SRS Anonymous post..How do I get out of debt.

Discussion in 'On Topic' started by dave steel, Aug 29, 2006.

  1. dave steel

    dave steel My Kung Fu is the best.

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    At my current age of 23, I have started to get worse and worse with my debt. One of the main reasons is for the past 5 months; my income has been cut in half from what it used to. As Of today, I am about $5000 in debt. I consider it a lot compared to what my current income is and it is just going to keep growing. My car insurance is due, so add on another $250.

    I have heard about agencies that pay off all your debt and you pay them an affordable monthly fee. Anyone have experience or recommendations on these? They say you end up paying less to them in the end, which is good. All my debt is from credit cards. I made it a rule to always pay twice the min balance each much at least. But I am seeing that this is hard now due to my income/expensive. With the interest rate on some, if I only paid the minimum, the APRs would eat that up and it would be like I’m paying nothing.

    The bottom line is; I have some interest in those companies that pay your stuff off, other then that. Any other ideas? While only 5k, it is a lot to me, and even if I could afford 500 a month, it would take about a year to pay off my current debt. I have trouble affording half that as is.
     
  2. Cerridwen

    Cerridwen Guest

    Take it a little at a time and realize that while $5,000 may seem like a lot, it truly isn't. While you may WANT to pay off your debt in as little time as possible, that can be a frustrating and sometimes unrealistic thing to do. IMO it is better to take it a little at a time and it is absolutely vital to make sure that you still have money left over for you (even if it's a minimal amount) to spend at the end of the month. You might want to try "snowballing" your payments. Sit down and make a list of all of your bills and their correlating interest rates. Start with the bill that has the highest interest rate and put as much money as you can towards that one while paying the minimum on the rest. Once you have that paid off, choose the second highest interest rate and continue paying the minimum PLUS the amount you were previously paying.

    The first thing you need to do is recognize why you continually are going into debt. Are you living beyond your means? Do you have a budget and do you stick to it? If not, make one up. If you'd like some help with it, feel free to PM me.

    What is your income like? Your job situation? Why has your income been cut in half and what are you planning on doing about that? How much education do you have, do you hold a degree?

    You can focus on the debt, or you can focus on a solution.
     
  3. N-Word-Jim

    N-Word-Jim Cure for boredom

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    Don't go to a credit counseling service. That shows on your credit report and will hurt your score and scare your creditors.

    Keep paying more than your minimum, and keep in mind that they can close the card at any time, so don't get too high on the utilization, because if they get scared they'll close the account and tell you to pay it all NOW. I don't know where your credit limits are, but if you're anywhere near them, pay those down fastest.

    Stop living outside of your means.
     
  4. Brigante

    Brigante i'm a lurker without an avatar, deal with it

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    as much as you want to cut the large balances down, try this instead. work on paying off the smallest balances first before you even start chippin away at the larger ones. i'd even go so far as to say pay just the minimum on your largest balances and concentrate most of your allocated income for credit cards towards paying off the small ones. as you pay the smallest balance off, continue to pay the same monthly payment as you have on that one and apply towards your 2nd smallest balance. pay that off, the combined monthly paymenst that you've normally made on those two, pay that amount on the 3rd small balance, and so on and so on. make sense? a little tough to put into words. your total allocated income you set aside for your credit cards from the beginning stays the same. for example, you're $5000 in debt and you allocaten no less than $200-$250 of your monthly net towards this debt. you continue to pay that same amount even if your total balances equal $3000, $1000, and even $500 until you're completely debt free. it's a neat trick but it works. it jsut takes time. tthe key is to not use the credit cards during this time.

    and, like N-Word-Jim said, stay away from those debt consolidation copmanies at all costs and avoid using consumer counseling services. taking 12 months to pay off $5k of debt isn't such a bad thing. live within your means, don't use your credit cards and you'll be home free in a matter of time.

    if all else fails, apply for a debt consolidation loan at a bank or financial services company and move your revolving debt into installment debt. your credit cards will all be paid off, you'r emaking one payment to one place. and even though you're still paying interest, you're going to end up getting rid of that $5k revolving debt in 24, 36, or 48 months, whatever term the loan is for. revolving debt is what gets people in trouble. as long as the interest rate is comparable, you're not creating more debt, you're just moving the balances into one.
     
    Last edited: Aug 30, 2006
  5. civicmon

    civicmon got all my game from the streets of california.

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    5k is nothing, i'm a bit older and got a lot more..
     
  6. Legend Zero

    Legend Zero OT Supporter

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    I'm really not old enough imo to be helping you out so much, (18) so take it with a grain of salt.. but do you have anyone that can help you out? IDK, maybe match you on a monthly basis? Than, once your debt is paid off hopefully within a year or 1.5 year, you can pay back the person who helped you interest free. Obviously the person would have to be a family member or a friend.

    I know in my consumer ed classes, my prof said if you actually call up the company and explain to them that you have had a loss of income, they do lower the interest rates from time to time. If you've always paid on time, and have a good relationship with the CC Company i'm sure that could be a possibility?

    IDK, just trying to help out,
    good luck.
     
  7. crunchy_black

    crunchy_black OT Supporter

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    im in the same boat kinda... i just have to work my shit job for a few more years and hope nothing fucks up during that time
     
  8. Darketernal

    Darketernal Watch: Aria The Origination =)

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    DONT go to one of those agencies, your death is their bread. FYI the agency is not a charity organisation, the people behind the desk have to be paid, and they do that by pulling you even harder down the drain. No one cares if you go down the drain even if you have 50k or more in debt. The only one who can really save you is yourself, this is done by changing your behaviour.

    If not already read this http://forums.offtopic.com/showthread.php?t=2085244
     
  9. ledzep73

    ledzep73 New Member

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    .
     
  10. Pringles

    Pringles New Member

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    I'd recommend STOP USING CREDIT CARDS. ALso dont even consider the min. balence. That is how they make money because fuck ups pay that. Pay what you owe the company. If you can't afford to do that then you can't afford to buy what your thinking of buying. Sounds like you need a major redo of yourself financially. You need to sit down and look at your net out and net in. Then figure out how you can make that 0$ or +$ so you can start paying back the 5k. B/c that will just build as the interest rates increase.
     
  11. Cerridwen

    Cerridwen Guest

    That looks like it would help a lot before the fact, but it doesn't truly address how to get OUT of debt after you already have it (aside from a couple of small paragraphs). It is a really nice writeup though.
     
  12. Coottie

    Coottie BOOMER......SOONER OT Supporter

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    This is what I used to get 100% debt free...including my house, car (brand new in 2001) and motorcycle (brand new in 2003). It took me approx 5 years but that's because I got lucky with my job before I had completed the program. However, I would be in this same position today because this program really works!!

    http://www.amazon.com/Debt-Free-Prosperous/dp/1883113075/sr=1-2/qid=1156992954/ref=pd_bbs_2/104-5791194-3408754?ie=UTF8&s=books

    Good luck

    EDIT: Also be careful of those services that offer to help you get out of debt.
    A) They will lower your payments but it comes at a cost
    B) They accept no responsibility for missing payments to your creditors
    C) They WILL put a mark on your credit report for all future creditors to see (this is almost as bad as bankruptcy without the benefits of bankruptcy). This mark will stay on there for something like 3 years after you pay off your debt.
    D) If you miss payments, they will cancel your plan and the credit card companies may add back on past interest and fees

    I know because I went to a service before finding that tape program. In hindsight, I learned a lot and I can't say the experience was totally negative but it did have some unforseen consequences when I wanted to buy a house.
     

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