I am in over $40,000 worth of debt. How can I get out of it?

Question

We have a loan that is a little over $28,000 and about5 $9,000 on credit cards. We wanted to do one of those credit counseling services but I think they only help you if you are in major credit card debt and are interest rates on our credit cards are zero percent. What should I do?

Answer 1

It depends on whether you want the good answer or the right answer.

1. Tend Bar
2. Deliver Pizzas
3. Do odd jobs for people in the neighbourhood
4. Deliver Newspapers
5. Wait Tables.

Get about 5 jobs, work about 80-100 hours a week, set up a budget, do it for a year, and realize that you got yourself into this mess, and that you can get yourself out of this mess.

And frankly, I don't want to hear, "But I have kids, I can't do that, I don't have the time..." What you are really saying is, "That's no fun, and it's too difficult for me to do, and I'm not strong enough, and I'd rather find someone else to fix my messes..."

You just might be able to generate another $500-$1,000 a week in additional income. It just depends on your creativity, and how hard you are willing to work.

You put yourself on a budget, tear up those damn credit cards, and take that additional income toward those bills, you'd be amazed what you can do.

As Dave Ramsey says, "you live like no one else, so later, you can live like no one else..."

Now the aforementioned is the "right" answer.

Also, read the fine print, and take a closer look at your statement. If you are carrying that kind of balance on those credit cards, you are no longer at -0- percent. You are somewhere between 18 and 32 perent, just like everyone else.

And you can go to one of those credit counselors, and what they do is go to the credit card company and tell them they have another "loser" that needs an adjustment.

The credit card companies gladly do this, because they know you'll do the same thing in 6 months because you haven't learned anything, and probably be in even greater debt the second time, the thired time, the fourth time, and so one...

They key here is learn how to manage money. Set up a budget, and so on. You are in a situation that everyone finds themselves at one time or another. The key is to find out why, and then don't do the things that got you there in the first place!

Answer 2

First things first - if your credit cards will remain at 0%, pay the minimum until the other higher cost loan is paid in full. If you can switch the $28K to a zero percent credit card that will remain at 0%, do so immediately. Once you have the minimum amount possible going out in interest, start reducing it as aggressively as possible - if you don't want the debt.

I say that because at 0%, I would take as much debt as I could afford payments on - that's free use of someone else's money! I'd love some of that. It may sound strange, but you may consider more debt - follow the logic here.

If you are able to take another $50,000 in zero interest you could invest in a safe vehicle so as to not endanger the new $50,000 principle, but which brings in say 8% annually from investment- that is $4000/yr or over $330 per month in free money, that can be used to pay off the current $37,000 in debt. At zero percent interest, you should have it paid off in less than 10 years and still have the new principle balance of $50,000 to pay once you're done.

OK, so that is probably not available, or you want it gone much sooner, so there is only one good way to handle that - find more money to pay toward your bills. Slash your budget, live frugally, and get more income to go toward those bills.

Answer 3

Wow, I'm not sure whether you should need to sacrifice time off and with family to work 80 hours/week here....? The fact is $29k is really not too far above the growing average of household consumer debt and $9k in cc debt is almost "minimal".

First, see how long your interest dates are zero.% If you can make double payments to avoid interest down the road, do so. If not, consolidate these bills with a refinance or second mortgage that will at least likely cut your monthly payments in half, allowing you to make similar payments and reduce your balance quicker. This also is now tax-deductible as it is tied to the home.

There is no reason to worry about interest-free debt as long as you can make monthly payments to alleviate debt before interest kicks in.

If you don't have collateral or income to stand on, yes, ask for a raise or find a 2nd job.

Answer 4

If the loan is on a piece of real property (a house or car), you can't declare bankruptcy without losing that property. If it's a car or boat or motorcycle, I suggest you sell the item it's on.

A bankruptcy would take care of your credit card problem, but it's only a temporary solution. Most people go right back to using credit cards after a bankruptcy and dig in even deeper than before.

Answer 5

Great answers so far. Best responses I have seen.
Cards are not free, you will have already paid interest in the price or will pay when the interest free ends.

- Destroy all cards - do it now
- Use cash only
- Dont go anywhere near shopping centres - stay home watch TV, go fishing, go for a walk.
- on the weekend hire a DVD thats it. Maybe buy a slab or bottle of wine on the weekend thats it.
- Sell surplus junk around the house


You are smart enough to ask the question so you know its up to you.

Good luck mate.
:-)

Answer 6

Tighten-up your belt first.
If you have a regular income, pay off debts by older ones and critical ones first while requesting other lenders to wait.
If you are not married, go for it as soon as possible as your spouse's income takes off a little burden from you.
Pay off 1/3rd of the debt by taking a loan on your house equity; this should not cost much interest wise.
Adapt a frugal living style which saves dollars silently when you don't know.
Keep off from alcoholism or other addictions which have devastated lives such as yours.

Devise any other method according tot he demands of your circumstance.

Answer 7

if your interest rate is zero percent youre very lucky. 500 dollars a month for about 7 years should see you debt free from 40,000 dollars. you may need a second job to be able to manage this. if you want to get rid of the debt quicker, then you might want to liquidate some assets in order to do so.

Answer 8

If your cards are definitely zero percent then make the minimum payments on them while you pay as much as possible on the loan. Once it is paid off then increase the payments on the zero percent cards.

Answer 9

quit using credit cards. cut your unnecacary expeditures i.e. eating out, buying lots of clothes, etc. give yourself a budget is the biggest step. i saw this thing on t.v where people were putting their money in jars for the month. have a food jar, entertainment, clothing, gas, etc. start your month sith a set amount of money. using actual money instead of debit will help. writing down everything you spend money on. have a time line to pay the bills. you need to buckle down and live poor for a while. it really really sucks but its such a relief to have those debts going down.