Drowning in Debt

I find myself drowning in debt. I did a lot of overspending in late teens/early 20's and now I find myself with around $45K worth of debt and I only make $38K a year.
I find myself only able to make minimum payments. Between paying rent and just daily necessities, I have no extra money at the end of the month. I'm not really sure where to begin.
I've tried in the past calling the credit card companies to negotiate something. They were either able to do nothing or enter me in a program where I couldnt afford the payment.
I really want to get out of debt. I want to lead a normal life.
Any advice?

Re: Drowning in Debt

Can you get a PT job on Sat & Sun and use that money just for paying off bills?

Re: Drowning in Debt

When I was in a similar situation a few years ago, getting an unsecured consolidation loan with a lower interest rate from my credit union helped TREMENDOUSLY. First, it lowered my interest rate A LOT. Second it made my monthly payment manageable, And third, it put an end-date on the debt. In other words, I paid off $20k in 5 years instead of having it take 50+ years like it would have on a high interest credit card. When that was paid off I did the same for the remaining $10k that I owed and I had it all completely paid off in less than 7 years. During that time I also worked 2-3 jobs at all times. 1 full time, 1 part time and I did consulting work in my field whenever I could. It was a long & hard few years, but it can be done. I know that feeling of helplessness, but you can do it - trust me!

Message edited 4/28/2011 11:51:12 AM.

Re: Drowning in Debt

I'm so sorry you're in this situation.

We had a similar problem where I was out of work for awhile and used CC to survive in addition to just hvaing overspent in college, and then when FH got laid off from his job, we also kept up our lifestyle on CCs. It was incredibly stupid and YEARS later we're paying the price for it.

We were able to get out of the situation in a few ways:
1) We borrowed money from his parents to pay off the really high interest rate CCs. Parents will charge a lot less interest than the 30% a CC might. Of course this isn't an option for all people. For example, my mom could never afford this, and some parents might not be willing.

2) Go to a credit union and take out a consolidation loan. I used to be so against this, but FH did it with his credit cards and he was able to consolidate them all into a MUCH lower interest rate and pay them off over time with a set monthly payment. It's a lot of money and we're still paying it (almost done!!!) but we can budget around it.

3) I did none of the above, but my own personal CC debt (not counting student loans, etc) was never over $10K. FH's was in the range your described. But what I did was I did one of those 0% interest rate offers I got in the mail and transfered my highest balance CC there. For that card I paid the minimum. The fastest way to pay down debt (though I never follow this exactly and I always pay more than the minimum on all because I'm compulsive) is to pay only the minimum, not a penny more on every card except the highest interest rate and then every spare dollar you have should go to the highest interest rate card. Suze Orman has some calculators to this effect.

You can also consider taking any money you may have in savings and putting it toward CCs. You're paying WAY more in interest than you are earning.

You could try to defer or refinance your student loans to get a lower payment. Even if the payment is $25 less, than 25 going toward a higher interest rate CC will save you money in the long run.

See if there is ANY bill you can lower, or anything you can give up, like netflix, or a bi weekly starbucks trip that you can throw at your highest interest rate (not highest balance). you can clearly see on the statement, that paying a little more per month can make the difference between paying it off in 3 years vs, 18 years.

I know it is NOT easy, but you can get through it and there are ladies and gents on this board who are even smarter with finances who will also have great suggestions

ETA: Sorry if my post is a little confusing. FH generally makes a lot more money than I do, so when I say what "we" did, it refers to his debt, and what "I" did refers to my, relatively smaller amounts of debt. When I was out of work injured he was supporting me. Now I have my own job and manage my own debt, and he is the one with the consolidation loans, etc, but I consider his money to be more "our" pool because the rent, wedding, furniture comes out of his salary because I don't earn much and support my mom with what I do make.

Message edited 4/28/2011 11:52:59 AM.

Re: Drowning in Debt

I working a few days in the evening during the week and on saturday and sunday already just to make the minimum payments.

My credit score is in the dumper already because of how much debt I have that I can't get a loan.

Re: Drowning in Debt

Re: Drowning in Debt

Re: Drowning in Debt

I have been there and we're still trying to dig ourselves out of some debt. When we first got married we had both overspent in college and went to Disney World every year. Needless to say, we were about $20k in credit card debt when we first got married. Now we owe less than half of that. I think the financial advice from previous posters is helpful. Some things we did that weren't mentioned:

1) LOCK UP THE CARDS. We paid off DH's credit card that was $10k by itself by not using it. We are having an issue now with our remaining two cards because my work situation isn't ideal so money isn't coming in like it used to, but we paid our biggest balance off completely in about three years.

2) Make adjustments to spending. I don't buy certain things until they go on sale. I clip coupons.

3)Make adjustments to other bills. We just got a discount off of our Verizon bill we didn't even know we were entitled to. DH is going to call up the car insurance company next and see if we can lower our payments.

Re: Drowning in Debt

Posted by JenniferEver




I'm so sorry you're in this situation.

We had a similar problem where I was out of work for awhile and used CC to survive in addition to just hvaing overspent in college, and then when FH got laid off from his job, we also kept up our lifestyle on CCs. It was incredibly stupid and YEARS later we're paying the price for it.

We were able to get out of the situation in a few ways:
1) We borrowed money from his parents to pay off the really high interest rate CCs. Parents will charge a lot less interest than the 30% a CC might. Of course this isn't an option for all people. For example, my mom could never afford this, and some parents might not be willing.

2) Go to a credit union and take out a consolidation loan. I used to be so against this, but FH did it with his credit cards and he was able to consolidate them all into a MUCH lower interest rate and pay them off over time with a set monthly payment. It's a lot of money and we're still paying it (almost done!!!) but we can budget around it.

3) I did none of the above, but my own personal CC debt (not counting student loans, etc) was never over $10K. FH's was in the range your described. But what I did was I did one of those 0% interest rate offers I got in the mail and transfered my highest balance CC there. For that card I paid the minimum. The fastest way to pay down debt (though I never follow this exactly and I always pay more than the minimum on all because I'm compulsive) is to pay only the minimum, not a penny more on every card except the highest interest rate and then every spare dollar you have should go to the highest interest rate card. Suze Orman has some calculators to this effect.

You can also consider taking any money you may have in savings and putting it toward CCs. You're paying WAY more in interest than you are earning.

You could try to defer or refinance your student loans to get a lower payment. Even if the payment is $25 less, than 25 going toward a higher interest rate CC will save you money in the long run.

See if there is ANY bill you can lower, or anything you can give up, like netflix, or a bi weekly starbucks trip that you can throw at your highest interest rate (not highest balance). you can clearly see on the statement, that paying a little more per month can make the difference between paying it off in 3 years vs, 18 years.

I know it is NOT easy, but you can get through it and there are ladies and gents on this board who are even smarter with finances who will also have great suggestions

ETA: Sorry if my post is a little confusing. FH generally makes a lot more money than I do, so when I say what "we" did, it refers to his debt, and what "I" did refers to my, relatively smaller amounts of debt. When I was out of work injured he was supporting me. Now I have my own job and manage my own debt, and he is the one with the consolidation loans, etc, but I consider his money to be more "our" pool because the rent, wedding, furniture comes out of his salary because I don't earn much and support my mom with what I do make.

Message edited 4/28/2011 12:04:53 PM.

Re: Drowning in Debt

Can you change your living situation?

Not sure if you live alone but could you move into an apt with a roommate to cut your living expenses?

Could you move in with your parents temporarily?

Re: Drowning in Debt

Have you tried a credit union specifically? They will work with you. Even if you get a 15% rate I'm sure that's better than the CCs.

You still MIGHT be able to get a new card with a 0% interest rate to transfer balance to. I was pretty surprised. Good Luck!

Re: Drowning in Debt

See the FM I sent you.

but the advice from PP is good. The best is get a room mate or lgive up your place and move in with someone.

I think you HAVE to get a second or even third job, and you HAVE to lower your monthly expenses.

Re: Drowning in Debt

Re: Drowning in Debt

First off, We all make mistakes and wish we could press a rewind button on something in our lives. The important thing here is that you realize this now and are ready to make whatever changes you need to make in order to get out of this.

I've had a lot of debt since college and it's been a strain, a headache always in the back of my mind. When DH and I got married, we made moves to seriously bring it down because we just didn't want to live that way.

We used Dave Ramsey's Debt Snowball plan. Beth actually mentioned it on LIF and sent me the budget spreadsheet that I used to start off. It's basically the same idea someone else posted above - if you have $500 per month to spend on your credit card payments, you send ONLY the minimum payment due for all of your cards, except for 1 card. That card you send whatever you have left of the $500 after you've paid the minimum on the other cards.

It makes most sense to pay down the cards with the highest interest rate first. For me, I needed to see "progress" in order to feel like we were making a dent. It didn't help to send payments to all cards and basically never see a true difference. I paid off the cards with the smallest balances first so that I went from owing on 10 cards, to 7 cards, to 4 cards, eventually to 2 cards, etc. While I was still left with large balances after paying off the smaller balance cards, I felt inpspired at seeing less bills each month and having to make less payments (even if the total amount was the same).

You definitely need to get another job if after paying all of your must-pay expenses, the amount you have left over only pays the minimum on the cards.

You also really must call up all of your cards and tell them you have a hardship and cannot pay. Ask what they can do. Accept that they will most likely close your account, but with that, they will lower the interest rate significantly which will allow you to begin paying down the balances.

Also, if you have available credit on any cards with lower interest rates, transfer some balances on to that/those cards so that you can pay less per month.

You CAN do this. It won't be resolved over night or by the end of this year, but you WILL do it if you put your mind to it.

You have to STOP using your cards. Just stop. Use your debit card; if you don't have money in your account, then don't buy whatever it is. This was the hardest thing for me. You don't get into a lot of debt by practicing "only buy it if you have the cash to pay for it" mentality. But really, that's the only way to dig yourself out.

When I graduated college I went to a reputable debt consolidation company and used them to pay down a chunk of my debt. You definitely have that option, but I learned that everything they did, I could have just done on my own by contacting the cc companies myself.

Re: Drowning in Debt

The above posts offer excellent suggestions..however I don't want this to come off badlly but..have you considered filing Chapter 7 (bankruptcy?)? Someone with your exact same situation called into Suze Orman and Suze suggested they file for bankruptcy because it wasn't worth it to pay all that debt back.

With that much debt and the income - it will just be easier to wipe the slate clean with a Ch 7 and then you can start fresh after the 7 year period...If you do have assets, you can maybe try for a Chap 13...

Re: Drowning in Debt

I know you said you called the CC companies but I would say call again and ask to speak w/ someone who has the authority to change your interest rate. They'll probably say they can't do that but be insistent.

Ask to speak w/ their supervisor or ask if they have a credit review department.

If you don't have recent late payments, mention that and try to use it in your favor.

Other than that I'd suggest a 2nd job. Any 2nd job. Even $10/hr at 2 hrs a day can bring in an extra $400/mo or so.

Also, people generally suggest that you focus any extra payments on the card w/ the highest interest rate. This is not always the best method. Instead, make payments to the card where more cash is going to finance charges - this isn't always the card w/ the highest interest rate.

I'm also a member w/ NEFCU and when they turned me down for a consolidation loan and went to the branch and begged and pleaded for them to let me speak w/ someone in person. Went their w/ the numbers of why the loan made sense. They gave me the loan.

You definitely seem dedicated, keep at it and you will be able to do this in much less time than 21 yrs.

Message edited 4/29/2011 11:06:57 PM.

Re: Drowning in Debt

I was also going to suggest contacting Beth. I've never met her, but I've followed her posts on here, and she seems to be able to do amazing things with debt and not a lot of $$$$.

Maybe she'd be kind enough to start a thread?

Re: Drowning in Debt

I have no idea if this is good advice and I have never done it, but it seems like you might be a good candidate for bankruptcy. I think I saw once that if you owe more than you make in a year = you are bankrupt.

You own your car, so at least you have that to get to work. I know a lot of people abuse bankruptcy, but it is there for a reason and maybe something to look into?

If your credit rating is shot already, it's not going to make a difference.

Re: Drowning in Debt

there are a few things you can do

every card has a hardship program now- I was able to get in hardship programs on 10 out of 13 of my cards

I have a real hardship- but to be honest- no one ever asked for proof

I paid off about 55% of my debt this way

my main goal at the time was saving my credit

then I found out I needed to "repo" my late husbands car - there was no way around it- 18 months of fights, lawyers, it was a nightmare

there went my credit.......

so I went to speak to somone recommended by a finacial planner- and now I am settling all my debt for about 40% (I was at about $80K- from about $140K)

I feel a bit like I am cheating- but I will be out of debt by the end of the year- and all my creditors are getting paid

they all made plenty of money off of me

it took a lot for me to agree to this- but it just made sense

but at the end of the day moving on with my life is the most important thing to me

I spent the last 2+ years trying to prove a point to a dead man- and almost killed myself in the process (I lost about 20 lbs from working 80 hours + a week- bartending + a demanding career)

from there we will rebuild my credit

in your case I would also speak with Keri Stone a vendor on this board about BK

if you want the name of the person I am using to settle my debt FM me

good luck- you have many options- so what's best for you

Re: Drowning in Debt

The balance program

Give them a call. It's free. Maybe they can help you.