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Wish: to get out of debt

PostPosted: Tue Jan 22, 2019 9:06 am
by elarue
Wish: to pay off our over $16k in credit card debt. That would make my wife happy (as she never had to deal with debt before coming to the U.S.) and it would make it easier to meet one of our other goals - to buy a house.

Obstacle: We have a lot of expenses right now - besides the standard, I'm carrying a heavy student loan burden from a second bachelor's degree I got after our children were born. Plus our daughter is in preschool right now, which we have to pay out of our own pocket. We're even putting more debt on the credit card right now just with regular expenses.

I'm sure I'm just looking at my budget the wrong way, and I'm sure there are some things we could do more economically than we are right now. I could just use some help. ;-)

Re: Wish: to get out of debt

PostPosted: Wed Jan 23, 2019 6:57 pm
by Tituba
You first have to stop the bleeding. Meaning, you can't get out of debt while continuing to use your credit cards for anything. I would suggest going to a respected credit counseling service. They will work with your credit card companies to lower (or eliminate) the interest charges.

Re: Wish: to get out of debt

PostPosted: Wed Jan 23, 2019 7:09 pm
by elarue
Thanks for the suggestions. Any recommendations for a credit counseling service? Are they nationwide or local?

We're working on reducing our credit card usage. The regular expenses of living (plus the debt payments) aren't helping that much, though.

I forgot to mention that I also have a car loan as well as the student loan debt I mentioned. I'd love to pay those off as well.

Re: Wish: to get out of debt

PostPosted: Thu Jan 24, 2019 6:50 pm
by SquarePeg
Does your current employer have EAP (Employee Assistance Program)? That's one entity that might provide assistance.

The only advice I can offer is to identify the credit card or loan that has the highest interest rate and pay that one first. So let's say you have three cards with the following balances and rates:

Card A $5500 25%
Card B $5500 21%
Card C $5500 19%

Make minimum payments on Card B and Card C and put as much as possible into paying down extra balance on Card A, which has the fastest-growing balance. Note that this advice assumes you have roughly the same balance on all the cards. I'm not sure this advice is valid if the balances are vastly different.

Well, one more advice... Loan consolidation can benefit. Using the example above, if you can get a loan for $16.5k at 18% interest, you'll accumulate debt at a slower rate. But watch out for fees and for early payment penalty.

Last one.... When you do finally pay off a card, don't close the account. Why? You credit rating considers the ratio of debt to available credit. By closing a card, you reduce the amount of credit you have available, and it will lower your credit score.

Re: Wish: to get out of debt

PostPosted: Thu Jan 24, 2019 9:43 pm
by elarue
I do have an EAP - one that I’ve taken advantage of quite frequently to deal with some mental health challenges lately. But I’ll see if they have some credit counseling services as well.

We only have two credit cards, and one is our Costco card that we pay off every month. We do have the other loans, but the credit card definitely has the highest interest rate since that’s the nature of credit cards. ;-)

On the other hand, increasing my income would definitely help. Maybe I should post some more of my wishes to see how I can get a few extra dollars from them. ;-)

Re: Wish: to get out of debt

PostPosted: Mon Jan 28, 2019 9:08 am
by Elaine Glimme
It's a hard wish to comment on. Do you have more $ coming in than going out? And if not, can you cut back (or make more) so that you do have more coming in than going out? And life ALWAYS throws unexpected expenses at you, so try to plan for that.

Good luck.

Re: Wish: to get out of debt

PostPosted: Tue Jan 29, 2019 11:59 am
by Jason
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Re: Wish: to get out of debt

PostPosted: Thu Feb 28, 2019 10:16 am
by Kenza59
It's hard, but not impossible.
My husband and I were once in debt, and when I say "once", it was less than 15 years ago.
We had gathered debt from several sources, and it called for some serious measures.
First, we dealt with the most urgent debts by reducing our hobby and consumption spending; sure, we ate pasta, potatoes and read second hand books for a while, but it was a minor issue compared to what awaited us.
Then, when this was done, we allowed ourselves a little bit more pleasure in our lives, but still dedicated most of our income that wasn't used to pay for vital stuff (rent, bills, food...) to paying the "middle" debts, those which weren't as urgent as the first ones, but which still weren't benign and could become worse quickly.
When these were paid, we didn't allow ourselves more while paying the last, less urgent debts: we kept going the same way we were going with the "medium difficulty" debts, but redirected some of the money towards investing in some promising companies.
And it turns out that we chose the shares we bought rather well, as our income shot up and allowed to get rid off the last of our debts within a year!

And now, a big decade after hitting the highest amount of debt we ever had, we're paying for our children's college, are looking at buying this house in Corfu, Greece for the holidays, and my husband has started hunting and collecting minerals again, something that hurt him quite badly when we were redirecting all of our disposable income towards repaying the debts.

Re: Wish: to get out of debt

PostPosted: Sat Mar 02, 2019 11:29 am
by Elaine Glimme
Congratulations. I hate the mindset that says as long as you can make minimum payments you're doing all right. You did a good thing.