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debt nightmare

December 11th, 2006 at 11:54 am

I am in trouble. I have eight credit cards and about half of them are maxed out. I have a total of $56,147.34 in credit card debt. I also have about 35,000 in student loan debt. I am current on all payments and my credit score is actually okay (701). But I am drowning in these credit card bills. My average interest rate is %17.31. It ranges from 29.9% to 1.9. I approached a consumer credit counseling agency (the good kind) and they said that debt consolidation would not work for me because I already had good interest rates (this was before they were raised to 29.9%). I have taken on a second job with the hope of paying down my credit card debt, but it seems the more money I make the worse it gets. My income is $31880 gross from my main job, plus $1,100 per month from a trust fund and another $500 a month from my second job. I also have no assets--I rent an apartment.
I haven't seen anyone out there with no assets and this much debt who was trying to pay it down. The highest I've seen is like $30,000. Are there any other people like me out there? If so, please write and let me know if you have any advice.

14 Responses to “debt nightmare”

  1. Nancy Says:

    Start listening to Dave Ramsey on the radio, and get his book, "Total Money Makeover".
    You can also find his website, and read the success stories. I have heard and read of many people who were in worse shape than you, get out of debt, by creating a plan, a budget, and cutting up the credit cards.

  2. carol Says:

    Nancy is right on target about cutting up those credit cards. PRICEPLUS just very recently paid off the last remaining debt on his cc's and is now debt free. At the very least take all that tempting plastic and place it in a place that's not easily accessible. Then like Nancy said, find the material you need, you can even Google "budget" on the Internet and get a wealth of free information about budgets, personal financial planning.

    Those credit cards will eat you alive. Take charge today.

  3. Thrifty Ray Says:

    Do you have a splending plan? Have you tracked expenses and where your money is going? Somesort of plan is vital to any success.

    Making more money is good...but cutting back on spending and expenses is better. Challenge every expense that you have and see where you can cut back and eliminate.

    As mentioned above, DR is a good sourse of advice and information too.

    You are in a tough place, but you can tackle the mountain of debt so long as you have a solid plan and strong determination!!

    Welcome! You've come to a great place for support and ideas as you turn things around!!

  4. janH Says:

    Take a deep breath......I have a lot of debt, also. I know it is overwhelming. But you've just taken the first step. Now that you know how much you owe, you've faced the hard part. Don't beat yourself up. Now go proactive. Like the others say, next step is to start a spending plan. Find one that works for you. Track all your expenses. Write down all your bills, then all your infrequent bills, all your out of pocket things like gas and groceries. After months of being afraid, it only took me two months of listening here to feel more positive. I now have a budget and feel more in control. The debt is still here, but I can now see little bits of progress. Feel free to vent and ask questions. The people here are very supportive and really smart about these things. They have helped me a lot. We care.

  5. LdyFaile Says:

    Welcome! You're right, I'm not anywhere near you. I have no assets, have about $30k consumer debt and $34k student loan debt. The only other advice I have aside from what's already been offered is can you call your higher interest rate cards and request a reduction? I did that and the conversation was very simple. I asked the CSR what my current rate was, and after they told me I asked if it could be lowered. I wound up reducing my largest card by 5% which made a difference of $90/mo in Interest! Anyway, it's worth a shot, esp if you make payments ontime and have good credit which it sounds like you do. Again, welcome to the blogs. Smile

  6. Broken Arrow Says:

    Wow, welcome to the blogs.

    Um, your stats are indeed very scarey. However, whenever I feel a bit overwhelmed, I just think of my ex. I don't think of her too poorly or anything, but let's just say that she has 130k in student loans alone, and no assets.

  7. PRICEPLUS Says:

    Sarah, Welcome to your journey to financial freedom. It takes time but I am proof that it can happen and will happen if you want it to happen. Write down all your expenses for the month and also write down in a pad every penny you spend. You must know where your money is going.

    Look through the forums pages to find a ton of info on reducing your bills and living on less money. Life will be somewhat spartan for a while.

    You may not use the CCs. Put them away and DO NOT USE THEM!!!!

    Make a list of your CCs and start paying as much as you can on the highest priced one. Keep paying at least the minimums on the others. When you finish paying off the highest priced card roll that money over into the second card and procced so on until the cards are paid off.

    Highest price means that interest on the principal is the highest in terms of cash dollars. 17% on 10,000 is more than 29% of 2000. Use your calculator to work this out.

    Make your own lunch. Cut out soda. Cut back on the entertainment budget and go to free events. Use the library. Attend free lectures. See the forums for many more ways to cut the budget and put more money into paying debt. Rack up as many no spend days as you possibly can! There are a ton more ideas on the forums.

    You have faced the reality of your debt and are taking control of your life. You can and will win! We are all with you here! Smile

  8. Ima saver Says:

    Priceplus is right, you need to get on the debt snowball. You must not charge anything else and get one at a time paid off. Do you ever get offers for 0% transfers, if so take them.

  9. rduell Says:

    Welcome, Sarah! You can do it!!!!!

    This place is great for support and information.

  10. crazyliblady Says:

    Hi. Here's my two cents.

    Step 1. Take a deep breath. Remember that no matter how bad it is, it will get better.
    Step 2. Cut up all your credit cards except one major card, like Visa or Mastercard or something. While no one really needs credit cards, you really don't need eight.
    Step 2. Make a list of all debts, including credit cards, auto loans, medical, whatever. Include interest rates, dates due, and current balance. Your list can be on a computer or a simple notebook.
    Step 3. The snowball method PricePlus mentions works great. I have seen it work for others. You may need to cut some corners here. Figure out where your money is going that it doesn't really need to go. For example, do you have both a cell phone and a land line? Do you need both? How often do you eat out or go shopping?
    Step 4. Record your progress on your list.
    Step 5. Progress until your debt is paid off.

    By the way, I am in debt right now because of medical bills and credit card bills incurred earlier this year because of a small medical crisis. I am using this method to get the debt paid off. So far, I have 4 debts of out 9 paid off. I started snowballing with the smallest debts first so I could see some real progress fast. Woo-hoo!

  11. Amber Says:

    First I would like to say welcome a broad and these guys are awesome. I had the same problem, a total of 9 cc and a student loan, not as much as you but the same situation. I just got serious I stop using the cards asked for a deferrment on the student loan and tackled the cc's smallest to largest...I know some may not agree with this but it gave a sense of accomplishment and I continued to work on paying down the cc. My score was terrible still is there are some things I need to straighten out ( I closed a cc, big mistake) any way my point is it seems like a lot to take in but it can be done. I never thought I could/would get my cc debt down, my cards were either maxed out or close to it, I now owe only on one CC and that is a blessing. I joined this site and others like it, i listen to D.ramsey ( i do not agree with him all the time) and S. orman, I read books and blog all my concerns...this was my therapy. The point is you are not alone and there are people out there like you and I in the same information or worst. Good luck and if I can be of any help feel free to send me a email. But stop using the cards, do not travel with them...that was my biggest mistake

  12. tnfarmgirl Says:

    Well, we have a LOT more debt than you, on an income way less than yours! But, we do have assets, which we are trying to liquidate, but the cash flow situation is the same.

    You MUST write out EVERY SINGLE ONE of your monthly expenses. Don't guess, look at your bank statements, keep receipts for EVERYTHING. I thought we had cut back to the bare minimum until I started keeping receipts for each little run to the market for milk, and each stop at Sonic for fries & coke with the kids. Boy, did it all add up!

    Although we've been discussing getting out of debt for quite some time, we're really still not completely on board. Husband & I have differing opinions about how to use our money, so it's an ongoing struggle.

    Post here often... I have gotten great responses each time I blogged.

    Good luck!

  13. jersey jen Says:

    welcome! share some details and we'll be your support backend!

  14. moi aussi Says:

    I have a spread sheet that I made at docs.google.com. I can access it from anywhere, and I update it everyday, so that I know how much I have and where my money is going. Before I even use my money, I already mark down what I absolutely during that pay period-rent, metro, bills etc and deduct it from available money so that I always know how much money I can spend if I have to (I shouldn't be spending anything btw). Because I look at my financial situation everyday in a spread sheet that is marked down in red, blue and all kinds of colours, I don't want to use my cc for anything, or use cash for anything that I do not need to. Sometimes you break down and spend money though, but it's okay as long as you pick yourself up again. I have a long way to go, but hopefully I will get there soon.

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