Debt help

[maddmartagan]

You didn't reference any other scenario in your post, you only made a case for not paying them back because you don't like their business practices. If you think I said merely filing bankruptcy makes one a thief you should go back and re-read. There is an "only" in there that is very important.

Looking forward to see where you place the goalposts now.

Maybe you are the one that should go re-read my post where I mentioned the business practices of credit card companies because there are a lot of words that are very important, not “only” one. I never “made a case” for not paying them due to their business practices. I suggested that if “morals” were the reason someone would forgo a bankruptcy even when the credit cards run their business the way they do, then I personally think that is dumb, but he can go ahead and pay them back and live a miserable, stressful life for 5 years. Are your morals to pay back a credit card company more important than caring for your family? “Sorry kids, we need to live on rice and beans for a few years because I need to pay Capital One back or else I’ll feel bad that they aren’t getting all their money back! My moral
Values to pay back their debt (along with a bunch of interest) outweighs my moral values on providing a nice quality of life for my family!”


Also, whats football got to do with this?


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[CJohnson]

Solid, basic, simple^^^^^. Consolidation is often a diversion that keeps you from addressing the real problem. Only do that long after you've changed habits and only if the math works out. Consolidation is the wrong focus.

Follow. Dave. Ramsey. His work has created more free people, more wealth, more saved marriages and fulfilled lives than most.

Car payments suck by themselves, but they don't take into accounting higher insurance, licensing and depreciation. There are excellent, reliable, good looking used cars that will save you a bundle, actually many bundles. If you use the vehicle for work, whole different story.



My vehicle story isn't the answer key, it's just what I've done that works for me. My family buys cars/trucks with about 100,000 and dig into the carfax report on number of owners, wrecks, clear title, etc.. before buying. We keep them for approx 10 years, then maybe put a few thousand $ into them if they still look good, then put another 3/5 years on them. Then sometimes just give them away. I've gone far and wide, two states away, even had a vehicle for my wife delivered from Jacksonville, FL. That one had 60,000 on it and we drove it until it had 230,000. The whole time we put about $2,000 into it, it was an Acura. They work. My truck has about 190,000 on it, just put in about $5,000 and hoping for 2/3 more years. Way cheaper than payments, further deprecation, licensing, insurance. All those other expenses keep going down down down as time goes on.

You can do this and it will feel awesome when it's under control.

In addition to this advice, invest every raise or windfall you get without compromise. Set up direct deposits to go straight into an account that you pay the debts with and when the debts are gone put that money to work in some other way. My wife and I have done this since we got married 8 years ago. Now we have a nice egg growing, but when we started out we were in your same shoes.

One thing I haven’t seen mentioned on the vehicle - look for a job that will give you one. That was one of the primary motivators for my current employment. It’s hard to put a dollar value on it when you can drive it whenever and never have to make a payment or buy gas

 

[righthelix]

Dave Ramsey. 100%. Read his book The Total Money Makeover and get enrolled in Financial Peace University at a local church. There is no shortcut, you just have to get after it with a plan that works. Dave's plan works. If you commit to it, it will work for you too. If you need a copy of the book PM your info to me and I'll send you mine.

 

[String&stick]

Read most of this but might have missed some. . . Wanted to put in some thoughts.

#1. Start with the budget. You've got at least 1 more month (december) without the student loan payment. So make a strict budget now and start sticking to it.

#2. Cut up the cards. Putting more on them only digs a deeper hole. If you can't pay for something you don't need it. If you can't afford food or clothes for your kids there are a lot of things out there to help.

#3. Talk with your wife and find someone you both trust to hold you accountable. It's to easy to rationalize spending a bit extra between the two of you. Here in America we are way to private about personal finance and we receive little to no education on it. Find someone you trust that is debt free or damn close and ask them to review things with you monthly. They will spot problems that you don't!

#4. Bankruptcy is a last resort. I manage a bank and it will follow you for the next 10 years if you need to buy a house or finance a car.

#5. Some will not agree with this but if you can stick to you budget for 4 months, and you own your home, look at a cash out refinance. ONLY DO THIS AFTER YOU HAVE MASTERED YOUR BUDGET!!! doing it before hand will only exacerbate the problem. But cashing out 30-40k against your house and paying off credit cards could save you $700 to $800 per month. Now this moves unsecured debt to secured debt and puts more against your house. But if you own and have for several years you probably have appreciation you can tap into. This moves interest from 20% down to about 3%. Just make sure you follow through the baby steps and attack this debt down the road because paying for it over 30 years racks it up too!

Other than that do what others have said, buckle down, get a side job, only do Xmas for the kids, and make it happen. 3-4 years is nothing in the scheme of life and it will be so much better. Tax return only goes on debt if you get one!!!!

 

[browning2480]

Maybe you are the one that should go re-read my post where I mentioned the business practices of credit card companies because there are a lot of words that are very important, not “only” one. I never “made a case” for not paying them due to their business practices. I suggested that if “morals” were the reason someone would forgo a bankruptcy even when the credit cards run their business the way they do, then I personally think that is dumb, but he can go ahead and pay them back and live a miserable, stressful life for 5 years. Are your morals to pay back a credit card company more important than caring for your family? “Sorry kids, we need to live on rice and beans for a few years because I need to pay Capital One back or else I’ll feel bad that they aren’t getting all their money back! My moral
Values to pay back their debt (along with a bunch of interest) outweighs my moral values on providing a nice quality of life for my family!”


Also, whats football got to do with this?


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The business practices of the company’s are irrelevant. He used them to buy something he couldn’t afford. He should pay the money back, regardless, or sell whatever he bought and pay it back. The problem is people don’t live within their means. He has dug a hole that he needs to pull himself out of. Hard work and dedication will get him there, along with following the Dave Ramsey advice. Not paying back the money that he borrowed isn’t the way out, unless it is a last resort.

 

[hunterjmj]

Dave Ramsey! My wife and I started his plan a little over a year ago and it changed our lives. We owe nothing but our mortgage which we refinanced this last summer to 2.99%. It's definitely a lifestyle change but change for the better! Good luck!

 

[maddmartagan]

The business practices of the company’s are irrelevant. He used them to buy something he couldn’t afford. He should pay the money back, regardless, or sell whatever he bought and pay it back. The problem is people don’t live within their means. He has dug a hole that he needs to pull himself out of. Hard work and dedication will get him there, along with following the Dave Ramsey advice. Not paying back the money that he borrowed isn’t the way out, unless it is a last resort.

I disagree that the business practices are irrelevant in this context because I was addressing the moral argument against filing bankruptcy.

But I’ll say it once more. If you feel that paying back a credit card company (regardless of their business practices) is more important to you than you and your family having a decent quality of life, then that is your choice. It certainly wouldn’t be mine, though, and I think the romantic idea of having “morals” when dealing with this type of financial stress is ridiculous. Especially considering that bankruptcy is a LEGAL option.


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[browning2480]

I disagree that the business practices are irrelevant in this context because I was addressing the moral argument against filing bankruptcy.

But I’ll say it once more. If you feel that paying back a credit card company (regardless of their business practices) is more important to you than you and your family having a decent quality of life, then that is your choice. It certainly wouldn’t be mine, though, and I think the romantic idea of having “morals” when dealing with this type of financial stress is ridiculous. Especially considering that bankruptcy is a LEGAL option.


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Dave Ramsey will also explain that in dire situations you keep the four walls going. Everything else comes after that, including credit cards.

I don’t disagree with you that he shouldn’t be putting these credit card payments in front of food, electric, clothes and everything else that goes into keeping your four walls going. All depends on the situation. His first option shouldn’t be bankruptcy, unless that is the position he is in. He would be better off letting the cards go into collections and then negotiating with a collection company on what it will take to get out of them.

But every other attempt to pay back what he owes should be made first.

 

[007hunter]

I could be wrong, but I thought if you file for bankruptcy, your student loans don’t go away.

I’m not recommending bankruptcy FYI. You got plenty of good advice so far. You can do it!

 

[maddmartagan]

Dave Ramsey will also explain that in dire situations you keep the four walls going. Everything else comes after that, including credit cards.

I don’t disagree with you that he shouldn’t be putting these credit card payments in front of food, electric, clothes and everything else that goes into keeping your four walls going. All depends on the situation. His first option shouldn’t be bankruptcy, unless that is the position he is in. He would be better off letting the cards go into collections and then negotiating with a collection company on what it will take to get out of them.

But every other attempt to pay back what he owes should be made first.

Well said and I completely agree. I’m not advocating filing a BK at the slightest bump in the road. But I also don’t think you should live a miserable life for years if you really have just fallen on hard times. Too many people won’t even consider it because of the stigma.


And just for the record, I’ve never filed bankruptcy and don’t ever expect to.


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[maddmartagan]

I could be wrong, but I thought if you file for bankruptcy, your student loans don’t go away.

I’m not recommending bankruptcy FYI. You got plenty of good advice so far. You can do it!

You are correct, in general, student loans are not affected by a bankruptcy. But his post indicated that the credit cards seemed to be the big issue.


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[timmymac24]

The Millionaire Next Door is a good read too...

 

[MattB]

Might not be able to hear me way up on that high horse, but hey if you feel your "Morals" outweigh paying thousands of dollars to a credit card company that most likely knew you couldn't pay the debt back (because that is their whole business model), is already taking advantage of you with 30% interest rates, that will charge the debt off to a collection agency as a tax write off, and could care less that you filed bankruptcy because they've already calculated it into their cost of business, all because you think its immoral, then be my guest and pay it back.

And if your "morals" are coming from the bible, then here's a quote or two for you:

Nehemiah 10:31b: “Every seven years we will let our fields rest, and we will cancel all debts.”

Deuteronomy 15:1-2: “At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.”

No, my morals came from my parents.

And the notion that if everyone lived beyond their means and then periodically pursued bankruptcy to expunge their debts our society would collapse.

You sound like a lawyer.

 

[Bubblehide]

I could be wrong, but I thought if you file for bankruptcy, your student loans don’t go away.

I’m not recommending bankruptcy FYI. You got plenty of good advice so far. You can do it!

I has been common for lenders and others involved in the student loan program to tell borrowers that bankruptcy did not dissolve student loans. In the past, Chapter 7 did dissolve student loans. However, I have not kept up with the law in this particular case, so I do not know it it still remains true.

For those about to attack me, don't bother, I have never filed Chapter 7 or 13.

 

[Bubblehide]

Credit card debt for most is literally modern day slavery. I mean for those that can only pay the minimum on a $2000.00 credit card debt, with an average interest rate on their debt, it will literally take them 20 or more years to pay that debt off. Considering that most people have multiple credit card debt, it literally makes them a financial slave to their creditors (specifically the credit card companies). It is a business that should be illegal under current practices.

FYI, I carry zero credit card debt, as I will not be a slave to anyone or any institution.

 

[MattB]

I disagree that the business practices are irrelevant in this context because I was addressing the moral argument against filing bankruptcy.

But I’ll say it once more. If you feel that paying back a credit card company (regardless of their business practices) is more important to you than you and your family having a decent quality of life, then that is your choice. It certainly wouldn’t be mine, though, and I think the romantic idea of having “morals” when dealing with this type of financial stress is ridiculous. Especially considering that bankruptcy is a LEGAL option.


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I would imagine that folks who are in debt for lifestyle reasons and will roll over on their creditors are probably not that concerned about their family either. There is an easy button to get out of that too.

 

[Eltigreblanco]

Tons of great advice on this thread. I love credit cards. We have not paid intrest in over 10 years, and get paid to make our purchases. It does take discipline to only make purchases you can afford

 

[maddmartagan]

No, my morals came from my parents.

And the notion that if everyone lived beyond their means and then periodically pursued bankruptcy to expunge their debts our society would collapse.

You sound like a lawyer.

Ha, props on your assumption. Is it that obvious?

While I don’t necessarily think society would collapse, i would certainly agree that we would have some big problems if everyone lived beyond heir means and then filed BK. But you could say that about a lot of things, including hunting. If everyone in the US hunted, we would either have zero game left, or essentially zero opportunities to hunt.


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[Bubblehide]

The facts about bankruptcy.:

You can only file once every 7 to 10 years. As such, once you file, creditors are eager to almost instantly lend you money again, because they KNOW you are on the hook for those 7 to 10 years. It is simply a smart BUSINESS decision for them to do so.

Filing Chapter 7, or 13, is simply a smart business decision which treats your creditors the way they treat you and others; nothing more, nothing less.

Many many of the rich, plan bankruptcies into their lives, because it is smart business. Business do the same.

 

[Eltigreblanco]

Also you can get out of debt, you are already on your way by reaching out for help. Follow the advice on this thread and you will be there in no time. After you are debt free remember to always pay yourself first.