OT-Little advice needed

[JOZ]

Guys,

I'm in a little bit of a jam financially. We have a nice little balance on credit cards that at one time we were in control of. We were paying so much a month and it was over the minimum so it was going alright. Well, we missed paying the bills on time a few times and they now have raised the interest rate quite a bit. We always had the money to pay the bills on time, we just missed the date a few times and it was never over a week. Obviously, this doesn't matter to the credit card companies.

Anyway, now we are only able to pay the minimum and it is taking its toll on us every month. My question is what should I do to get the monthly payments down to where we are actually paying it off and not paying the minimum. I've talked to the credit card companies and they aren't much help. I see the commercials for getting lower monthly payments and slashing what you owe in half, but I'm skeptical of them. I don't mind paying what we owe since it is our own fault, just at a lower monthly rate that we can afford and still live somewhat comfortably.

Maybe one of you have had a similar experience and could give a little advice. I would appreciate it.

[jondiehl]

Not to be blunt, or an a-hole, but it's very simple:

Don't buy things you can't afford or otherwise pay cash for. The only thing that you would not follow that on is a major purchase (house, car).

As for the problem that you're in, get rid of any non-essential expense. Pay TV, eating out, magazine subscriptions, video games, all gone.

Get by on the essentials for now. Food and shelter.

If you can't swing that, and you're not going to buy a different home or car in the next 7-10 years, then a bankruptcy could bail you out (probably not worth it unless your debt load is more than half a year's salary).

[FatPitcher]

If you have decent credit, there are a few places that will give you a consolidation loan. You can also open a new credit card with a promotional balance and transfer the balance from the old one -- just keep in mind that having too many open accounts and too many credit inquiries will drop your credit rating, so close down your old accounts. Your credit card companies may also be more willing to negotiate if you tell them you are going to close your account and consolidate/transfer (and have the credit rating to back up your threat).

If you can, sell off unnecessary stuff and put the money towards your credit cards. There are very few investments that will net you 20-30% annually, but that is exactly what you are doing when you pay off CC debt and prevent it from accumulating interest.

[F308GTB]

http://www.daveramsey.com/

When my wife and I got married, we were still both students (grad school and undergrad). We funded our daily living on credit cards. Racked up $20k+ in credit card debt. I'd look for low/zero interest offers from credit cards, transfer an amount I thought we could pay and worked hard at it.

I'm debt free (except for a small mortgage and even smaller car payment), but I still listen to Dave Ramsey on the radio whenever I can just because there's good financial advice.

[JOZ]

Thanks a bunch guys. Believe me, I know we F'd up. But I know we need to nip this thing now while we still can. I'll definitely take this advice and the advice from the Dave Ramsey website.

[fsquid]

I've listened to that Dave Ramsey guy. He seems to have a good program for people.

[pk500]

I couldn't agree with Jon more. There's no quick fix, and there's ALWAYS some luxury or expense you can do without.

For example:

-- No takeout food.
-- No trips to the movies. Rent a DVD instead.
-- Keep only one cell phone.
-- Get the cheapest level of basic cable TV your system offers. No digital, no premium channels, nothing extra.
-- No magazine subscriptions. You can get most of that content for free online.
-- No Starbucks. Brew your own.
-- Use a clothesline instead of a dryer. We run our dryer maybe once per month, even in the winter.
-- Turn off all lights except for the room in which you're in. Use energy-saving bulbs.
-- Drop your cable Internet for cheaper DSL.
-- No video games.
-- No music purchases. The Web has a ton of free streaming music that's legal.
-- Consolidate errand trips to save gas. No more "Hey, I'll jump in the car and drive 20 minutes to get that one item."
-- No elaborate vacations. Maybe an extended weekend getaway somewhere within driving distance.
-- No new clothing or shoes for trend or fashion reasons. If the shoes still function, no need for new ones. If the clothes still fit and don't have holes in them, wear them.
-- No impulse purchases of any kind. No big-ticket optional appliance purchases such as a new TV, new MP3 player, new stereo, new DVD player, unless the existing player is broken.
-- Turn down your hot water heater to 110 degrees. You don't need scalding water to wash your body, your clothes and your dishes, and you'll save dough.
-- Cancel the lawn mowing service and snowplowing service. Do it yourself. You'll just have to make the time.
-- Etc., etc., etc.

This will require a ton of discipline. Desperate times require desperate measures, man.

I sincerely wish you the best of luck.

Take care,
PK

[Jared]

If your credit score is any decent, you should be able to take advantage of credit cards with deals where, if you transfer a balance, you get no interest for a year. Figure out how much you can pay per month total while being pretty tight (say 1,000 a month). Move your debt to one of those no interest cards and put away that 1k a month into a savings account with a decent interest rate that you CAN NOT touch. Furthermore, NEVER use that credit card and ALWAYS pay it on time. Then, once the interest rate goes up on that card (after one year), take what you put in savings and pay off the card. You'll save the one year of interest at your credit card rate, plus gain whatever you get from that money being in savings.

As for closing down your old CC accounts, you have to watch out to make sure that it doesn't raise your debt to credit limit ratio too high, or that you're not closing down your oldest account. Either will nick your credit score.

[JackB1]

If you cant score some new cards with 0% balance transfer offers, call a debt consolidation company. They have make deals with the credit card company's to pay off your balance or a portion of the balance with little to no interest. Only catch is you cannot use those cards ever again....but that's not a bad thing. If you are really desperate, consider talking to a bankruptcy lawyer.

[JOZ]

Again, thanks alot fellas. I needed some unbiased info to make a decision/plan on how to fix this.

I was a little hesitant to post this on here, but I knew that this forum is full of a great group of guys and I'm glad I did. I really do appreciate it.