from ~iHeart~
Tell me step by step to. I have two jobs, and already credit cards and college debt’s growing unbelievably fast (debt collection agencies bother me ALL the time!). I don’t know what to do. All the loans I apply for don’t take me either, and my mom has bad credit so she can’t be a cosigner. So, how do I go about managing debt?
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7 Comments Received
February 13th, 2009 @12:10 pm
check out daveramsey.com
February 14th, 2009 @9:14 am
Maybe bankruptcy. Otherwise, start a budget, make deals w/credit agency’s, do a search on managing debt, Suzie Orman’s show is great. Good luck to you..
February 16th, 2009 @3:46 pm
Start by NOT taking out a loan. That’s a big mistake. It will only prolong the problem. Cut up your credit cards and start living within your means. THAT is the problem- you are spending more money than you can afford. Stop. If you can’t afford to go out to eat, don’t go out to eat. If you can’t afford to go to the movies, watch something at home. Find cheap means of entertaining yourself. Eat cheap. Cut your costs as much as possible. Then put everything you can into catching up on your bills. That’s it. That’s how you get out of debt. But it takes time and sacrifice. Taking out a loan will only make things worse. Budget the money you already have, and stick to that budget at all costs.
Good luck!
February 19th, 2009 @10:08 am
you have two jobs and still cant afford nothing? either you got jobs that pay low income out or the way your spending isnt helping, you can pay off the debts but I can tell you that they stay on your record for a long period of time, it’s hard to get a loan and you will be denied, stop taking out loans and stop charging your card. Always go in with the thought if you dont have the cash dont charge it, your ruining your credit the more and more you do. You can call the agengies and ask the lowest amount they will take and go from there, it may or may not help to pay them off cause it stays on your record unless you ask them to delete it out, otherwise start paying what you owe and stop spending what you dont have.
February 22nd, 2009 @3:26 pm
How’s your credit score? If you don’t know, find out.
Don’t worry about the credit card companies. There’s nothing they can do. Nothing.
Call the credit card companies, and ask them to stop charging higher interest rates.
You have to pay your college loans, because they are underwritten by the government.
Take your credit cards, and freeze them in a bottle of water in the freezer.
Live within your means.
Save more money.
Bankruptcy may not be an option, since the Republican Congress and President Bush changed the law, to make it more difficult for you.
If you want to file bankruptcy, which I would encourage you to seriously consider. Wait until next year, and vote for Obama, who’s already said he’ll move to change the law.
February 25th, 2009 @5:59 pm
1. First of all, you can stop debt collectors from calling you. The best way is to simply get a new phone number. The second best way is to request directions for a “Cease and Desist” letter. This is an option available to you under the Fair Debt Collection Practices Act of 1968. Simply mail or fax a letter to the collection company saying, “Please Cease and Desist all telephone Calls for this account.” Include your account number. After recieving this, they can only call you when there is a change in the status of the debt. When the debt gets sold to a new collection company, you’ll need to send a new letter. NEVER call the “800″ number from a phone number that you don’t want them to call you on. You can’t block an 800 number from capturing you information and they’ll start calling that number as well to find you.
2. If you have good credit, keep it good, this should be your first priority. Stop charging new debt (I know this is hard to do.) Pay extra towards the balances if you can. The plan is to pay off the credit card with the lowest balance first then use that extra payment to pay off the next lowest balance. If you have two accounts with the same lowest balance, pay off the one with the highest interest first.
3. If an account goes to “charge-off” status, you still have to pay it. However, it should be the lowest priority. Ironically, when a credit account goes to “charge-off” it stops being “late”. Therefore, eventually, your credit score can actually go up-even if it includes charge-offs-but it rarely goes up with “lates”.
4. Debt automatically drops off your credit report after 7 years of inactivity from the charge-off date. Therefore, if you only have enough to pay off one charged off debt, pay off the debt that is the newest regardless of the balance. By the way, many times a creditor will accept a “settlement” of the debt. In other words, they will accept less than what you owe to pay the debt. Always get an agreement for this in writing before you make any payments. In addition, it is better to make a lump-sum settlement of 1 payment than it is to make multiple payments on a settlement. Once you make one payment, the seven years starts over again and if you miss one payment the settlement can be voided by the creditor.
5. Next, these things usually get worse before they get better. Don’t worry about your credit score at this time. If you can’t get credit now, and your score goes down, you still won’t be able to get credit. Therefore a lower score doesn’t make any difference. Ironically, a lower score goes up faster when things start to get better.
6. Finally, the most important thing is to start over. Determine that, from this point on, not to have NEW bad credit. As I stated before, bad credit eventually drops off your credit report. So, after 24 months, your credit could be outstanding. However, if you have bad credit next month or six months from now, then good credit comes 24 months after that.
February 27th, 2009 @4:38 pm
The best way to manage debt is to pay it off and not go into debt again. Make up your mind to stop using credit and to pay it off as quickly as possible. It takes some discipline but it is being done every day.
1. Stop using credit, pay cash for EVERYTHING
2. Make a budget. Put down EVERYTHING in your budget so that you know just where your money is going to go. Your priorities are food, shelter, utilities, transportation. After that comes paying off your debt. A budget is a tool that will give you freedom from worrying about money ever again. A budget removes stress from your life.
3. Get current on all of your different debts. Even if you have to take a 2nd or 3rd job and/or sell some of your stuff. Use all of the money that you make from the 2nd or 3rd job to pay down your debt. Make it your life’s mission to get out of the quicksand . If you have a car payment decide if you are better off keeping the car or selling it, buying a cheap car for cash, and then paying off the car loan as quickly as possible.
4. Once you get current on your debts, add $50.00 per month to your budget to put aside for emergencies. You need to have an emergency fund of at least $1000.00 and preferably $1250.00 to start.
5. Once you are current and are putting aside $25.00 or $50.00 per paycheck follow this system:
Make a list of all of your debts in order of interest rate from highest to lowest rate.
Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on card #1 (the minimum payment and the extra payment) towards card #2. That will pay card #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Card #1 (highest interest): minimum payment+ extra payment
Card #2 (middle interest): minimum payment
Card #3(lowest interest): minimum payment
Card #1: paid off
Card #2: minimum payment from Card #1+ Minimum payment from Card #2 +extra payment
Card #3: minimum payment
Card #1: paid off
Card #2: paid off
Card #3:Mimimum payment from card #1+ minimum payment from Card #2+ minimum payment from Card #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
While you may have a “no fun” year or two with two or three jobs it is better than a “no fun” decade. Once you start, you will begin to make progress and when you see yourself getting out of debt, it will seem like a game to see how fast you can get the monkey off of your back.
6. After you get all of your debt paid off, start building an emergency fund of 6-12 months of your income. Since you won’t be making any debt payments anymore, it shouldn’t take very long.
7a. When you emergency fund is in place, use that part of your budgeted money to start saving for a nice car. Save up until you can buy the car you would like with cash. No car payments. Never finance anything that loses value the moment you take possession of it. After you buy your new car with cash, keep saving money in your budget for your NEXT car. If you so this, you will always be able to pay cash for your car and you will never have to go into debt for a car again.
7b. Add some fun to your budget. Now that you are out of debt and have an emergency fund, add a “fun” or “vacation” place in your budget. Don’t let your life go by without enjoyment and wonder. After you get out of the quicksand, start planning and budgeting for your “reward” for which you will pay cash.
I know it sounds hard, and it is, but it is also empowering because you have decided to take your life back. Make a calender that will show you how long it will take for you to be free and as you mark off the calender, you will see yourself moving ever closer to financial freedom. I know that you can do it.
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