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help me get out of debt.

vabunucvabunuc Registered User regular
edited January 2010 in Help / Advice Forum
So new years eve i smashed my car. I wasnt drinking. I was headed to work in bad weather, hit a slushy curve, and ran into a pole. I had only basic coverage, so my car was a total loss. So now im trying to get a new used car. I found a nice car in a dealership, and the machine that ran my credit laughed at me.

Ok, ive been bad with my money and have debt that i haven't paid in a long while. Time to man up and fix that. I am looking at Credit Counselling services. The two im really looking at are:

http://www.curadebt.com/
and
http://www.cccsatl.org/ (leaning toward this one)

Anyone have any experience with these? Anyone recommend any other programs?

vabunuc on

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    DeebaserDeebaser on my way to work in a suit and a tie Ahhhh...come on fucking guyRegistered User regular
    edited January 2010
    If you're in the states, order a copy of your credit report from annualcreditreport.com. Its the actual honest to God free credit report site.

    Deebaser on
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    tardcoretardcore Registered User regular
    edited January 2010
    My advice to you is to try and heavily cut back on your entertainment and food expenditures where possible. Try to eat on a strict budget and don't go out buying games or drinking with your friends as often.

    tardcore on
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    PeregrineFalconPeregrineFalcon Registered User regular
    edited January 2010
    You said "debt that i haven't paid in a long while." Is this just old debt that you haven't paid off, or is it actual delinquent accounts and bad debt that creditors/collection agencies are after you for? Next, fuck the debt counselling services IMO, most will are just going to either push you to declare bankruptcy or point you to one of the ideas below.

    There's pretty much two schools of thought in this, but they both involve the "debt snowball."

    One is the traditional "Dave Ramsey" hyped method - list all your debts. Pay off the smallest debt first, making minimum payments on the rest. Live on rice, beans, and pasta if you have to; throw all the money you can spare at the smallest debt. As soon as the smallest one is paid off, take everything you were paying on it and roll that into the next debt, on top of the minimum payment.

    The other is the same idea, but you do the highest interest rate first. If you've got $5000 sitting on a 28.8% CC and it takes you a year to get to it, you've accrued another $1440 of interest on it. Ouch.

    The reason people like to push the first method is because you "see results" and therefore "don't lose hope." YMMV, but I've always seen better results having people kill off the crippling high-interest stuff first, especially when you show them just how much is getting flushed down the drain in interest money.

    If you've got multiple high-interest debts, a lower-interest debt consolidation loan can be a useful weapon if used properly; however, you can also shoot yourself in the foot with them. I've seen a lot of people get a DC loan to wipe out a $10K credit card balance ... and then run the plastic back up to $5K before realizing oh right I already spent that money. And then they're not just back to square one, they're worse off because instead of being $10K in the hole, they're now $15K in the hole and can't pull another loan out of their ass because their debt-to-income ratio sucks. Edit - DO NOT get a consolidation loan through any "special agencies" - use your bank or credit union. Interest rates will be better, and they'll likely be more interested in serving your needs.

    But the first thing to do here is to make a budget. List your income, your expenditures, and your current debts. Let's see where we can supplement the former, trim the middle, and kill the latter. Whatever you're comfortable with, of course.

    PeregrineFalcon on
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    GothicLargoGothicLargo Registered User regular
    edited January 2010
    vabunuc wrote: »
    Ok, ive been bad with my money and have debt that i haven't paid in a long while. Time to man up and fix that.

    Yes. it is.

    Anyone recommend any other programs?

    cut-credit-card.jpg

    Not gonna sugarcoat it here, I believe the English had it right when they created debtors' prisons. Destroy your credit cards and get them paid off. Do not spend on credit until you have eliminated the debt you have already.

    GothicLargo on
    atfc.jpg
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    eternalbleternalbl Registered User regular
    edited January 2010
    You'll probably want to pick the one with the smallest balance and focus your efforts on that one. Pay the minimum payments on the others until that one is paid off, then do the 2nd lowest balance and do the same. This way you'll have a feeling of accomplishment more frequently as you get rid of them.

    I guess if you only have 1 debt that's huge, make a budget with all your necessities, add in some for gas and food type expenditures and then a little for entertainment and such. Then stick to it and put the remainder towards your debts. The key is to be realistic. Don't make your budget down to the penny and your debt repayment as much as possible or you're setting yourself up to fail at your goal. Round everything up so it's as though you have more to pay on your bills than you really do. It'll be a good safety net for if you accidentally overspend slightly on something.

    eternalbl on
    eternalbl.png
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    PeregrineFalconPeregrineFalcon Registered User regular
    edited January 2010
    Not gonna sugarcoat it here, I believe the English had it right when they created debtors' prisons. Freeze your credit cards in a block of ice and get them paid off. Do not spend on credit until you have eliminated the debt you have already.

    Fixed, IMO. While it's nice to have that fantasy where everyone has their own personal six-month cash emergency fund, most people don't have the scratch to cover a serious vehicle repair/appliance replacement/medical bill on hand. Keep the card, but make it extremely hard to get to.

    Once you've got the money saved up to cover emergencies, then go ahead and cut the fucker up if you want.

    PeregrineFalcon on
    Looking for a DX:HR OnLive code for my kid brother.
    Can trade TF2 items or whatever else you're interested in. PM me.
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    GothicLargoGothicLargo Registered User regular
    edited January 2010
    Fixed, IMO. While it's nice to have that fantasy where everyone has their own personal six-month cash emergency fund, most people don't have the scratch to cover a serious vehicle repair/appliance replacement/medical bill on hand. Keep the card, but make it extremely hard to get to.

    Once you've got the money saved up to cover emergencies, then go ahead and cut the fucker up if you want.

    I think if you have the discipline issues to get into debt trouble in the first place you'll have the discipline issues to not know when to leave it put away. But if you absolutely don't want to destroy the card...

    Give it to someone you can trust not to use it; if your parents have a safe box at a bank, ask if you could drop it in there. You need to make it intentionally IMPOSSIBLE to get to without having to go to someone else to get it.

    GothicLargo on
    atfc.jpg
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    RaekreuRaekreu Registered User regular
    edited January 2010
    I found a nice car in a dealership

    This may be part of the problem right there. I know that getting a car is a major hassle, but if you're looking to finance a vehicle when you're already in debt then you're gonna have problems. It might not be easy, or even possible depending on your circumstances, but I'd really recommend that you borrow $1500 from a good friend or from a family member. Take that money and buy a car off of craig's list. You may have to test drive a few before you find one that isn't fixing to give up the ghost. It WILL be a POS but if it can get you to work then you'll be doing better than you are now.

    Now the ugly part: you work as hard as possible and as often as possible. Any chance to work overtime is a way to get out from under the pile. I'm not going to go over techniques/strategies because the good ones have been listed by other posters. Your necessary expenditures, your current income, and amount owed are all going to affect your choice of method.

    Raekreu on
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    TejsTejs Registered User regular
    edited January 2010
    Also, for the purposes of getting a car, you should consider getting an auto loan through your local bank / credit union. They can tell you what you are approved for (if at all), and how much you can expect to get in loans. That info would be helpful in determining what price level of car you will be eligible for.

    Paying off debt is nothing more than a simple math game - paying X over Y time. The only exception is declaring bankruptcy. PeregrineFalcon has good advice.

    Tejs on
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    iglidanteiglidante Registered User regular
    edited January 2010
    Not gonna sugarcoat it here, I believe the English had it right when they created debtors' prisons. Freeze your credit cards in a block of ice and get them paid off. Do not spend on credit until you have eliminated the debt you have already.

    Fixed, IMO. While it's nice to have that fantasy where everyone has their own personal six-month cash emergency fund, most people don't have the scratch to cover a serious vehicle repair/appliance replacement/medical bill on hand. Keep the card, but make it extremely hard to get to.

    Once you've got the money saved up to cover emergencies, then go ahead and cut the fucker up if you want.

    Exactly. If I didn't have credit cards, I would never be able to pay for any emergency. A lot of people live paycheck to paycheck. Better to be in debt than to wreck your car and be unable to fix it. Better to be in debt than break your arm and have no money to cover the hospital visit. Life is expensive.

    iglidante on
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