay for something ask yourself if you want to pay 3 times what its worth, and do you mind paying for it years after you've thrown it out? If the answer is yes then go for it.
- Think about changing your tax status. For a long time I was claiming like I was single with zero dependents so I would never end up owing, I wanted that big fat return. Instead of getting a fat check at the end of the year the tax works out to be a wash and I gave myself a monthly raise, yeah! You can change your tax status at any time so you can dial it up and down at will. Check out what your checks will look like with your adjusted tax rates.
http://www.finance.cch.com/sohoApplets/Tax1040.asp <- Tax status calculator, shows your check is before and after.
http://www.irs.gov/pub/irs-pdf/fw4.pdf <- pdf version of the 2007 W4 form. Turn it into HR and enjoy your raise.
- If you get a return, don't blow it on crap, use it to pay off debt. yea it sucks, sure your rig could use an upgrade or you might need to treat yourself and feel pretty again, whatever... Just suck it up, your knee deep in debt and getting rid of it will feel better than any computer upgrade. Besides we live in the NW everyone will spot your spray on tan and press on nails... Once you're out of debt you can have many more treats more frequently.
If you get a card too high and miss a few payments, you're toast. You'll get a 30%apr, and a high total will give you huge financial charges. So lets say you have around $13,000 on a card. Your APR is 30%, so that's around $300 for the finance charge alone, not including the $100+ regular payment.
There is no magical solution, unless you get debt consolidation loan (in that case, destroy ALL of your credit cards afterwards). What I'm doing right now, is opening a new account with a intro APR of 0% for 6 months. I put $4000 from my highest card onto the new card. I can then pay that off quickly, since every dollar is going right to the balance. No interest for 6months, afterall. After 6 months? Cancel the new card, and get another. Then transfer some more. Keep that up, and your high APR/Debt cards will melt away.
In the end, it really takes fouling up to learn your lesson. I was stupid as a teen. I spent a LOT. Now I regret every bit of it. I bought tons of shit I didn't need. But I'm smarter now, and I don't make those mistakes. Following the plan I have, I should be debt-free in 3-4yrs. Not bad, if you ask me.
Seriously, the concept of a 'studen loan' is just evil. I grew up in Ireland where all education, including college, is free. It wasn't until I saw Michael Moore's sicko that I realised the rest of the world didn't have free healthcare. You guys get shafted on basic human rights, and you don't seem to notice. Nobody should have to live in debt. You live in a wealthy country, it should make you very, very angry that it's normal to end up in debt.
Anyway, sell your car. Pay off your credit card. Send your kids to school in Europe. Vote for someone who will bring your country back into the first world.
but the site also lists some basic economical information about the counties (useful when seeing if a county supports the arts):
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Carter County has a total population of 26,889 (2000 census) and a median household income of $26,427. With an unemployment rate of 8.5%, 22.3% of Carter County residents live in poverty. Over a third of residents do not have a high school diploma or its equivalent, while nearly 9 % have a bachelor's degree or above. Morehead State University graduates are in the majority, with 1,471 of the 3,315 alumni and undergraduates being affiliated with MSU.
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Elliott County has a total population of 6,748 (2000 Census) and a median household income of $21,014. With an unemployment rate of 10%, 25.9 % of Elliott County residents live in poverty. Ove 47% of residents do not have a high school diploma or its equivalent, while 7.8% have a bachelor's degree of above. Morehead State University graduates are in the majority, with 294 of 454 alumni and 186 of 279 currently enrolled undergraduates (fall 2005) being affiliated with MSU. Half of Elliott Countians use the internet at home.
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Knott County has a total population of 17, 649 (2000 Census) and a median household income of $20,373. With an unemployment rate of 7.1%, 31.1% of Knott County residents live in poverty. Ove 41.3% of residents do not have a high school diploma or its equivalent, while 10.2% have a bachelor's degree of above. Morehead State University graduates are in the majority of college alumni with 413 of a total of 3,145 alumni in the county, but Kentucky Community and Technical College and Eastern Kentucky University lead in current undergraduate enrollment with and 656 and 66 respectively of a total enrollement of 954. Over half of Knott County residents use the internet at home.
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that's just a few of the more compiled ones so far..
[rantbitchwhinecomplain]
and yeah student loans suck... and my university loves tweaking things just enough so that students dont get to see what all they are being charged for, implementing a flawed 'great new' data system for relaying information, all online of course, eliminating paper notifications, signed agreements that loans will be paid in full by a certain day, which is three days before most loans actually come in thus incurring a $100 late fee to be paid by the student to the school(which it's not the students' fault that the loan was not sent in earlier), instead of giving the students their refund checks(loan money taken out but not paid to the school) all at the begining of the semester like they used to it is now split at the begining and then in the middle of the semester a week after your first refund runs out.. blah blah blah... XD [/rantbitchwhinecomplain]
Hopefully if I get this job I'll be so much better off in that department and it'll be like 3 great things all in one (cries like a little school girl with a lost sucker).
people say "they are good for emergancies". to be honest, i've never gotten into an "emergancy" that needed a credit card. and with debit cards you can never borrow more than you have, so it was a smart thing for me.
i've previously been in £20k debt (about $40-$50k), my major priority was calling, and following up in writing (tell them on the phone you're sending a letter too) to the creditors i owed money to. telling them i could no longer afford my current commitment, and to ask them to freeze my account for a period of 3 months, until i was on my feet, and agree with them a timeframe for starting up payments again, and what the minimum i would have to pay is.
the most important thing is, and i can't stress this enough, DO NOT EVER EVER EVER forget to stay in touch with any creditor. be constantly on the phone to them, twice a month is probably best, updating them on your situation, and reassuring them you still want to continue your buisiness with them. most creditors are sympathetic, and as long as you intend to pay off any balance, they don't mind a little leeway on how long it takes, or your minimum payments. they understand, in most cases, that if they charge more than you can afford, you won't be able to pay, so they won't get their money. even if you ended up declaring bankruptcy, they would lose out. so it's in their best interest to help you as much as possible.
catagorise things by importsnce:
loands set against your car, or your home, are the most important, and should always come first. credit cards are classed as unsecured loans, so the ONLY property they can take from you (this is england law, dunno what it's like where you are), is a portion of your income, and anything you've bought using their money. they cannot take anything else without a high court judgement, which would cost them through the ass, so they won't do it.
never take another loan to pay the ones you have, even these "lets consolidate your loanz lol look how much money we make off you". it might look easier in the beginning, but you're just juggling your money, not actually putting it to constructive use.
that's all i can suggest right now... just remember, maintain contact, and they will be happy to help, ignore any single letter, and you're putting yourself in a bad position.
for the record, i'm now debt free, i don't have a contract phone, or credit cards, and i now live by the motto "if i can't afford to buy it in cash, right now, then i can't afford it". so i had to save up for my new motorbike...
You guys get shafted on basic human rights, and you don't seem to notice.
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Oh yes we do, its a top issue in every election that ends up being over shadowed with something else. This time around everyone is buzzing about "the first black president, or the first woman president" OooOoo ahhh who give a crap, serriously aren't we over all that crap now? When can we focus on the issues that matter?
Most of our employers pay the health insurance premiums so the costs are almost invisible to the average healthy person. It's only when you really need it that you notice how crappy it is. The people who care the most, are the ones who are the weakest to do anything about it, financially and physically. It's kind of hard to lead a march when you're waiting for a lung transplant or can't get out of bed, not to mention setting your great grand children up for payment plans to cover your hospital stays.
The problem with the health care issue is that the people who have the power to deal with it, don't. Mostly because its a non issue for them. They care about it just enough to make people think they'll do something about it, then don't. "Oh but these bigger issues came up and I was umm busy not doing my job." Having amazing amounts of money to pay out of pocket for the best health care, makes it so you're thankful you don't have to feel the fiscal pinch like other people.
"oh you have crappy health care? You need more money"
"America is the land of opportunity, go make a million and you'll have better health care"
"Do what I do, put on a 5k plate dinner every time I need a new kidney. I'm 204 years old and most of these organs aren't my own! BTW how's you're liver?"
We have well care in America, as long as you're well, you're cared for.