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Slow process of getting out of debt

Q: Getting out of debt is slow and depressing. Why didn’t i have the insight to stay debt free???

A: Unless you win the lottery getting out debt will be a slow process. You didn’t get into debt overnight and your not going to get out of debt overnight. Just take it day by day.

You will get out of debt believe me.

I went on bed rest when I was 4 months pregnant with my daughter. I had a rough pregnancy. I could not work so my bills started plying up and I got behind. It took me a long time to get out debt. I plugged away at it one bill at a time. I started with the smallest bill. Then worked my way up to the highest one. Every time I got a bill paid off I treated myself to a Latte.

My father-in-law worked for FDIC and is a financial guru. He put me on a strict budget using the same system that he used and his parents before him used. By using this system he was able to retire when he was 50 and able to put his 3 kids thru college and pay off his home about 15 years early and his wife never had to work. It’s hard.

He swears by the envelope system. It takes a lot of discipline, but if you want to get out of debt you need to have more discipline then ever. When ever I see something I would like to get I stop and think about do I really need this or do I want it. it’s not a need it is a want and I don’t get it. Don’t carry your checkbook, any CC or your ATM card with you.

good luck

I would have them contact their bankruptcy lawyer

Also when you are having a bankruptcy you are not supposed to talk to creditors just give them the lawyers number and say have a nice day and hang up , and never agree to anything on the phone , go buy a cheap 20.00 answering machine and have them screen their calls, were they filing a chapter 7 or 11 , i just did a chapter 7 , you know it is illegal for them to call and harass you after you have repeatedly given them the lawyers numbers, and i would just tell them to quit harassing make sure not to threaten them tho. If they filed a chapter 7 make sure thet anything that they listed on it , that they dont pay a penny to any of the bills or it could get their whole case thrown out of court , it is just better not to talk to them at all.

Q: I have to ask this question… while I know that this is the law, I have to wonder about this. As a small business owner who has been a victim of 5 customers who had filed bankruptcy, it doesn’t seem morally right to me.

I have never/could not even envision myself of declaring bankruptcy. (No offense intended to anyone who has done so) I have even heard of people (friend of friends) who actually ‘planned’ backruptcies, and some who had purposely run up additional debts in the months prior to declaring.

I know that it’s not possible to return products direct to a credit card company to reduce debt, and that many, many things we purchase are disposable or unreturnable, (plane tickets/ clothing/food, etc) I would think if I were to find myself in such dire straits, I would imagine I would contact companies to explain my situation, and try to affect returns of large ticket items to try to reduce my debt. Things like vehicles and large appliances would fall under this large ticket umbrella. Is that not ever an option?

A: I do believe that it is ethical and moral to try to return that which one bought, or in failing that, sell it so as to pay back that money.

I did this when I was in did. I wouldn’t have felt right otherwise.

But I was not referring to ethics or morals when I wrote that about the law. I was writing strickly about the law…as you yourself mentioned.

I also believe that it is unethical and unmoral for CAs to try to browbeat people in debt to pay up. They should help and encourage repayment…which what most people want to do anyway…they just need a little time and a break or two.

But I will say this…and it may be unpopular…

But there is absolutely NO EXCUSE for anyone to file for bankruptcy.

There are alternatives to prevent this. And had they taken a little precaution BEFORE all this trouble occurred they would not even be in trouble. And I don’t care why the circumstances. I don’t care about the excuses…if you are doing bankruptcy then you brought it on yourself.

Yes it may be warrented to do BK. But realize that it is and was your fault.

Instead of buy, buy, buy mentallity which is just implants from the credit card companies instead…

Put a little money aside every month — 10, 20, 25%. More if you can afford it.

Live below your means.

Never use credit to buy something. If you don’t have the cold, hard cash then you can’t afford it.

Pay down the mortgage as fast as you can.

Only buy cars three years old or more. And pay cash.

Use coupons and other incentives to lessen the monthly budget.

Make sure you have money set aside for fun things.

Have at least three streams of income.

If you do the above NOW then you can and will prevent bankruptcy.

Of course, I learned my lessen the hard way as many here did. But fortunately we can learn from our mistakes. And if we get this word out to those that haven’t walked in our shoes then maybe we can prevent them from ever having to face what we have been through.

Hope that helps to clarify.

Never get any more credit cards

Do yourself a favor and get rid of them and never get any more credit cards. They are horrible burdens. I’m not sure what you could charge up with them that is worth the worry. I’ve tried to get rid of the rest of mine and it’s a nightmare! With such low credit limits, just pay them off and if you decide to keep them , if you buy something pay it off before you use it again and make payments on time, after making 3 to 4 “on time payments” try to renegotiate your interest rates.

with such small balances, i’d pay them off… specially your second one with the $6 processing fee!?! Defeinately if you can afford to. You might very well want to close them out too if you feel you’ll be tempted to get the balances back on there in the future. But part of your credit score does count towards the history of your cards so if you close them that may lower your scorre if i understand that correctly.

But closing the cards would be the better option if you feel you might be in the same boat later on dwon the line. CC debt is rough and it’s hard to get out of. I’m trying to do that myself!

Q: My parents declared bankruptcy several months ago and one collection agency is trying their scare tactics saying they represent a creditor (Sears and Western Auto) and that they would like my parents to acknowledge the debt and to allow them to “take back” all of their appliances that my parents originally bought using the store’s credit cards. Not of any loan.

Can a collection agency take appliances from one’s home based solely on a purchase made by credit cards? I never heard of such a thing.

I believe they are pressuring my elderly parents to voluntarily give up their washer and refrigerator but making it sound “official” like they have to. Even their letter head sounds like they are some official entity when in fact they are not.

Suggestions?

A: Credit is not hard to understand…

First you have 2 cards so you can start establishing a good payment record. A good record consist of 12-24 months of NO LATES!

Second is you need steady employment of 2 yrs or more in the same field.

Third and last is once you get credit keep the balances under 30% of credit line. Now this can be a bit confusing. Some cards do not report credit limits so on these you actually need to charge up to your limit to set a high balance and then keep that amount under 30%.

Your key here I think is the 24 months payment history and the high credit balances. I would suggest you pay down the balances to under 30% credit line or high credit balance (look on your credit report to see if they are reporting the limit or just the high balance). Then I would not apply for anything until you reach a 24 month GOOD payment record.

Patience is important because it does take time to build. Just wait it out and it will come….

To Close or Not To Close? … That Is the Question

I’m 28 years old, a college student, and I destroyed my credit back in high school before I even knew what it was or gotten a chance to use it so like many, I am stuck with bad credit … well at least for the moment.

My situation is I only have 2 credit cards and I get my grant money in a few weeks. I have been seriously debating if I should take some of the money to pay off these two cards and close them or should I pay off the balances but leave them open and try to manage the cards better to improve my credit rating? One is from Orchard Bank with a credit limit of $300 which I have had for going on 2 years now. The APR was out of this world from the start; 18% but I have been late on several payments so over the years, it has crept up to an astronomical 28.24%! The second card I have is the Premier Bankcard with a credit limit of $250 and 9.99% APR and I have missed 2 payments. I have had that card about 7 months. While Orchard has a $15 minimum payment, the Premier has a $20 min payment IN ADDITION to a $6 Processing Fee due every month.

I have never had a REAL credit and since I have a hard time even getting credit somewhere, how can I build up a “good” credit record? I do have a car I got a loan for which I feel I am paying too much for (but that’s a different story) but I have had that about 7 months and never missed a payment and never late on. I had tried to get rid of this car and buy a new one which was actually worth what the payments were for, but because of my credit, I was denied the vehicle. I asked the finance guy at the dealership, well how in the hell am I going to build up credit if my credit is so bad I can’t get any, his response was to get a small credit limit card, buy something for $50 or so, pay it off and keep doing that each month. Well, I have my 2 small balance cards and if I close them I know I can’t get another credit card somewhere else … probably not even with them because of the late payments.

I mean so what do I do? Would it be best that I bite the bullet and keep the cards to build up credit or should I just scrap them and lose what little bit of credit background I have?

I hate this credit thing … it’s so confusing and no matter what I do, I can never get it right. It seems every move I make is wrong throwing me back further in credit rating.

This is what Dave Ramsey suggests, what do you think?

Please if someone could advise/suggest, I would really appreciate it.

Is your LOC a home equity line?

Q: Is your LOC a home equity loan? You did a good thing to put those cards away. Is your monthly debt more than your monthly income? If it is you need to find a way to increase your income or decrease your debt (no brainer there!). Do you and dh both work?

A: Yes, the LOC is a home equity line, and we do pay out each month more than we take in. Even if we cut down to the minimums each month, it’s still more than we bring in. I’ve talked about getting rid of the cable (both tv and computer) and my hubby practically hyperventilates! It would be a big deal for him to give up the tv (sports nut) and it would be a big deal for me to give up the cable line for the computer, so I figured at least it would be even. He balks at it, but it’s much harder for him when I ask him if it’s worth $1,200.00 a year.

And yes, it is a no-brainer to increase income or decrease debt…. unfortunately, no-brainers don’t always get followed effectively! My husband works in accounting/finance (oh, the irony!) and for the most part, I’m a SAHM. I am a Southern Living at Home consultant and make a bit of money with that, but our income is primarily from hubby. Neither he nor I want me to go back to work, but at least we know we aren’t down to our last penny with no options.

HEL loans are explained in this video:

I am in the same boat as well. I am a SAHM and the only way I can work is to find a job that I can only work during school hours. Unfortunately, jobs like that are hard to come by, but I am still trying. It is not worth sending my kids to daycare after school bc it will cost $500 a month and I will only be making about that much:( Right now I am selling some things on ebay. Things that I never use, clothes still with tags that I have never worn, etc. It is helping and giving me some extra $$ to pay on CC’s monthly.

Hello fellow debt haters

Q: I have read through some posts and am glad I have found this place. My hubby and I are working at getting out of debt. We have listened to Dave Ramsey for a couple years and have gotten some bills paid off and cut up the credit cards so that we don’t get in further but its been slow going. For some background this is where we are right now…

  • 4800 to credit card
  • 6500 car no.1
  • 8500 car no.2
  • 9500 2nd mortgage

We aren’t behind or anything at this point, but still live basically paycheck to paycheck. I am just needing some motivation and accountability for sticking with my budget and getting more focused. Hopefully chatting with people in similar situations will help.

A: i have a question….. what’s a 2nd mortgage? is that a home equity loan?

Good luck on your debt payoff….. we aren’t behind as well..just trying to get it paid off…. not living pay check to paycheck so much but that’s because my hubby is deployed and the combat pay helps!

Q: Yep, our second mortgage is a HEL. When we moved into this house it needed alot of work. We had planned to work on it when we had the extra cash. Of course we got pregnant with baby number 3 and decided we needed new carpet right away and to pay off my dh’s truck and get a cheaper one. But after riding in that old truck for a year we decided we needed a more appropriate family vehicle (enter car payment no 2 again). It makes me kind of crazy knowing that essentially I am paying for 3 vehicles one of which was sold three years ago, carpet that is already getting worn out due to a steady flow of family traffic, and still paying for Christmas five years ago on credit cards. UGH STUPID STUPID. LOL

I am very glad to hear you plan is working so well. Its nice to start digging out of the dark hole and finally see light.