We suck at debt... HELP. Advice needed

[IHeartCoach]

Let me start off by saying, me (21) and my fiance (32) are the most irresponsible people I think when it comes to debt/credit cards/MONEY! We think in terms of "oh we can let this go til next month, etc, let go out to eat even though or credit cards are late!"

I am DESPERATE to pay off out debt- well my debt mostly as his will take a while.

We tend to spend a lot of extra money here and there- going out to eat, movies, misc. I am on a purse ban for a year! LOL

This is what we make each month roughly. His paycheck is always the same mine fluctuates.

~$3144/per month (I know horrible right?)

Here's the low down of what we have/owe:

Rent- $600/month
Car Payment (through Capital One)- $400/month
Cable- $116.00/month
Electric- $45.00/month
Cell Phone- $150.00/month

= $1311 in Regular bills.

My Credit cards- OH JOY!

BonTon- OWE: $1,238.24 which is over the limit $38.24

Capital One- OWE: $577.38 which is over the limit $77.38

Dell- OWE: $773.84

American Express- OWE: $526.19 They closed it out because we wern't paying because it got way too much and we couldn't pay it.

My 1st Auto Loan through a local bank (we don't have this car anymore- we gave it to his mom)- OWE: $979.88 Loan was for $3500 about 2 years ago! Ick.

HIS Debt-
Kawasaki Card- OWE: $9901.47

Orchard Bank- OWE: $315.99 which is over this limit $15.99.

He also has people coming after him to pay old credit card debt. He just got sued from one old one for ~$6000. And he is paying off one now that was ~$1500. These are the ones that threaten to take 10% out of your check if YOU don't make the move to pay.

So he def. has more debt than me but his is OLD and stuff he has ignored and hasn't paid until they come to find him!

Want I am wondering is, how is the best way to go about getting stuff paid off?

Should we start with the little cards or big ones? How much should we pay each month- min. or more?

IDK I just need SOME KIND of advice!

Thanks in advance!

Amber

[~Fabulousity~]

Its great that you are trying to reduce your debt. I am also, check out the curbing consumerism thread there is all kinds of info in there. I don't have much advice to offer except be diligent in not charging anything else on those cards and try and pay as much extra as you can each month!

[IHeartCoach]

We probably haven't put anything on ANY Of the cards for a good 6months!!! So all this debt is old and we aren't adding to it. The late fees and over the limit fees are what are adding it all up. KWIM?

And THAT'S what makes me sick!

[~Fabulousity~]

Originally Posted by IHeartCoach

We probably haven't put anything on ANY Of the cards for a good 6months!!! So all this debt is old and we aren't adding to it. The late fees and over the limit fees are what are adding it all up. KWIM?

And THAT'S what makes me sick!

Start by at least paying the minimum, not paying at least the minimum on your cards will ruin your credit! Think about the future one day you two may want to purchase a home. Start getting your credit in order now.

[Pinkdancer]

I think the best thing you can do right now is pay off some of the cards that are over the limit. Pay the minimum due on all the others if you have to, but try to get those other cards to a point where they're under your credit line. From the looks of it, you aren't too much over your credit lines (I saw about $30 on one and $15 on the other), so the good news is that it should be easy to get under control.

I'm sure others will have advice, but could you transfer your balances onto one or two cards so that you have less payments to make? It's obviously something to research before doing, but I'm planning on making a couple of balance transfers onto my card with a lower APR.

Good luck!

[Pinkdancer]

Oh, one more thing:

Is it possible to do away with cable for the time being? That'd be an extra $116 to put toward paying of your bills! Not calculating interest/fees, that would pay off your Bon Ton card in about a year.

[Cate14]

Good for you for deciding to take action re: your debt. I think it's so easy to become overswhelmed when we owe money, and it's great that you have decided it's time to aggressively address your debt. It's going to feel so good when your money is truly yours (and the CC companies/lenders aren't making a dime off of you through finance charges/fees!).

You may want to consult with a debt advisor. I don't have any experience with this, nor do I know anyone who does, so I'm a little hesitant about this recommendation, but they may be able to work with the people you owe/advise you as to which debts to target most aggressively.

Here's what my DH and I did a few years ago, when we carried debt:

Make sure that you are making the minimum payment on all of the cards/loans (more if you can), but attempt to pay off something each month (i.e. like the Capital One or the Orchard Bank). Once those are gone, get rid of the card (actually, get rid of the majority of your cards, like the Bon Ton, immediately)!

Do not, under any circumstance, continue to charge, or you'll end up dealing with the same situation again (okay, I just read your recent post that you haven't charged in 6 months--YAYYY!).

Try to pay cash for any purchases (I know, easier said, but in the long run, so much more beneficial for your bank account!), esp. eating out. We were huge eater-outers (haha), and it's an awful feeling to be paying for a meal a month or two after it was consumed!

In terms of selecting the debts that you want to pay off first, you may want to consider the interest rates (plus the amount that you owe)--higher rates plus a sizeable debt equals more money out of your pocket in fees! If you owe $100 at 2% interest, you are paying $2 a month (if you carry that balance month to month), but if that interest is 21%, you are paying $21 a month (that difference of $19 dollars is as good in your pocket as it is in the pocket of the CC company!).

I'm looking forward to hearing what other people suggest to you in trying to reduce your debt! I'm also looking forward to hearing how you do--good luck! I'm cheering you on!

[IHeartCoach]

Thanks for the advice so far.

How do you go about transferring one card debt onto another?

[lorihmatthews]

I'm not sure if you'll be able to transfer debt since it sounds like you might not have good credit (especially from that chargeoff from Amex).

I hate to say it, but to pay off your debts quicker, you need to sell your handbag collection. Sell those LVs and use the cash to pay off your credit cards (yours, not his).

Any chance of both of you getting better paying jobs? Or a second job?

[jan228]

Almost 10k on a Kawasaki card? Did he buy a motorcycle or something?

If that's a secondary form of transportation, I would say it has to go. It's simply not feasible to purchase based on the debt you owe and your income.

[twiggers]

Well you already did step #1 by itemizing your debts. That is a huge step.

What you need to do next is get all those credit cards that are over the limit paid to where they are under the limit...but go under the limit by at least 2x the minimum payment (you'll get hit with interest and then go above again and be recharged another fee). If you don't have the money to this ASAP then sell something. You need to get this done NOW....like tomorrow or the next day, but seriously right now!

OK...now once you get that done you need to figure out what your minimum payments add up to. Do you make enough money to cover all of them + your household expenses?
If the answer is no, then you need to cut something somewhere. Cut cable, get rid of a phone...whatever it is you have to cut it.
If the answer is yes, then this is good. You need to sit down now and figure out how you are going to pay off these cards. We can help you with this! You need to make a list of every card, the minimum payment, the balance, and the interest rate. And we can go from there!

You are BOTH going to have to make some sacrifices. You need to sell some stuff and start bringing in some extra money. This is the only way you'll get ahead.

I'm not trying to sound preachy....but I started off at 66K in credit card debt...and I'm now under 30K in less than 6 months. But I gave up everything that was not essential! if I can do it....anyone can.

You are also going to have to work on repairing your credit once you get out of this, because I am guessing yur husband's is pretty much done (since he has creditors after him) and yours might not be too great either. But it's OK....any damage can always be undone!

I would suggest coming into the Curbing COnsumerism Club too :-)

[ami kio]

Originally Posted by Pinkdancer

Oh, one more thing:

Is it possible to do away with cable for the time being? That'd be an extra $116 to put toward paying of your bills! Not calculating interest/fees, that would pay off your Bon Ton card in about a year.

Pinkdancer's suggestion is a good one.

Can you reduce your cell phone plan? $150/month sounds high to me. Can either of you get a discount on your cell plan through work?

I also recommend sitting down with a month's worth of receipts. It's very good that you're not using your credit cards, but where are you spending your money? Do you go to Starbucks every morning? Cutting out little things like that add up!

Eating out is usually a huge expense. If you're not comfortable with cooking on your own, you could try doing something like Super Suppers. It's more expensive that cooking at home, but it takes the prep stress out of doing it and is usually cheaper than eating out.

Good luck!

[ImASadGiraffe]

When I had debt to payoff, I cut out all unnecessary expenses - I went to the extremes and lived off Ramen noodles and cereal and started walking instead of driving, and getting extra overtime at work, but you probably don't need to be that extreme.

Start by attacking the overlimit cards, paying at least the limit on all the others. Sell that motorcycle if possible to pay off that loan. Once you pay off some cards, snowball (add the amount you paid to those cards and make other payments bigger) to the other cards that are still in good standing but have balances.

Make yourself a budget as well so you can really see where the extra money is going. Hold on to all receipts so there's tangible evidence of what you're spending.

[chiquen81]

If nobody said it already:

*Sell your car and buy a used one for cash. Put the $400 to paying off debt instead of to a car payment.
*Cancel your cable.
*Get rid of cell phones and get a landline. (unless you really need the cell phones)

Next:

*Pay off the cards with the higher interest rates

[chiquen81]

^PS - Mine above is probably the most drastic, but it will be the quickest way to eliminate everything. Nobody ever said it wasn't painful getting out of debt.