Help me learn how to get out of debt

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  • digitalbill
    digitalbill Posts: 1,410 Member
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    Than you for all the responses!

    I wanted to add that we do not have rent or utility bills or cell phone bills ( his mom lets us stay at her house that she has paid off for no rent because she is living with her boyfriend at his house)

    so when it comes down to it:

    c.c:$500.00 $40.00/month
    c.c:$1000.00 $20.00/month
    c.c:$800.00 $40.00/month
    c.c:$500.00 $25.00/month
    Hospital bills: $10,000.00 ( 3 different hospitals and different visits so we havent set up monthly payments yet)
    Car 1:$8,000.00 $185.00/month
    Car 2:$14,200.00 $310.00/month
    Loan 1: $3,500.00 $98.00/month
    Loan 2:$2,000.00 $73.00/month
    Business: $130.00
    Student loans: $3,500.00 ( no monthly payment for 6 more months)

    PLUS gas and car insurance a month



    C.C means credit card. I did not put who I owe just because this is the internet but I do not mind shoing what I owe if it helps me get a plan going lol.

    I was wondering if it would be a good idea to not pay on one of the cars so it gets reposessed? Would that make the payment go away? Because then we wouldnt owe acar payment on it plus we can change our car insurance so it may go lower

    Also me and hubby do not watch t.v unless its netflix but that is 8.00 a month so i guess that can go to!

    I am putting in job applications everywhere! My husband wrks from 4 a.m to 11 or 1 p.m M,W, and F. I am going to go with him tomorrow (to save gas) and apply for jobs when places start opening.

    If at all possible I really do not want to go through a consolodation place or anything like that. I dont mind calling the card companies but I dont want a third party agency involved.

    OK.. first things first:
    Your credit WILL take a hit. You made some stupid financial moves at a young age. for that, I say:
    WELCOME TO THE CLUB!!!!
    Now that we have gotten that out of the way, lets work on getting you fixed up.
    First, lets list your bills by importance. Most to least.

    Car 1:$8,000.00 $185.00/month
    Car 2:$14,200.00 $310.00/month
    PLUS gas and car insurance a month
    Student loans: $3,500.00 ( no monthly payment for 6 more months)
    Business: $130.00
    c.c:$500.00 $40.00/month
    c.c:$1000.00 $20.00/month
    c.c:$800.00 $40.00/month
    c.c:$500.00 $25.00/month
    Loan 1: $3,500.00 $98.00/month
    Loan 2:$2,000.00 $73.00/month
    Hospital bills: $10,000.00 ( 3 different hospitals and different visits so we havent set up monthly payments yet)

    What this means is that, your cars are the priority. With that said, on car #2, call the bank and explain, flat out, that you cannot afford the car and you would like to allow them to reposess it.
    Trust me, the bank DOES NOT want your car. They will offer to work with you by either giving you a break on payments for a few months (that gives you some breathing room), or, they will lower your interest rate.
    Obviously you cannot do anything about gas except, when you guys go somewhere, take the smaller, cheaper car if possible.
    You also MUST pay your insurance but, you can shop around still. Even $5.00 a month is a small drop but, it is still helpful.
    You have six months for your student loans and, as others have said, make that call. See how long you can put it off.
    As far as the rest of the credit cards and the like. For now, ignore them.
    Yes, your credit WILL BE HIT but, they will start to make deals with you.
    DO NOT LET THEM BULLY YOU!!!!!
    When they call, simply tell them the truth. You have X bills but only make Y money.
    Other bills, unfortunitally, take priority over them and you will pay them when you can. Be polite but be firm.
  • mtaylor33557
    mtaylor33557 Posts: 542 Member
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    Quick question

    I am looking at the transfer thing for 2 of the credit cards ( other 2 are for stores) and one card is in my name and one is in my husbands. how can i get both of them on the transfe card?

    Be careful with transfers and write off's. They effect your credit score really bad. You don't want to damage your credit any worse than it already is. Best bet call companies tell them your plan and pay off slowly.

    Transfers don't affect your score badly, but write off's do. If you can get a lower interest offer, you can easily transfer the balances of either card to that card. If you do it online, it will walk you through it. My husband and I did this with a 0% APR deal, when we began paying down our debt, and it didn't hurt our credit any more than it does anytime you open a new card. (We have very good credit scores)

    Now, if you transfer balances every few months, instead of paying them off, THAT can hurt your score.
  • mltchel
    mltchel Posts: 6 Member
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    You will certainly be able to do this - get out of debt and change course!
    It sounds like you have a go-to attitude and are dealing with the problem head on. Way to go, smart girl!
    -Another Dave Ramsey Financial Peace University online class graduate spring 2012! Turned us around completely.
  • Just_G
    Just_G Posts: 73 Member
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    Thank you everyone for great ideas. A lot of what was said I never thought about.

    Hubby and I are pretty much selling EVERYTHING that we dont need ( food, kitchen appliances, and bed and clothes lol)

    I have the best mother in law in the world who lets us stay at her home rent free and she even pays for our cell phone bills. ( she lives with her bf somewhere else)

    I am applying to every job I can find and I am even going to make posters to hang around town for house keeping and babysitting or dog walking, etc.

    I am going to somehow try to get rid of the car we owe 14k on ( I actually traded a car in to get this one because it has better gas mileage. The dealership promised me that the other car would be paid off and we wouldnt have to worry about it. I got a letter in the mail yesterday from the bank we had the loan with on the other car saying we missed a payment and it affected our credit score... can I take the new car back to the dealership and say Hey you breached the contract and didnt pay the other car off so heres your car back?)

    And I am going to walk ( hey exercise!) to the library tomorrow to check out the david ramsey book and sit down at our desk and figure a strict budget to get this plan going!

    I actually do not feel over whelmed now and I know we can do this!!

    You guys are the best :)

    So did you just buy this car in the last 60 days, being that the auto loan payoff didn't happens quick enough and you were late on a payment. I'm just trying to figure out how your $5000 upside down on a car, that it sounds like that you just bought?
  • sammyjowedeking
    sammyjowedeking Posts: 116
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    Thank you everyone for great ideas. A lot of what was said I never thought about.

    Hubby and I are pretty much selling EVERYTHING that we dont need ( food, kitchen appliances, and bed and clothes lol)

    I have the best mother in law in the world who lets us stay at her home rent free and she even pays for our cell phone bills. ( she lives with her bf somewhere else)

    I am applying to every job I can find and I am even going to make posters to hang around town for house keeping and babysitting or dog walking, etc.

    I am going to somehow try to get rid of the car we owe 14k on ( I actually traded a car in to get this one because it has better gas mileage. The dealership promised me that the other car would be paid off and we wouldnt have to worry about it. I got a letter in the mail yesterday from the bank we had the loan with on the other car saying we missed a payment and it affected our credit score... can I take the new car back to the dealership and say Hey you breached the contract and didnt pay the other car off so heres your car back?)

    And I am going to walk ( hey exercise!) to the library tomorrow to check out the david ramsey book and sit down at our desk and figure a strict budget to get this plan going!

    I actually do not feel over whelmed now and I know we can do this!!

    You guys are the best :)

    So did you just buy this car in the last 60 days, being that the auto loan payoff didn't happens quick enough and you were late on a payment. I'm just trying to figure out how your $5000 upside down on a car, that it sounds like that you just bought?




    Yes I just bought the 14 k car within the last 60 days. I traded in my old car wich i only owed 3k on. The 14k car is actually only worth 9k but I had negative equity so the added the 3k left onto the 9k and then added some for whatever reason ( i guess they have to make a profit) to get the 14k. BUT I got a letter in the mail saying the 3k car payment was never made this month ( i didnt pay it because the dealership said it was taken care of) SO since they breached the contract, can I just take the car back nd cancel the deal all together?
  • sammyjowedeking
    sammyjowedeking Posts: 116
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    Thank you everyone for great ideas. A lot of what was said I never thought about.

    Hubby and I are pretty much selling EVERYTHING that we dont need ( food, kitchen appliances, and bed and clothes lol)

    I have the best mother in law in the world who lets us stay at her home rent free and she even pays for our cell phone bills. ( she lives with her bf somewhere else)

    I am applying to every job I can find and I am even going to make posters to hang around town for house keeping and babysitting or dog walking, etc.

    I am going to somehow try to get rid of the car we owe 14k on ( I actually traded a car in to get this one because it has better gas mileage. The dealership promised me that the other car would be paid off and we wouldnt have to worry about it. I got a letter in the mail yesterday from the bank we had the loan with on the other car saying we missed a payment and it affected our credit score... can I take the new car back to the dealership and say Hey you breached the contract and didnt pay the other car off so heres your car back?)

    And I am going to walk ( hey exercise!) to the library tomorrow to check out the david ramsey book and sit down at our desk and figure a strict budget to get this plan going!

    I actually do not feel over whelmed now and I know we can do this!!

    You guys are the best :)

    So did you just buy this car in the last 60 days, being that the auto loan payoff didn't happens quick enough and you were late on a payment. I'm just trying to figure out how your $5000 upside down on a car, that it sounds like that you just bought?




    And I had bought this car in the begginning of May so I know they had time to pay it because my payment was not due for that car until June 7th
  • Just_G
    Just_G Posts: 73 Member
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    As bad as it is, they are not in breach, title and loan processing take time.
  • kyodi
    kyodi Posts: 376 Member
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    I'm at work so I can't reply as fully as I would like, but this is a good place to start:

    http://www.daveramsey.com/new/baby-steps/

    I've been working the plan and listening to his podcast. Many, many people are getting out of debit using his plan (myself included). It does work.
  • Dare2BThin
    Dare2BThin Posts: 211 Member
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    I was wondering if it would be a good idea to not pay on one of the cars so it gets reposessed? Would that make the payment go away? Because then we wouldnt owe acar payment on it plus we can change our car insurance so it may go lower

    NO!!!! You will still owe it and it will go own your credit!
  • Wonderwoman2677
    Wonderwoman2677 Posts: 434 Member
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    YI wouldn't advise letting your car get repossesed. Your debt doesn't look too bad that you need to suffer too much.

    So, as I said before, your credit card debt is not that much. If you could put it all on one card, that would give you one single payment of maybe 100, instead of four payments of whatever.

    Second, if you can stand being without a car (a bike would help with your burns too!) Park one, turn in the tags and cancel your insurance. Keep up payments though to pay down that debt and you will eventually be able to reinstate it.

    your medical bills and student loans would be my last concern. These will always be there forever and you can pick them up after you get a bit more financially secure.

    I just have to add to this that if they don't keep the insurance on it and it gets damaged they could end up in a worse spot. Not using it is probably better though... no gas or upkeep for awhile. Or try to find someone that will buy it (take over the payments).
  • kiminikimkim
    kiminikimkim Posts: 746 Member
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    1) Sell the cars and start using public transportation. No public transportation? Ask a friend to lend you a bike and start travelling that way.

    2)If you're renting, find a smaller more affordable place to live or stay with your parents or his parents for while. Sublet, don't wait till the lease is over.

    3)Find a job, any job will do. No job is beneath you.

    4)Pay off credit cards with the highest interest rates first (others, just pay minimum)

    5)Stop using plastic. Take out a specific amount each week in cash and that is it for the week. Ran out of cash? Then you can't afford what ever it is you are looking at buying.

    6)Don't tell yourself you have been good and splurge once a week or once a month. It was the splurging in the first place that got you in this much trouble.

    7)No more restaurants. Budget groceries, start cooking meals, freeze some for later in the week.

    8)Cut down on entertainment: no movies, no alcohol no partying. Only do things that cost NOTHING: like taking out movies at the local library.

    9) Volunteer: this may seem strange but offering your time and effort for no monetary gain will actually give you something in return, you will find out if you try it out!

    10) Set aside a small amount and save (like 25$ a month).
  • heberlonghurst
    heberlonghurst Posts: 156
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    An important tip that people often don't take into account is that if you have a little bit extra each month (even if it is only $0.01) you will get out of debt quicker and pay less in interest by paying this toward the highest interest rate card/loan/contract that you have. I have a spread sheet where I've modeled it out and it shows that the average American family can save over $10,000 paying down the highest interest rate loan rather than the highest minimum payment or the lowest balance loan.

    I have an MBA in Finance, I am a CFA Charterholder and I am an equity analyst for a bulge bracket bank. I will soon be doing a PhD in finance. Before my MBA I was a financial planner. I've always liked helping people through financial problems, what I didn't like as a financial planner was having to sell people specific projects when what I've always liked is simply giving financial advice. I still do it as a hobby when I find someone who is willing to really work their problems. Send me a private message with any additional details and I can help you get through your plan.

    If you can I recommend you detail every single loan, credit and card with balance, available balance, minimum payment and effective annual interest rate (or what every rate your statement has with how it is calculated). If you haven't ever built a budget that would also be crucial. Record every single expense (even for chewing gum) to be aware of exactly how much you have coming in and how much you have going out. This seems laborious but is more effective than a broad "spend less" recommendation and it lets you know exactly how much you have to cut expenses and/or how much extra funds you have available to pay down debt (beyond minimum payments).

    This is tough work, I've been a starving student with children and no job and let me tell you my finances haven't always been as good as they are. I've dug myself out of some pretty deep holes so I think I can offer something if needed.

    Dave Ramsey is encouraging and popular but also mathematically unsound. There are class action lawsuits out against how his phony feel-good math. On the other hand, from a psychological perspective sometimes the feel good part is what people really need, and he does do a good job at that. Just because finance PhDs don't think his recommendations are THE BEST doesn't mean they can't be GOOD right?

    Best of luck to you!
  • piesbd
    piesbd Posts: 196 Member
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    LOVE Dave Ramsey!!!!!!


    Best quote ever:

    "We buy things we dont need, with money we dont have, to impress people we dont like"

    This...
    http://www.daveramsey.com/new/baby-steps/
    Pay what you need to live first: rent, food, electricity/gas
    Work on building an emergency fund. (can you sell anything? do you need 2 cars? garage sell, craigs list)
    Work on a debt snowball
    Once that is completed, then work on 3-6mo savings

    You can do it. I know people who have... it is HARD, but can be done.

    Good luck
  • LuckyLeprechaun
    LuckyLeprechaun Posts: 6,296 Member
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    if you allow the car to be repo'd, They will auction it off for a very low amount, that amount is paid towards your loan. They will then come after you for the rest. I lived through this, I also thought that if they took the car back my problems were over, but you have a loan, which you must pay off. The auctioned car rarely covers the loan amount. So you got rid of the car, but not the debt.

    Don't do that unless you have no other option available.
  • loseequalsgain
    loseequalsgain Posts: 24
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    http://en.wikipedia.org/wiki/Debt-snowball_method
  • SofaKingRad
    SofaKingRad Posts: 1,592 Member
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    Financial Peace University. Google it. We have no debt other than the mortgage and will be getting rid of that in 5 more years by following the plan.
  • HartJames
    HartJames Posts: 789 Member
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    Not going to read through this all but I will say that now is not the time to pay off debts (obviously). What you can do is be creative to find work so that you can. Babysitting, cleaning, whatever it takes so that you can.

    In the meantime, coupon! We started & save over 50%! Krazycouponlady site rocks.

    Also, you can send certified letter requesting an investigation into your past debts disputing them. By LAW the company has 30 days to complete the investigation and submit it to you or it will have to be dismissed. You can then have it removed from your credit. My husband has done this and brought up his credit score 200 points in 3 months. Why? They almost never complete an investigation in time.

    When you get jobs, save enough to pay off what's left in bulk. Almost any collection agency I'll accept a settlement off o remove he debt. Typically you can pay 70% as long as you are prepared to do so at be time of the offer. Sometimes as low as 40% (depending on how much hy purchased your debt for).
  • medaglia_06
    medaglia_06 Posts: 282 Member
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    I love Gail! I suggest poking around her site to see what info you can get. She is Canadian so I'm not sure ALL will apply to you, but I can't see it being far off. She also has some worksheets you can fill out to help you get out of debt.

    http://www.gailvazoxlade.com/resources/get_out_of_debt.html
  • AmelodyAngel
    AmelodyAngel Posts: 152 Member
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    Great advice
  • Hearts_2015
    Hearts_2015 Posts: 12,031 Member
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    LOVE Dave Ramsey!!!!!!


    Best quote ever:

    "We buy things we dont need, with money we dont have, to impress people we dont like"

    This...
    http://www.daveramsey.com/new/baby-steps/
    Pay what you need to live first: rent, food, electricity/gas
    Work on building an emergency fund. (can you sell anything? do you need 2 cars? garage sell, craigs list)
    Work on a debt snowball
    Once that is completed, then work on 3-6mo savings

    You can do it. I know people who have... it is HARD, but can be done.

    Good luck

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