How do we get out from over $30,000 in credit card debt?

Question

Hi. My husband and I are in way over our heads & I would really love some helpful ideas. We have $30,000 in credit card debt, $15,000 in car loans, & a home loan for $145,000 (worth $180,000). I work 3 part time jobs & my husband works 1 full time & 1 part time. We bring in about $60,000/year & we have two kids. I work from home for one job and the other two are when my husband is home. That way we don't pay daycare. My daughter is special needs and needs to be enrolled in a preschool to help her development, this is $250/month & cannot be eliminated. We do actually make it every month, by the skin of our teeth but we have no savings & every time something goes wrong (the stove breaks, the fridge starts smoking, etc) it causes major problems. We don't qualify for home equity loan b/c our debt ratio is to high. We don't want to be rich we just want to be able to do fun things like go to a movie together instead of not being able to b/c we need to pay the gas bill. Any advice?

Answer 1

Home, car loans and your daughter's special needs are fixed and therefore you need to set aside the money each month in order to pay. Your credit card loan is too high and I can imagine that you are just paying the minimum with high interest rate. If you are doing this, then you will never be able to pay-off your debts. Try if you can to budget your income that after paying your monthly mortgage & car loan and paying for the essential of daily living including property tax, heat, gas, hydro, cable-tv, telephone, cell phone bills, you still got some money left to pay your credit card debt. To be able to do this, you need discipline, will power and belt-tightening. When you see something you want to buy, first ask this question, " Can I or my family do without it"? Then if the answer yes, just walk away and never to think back. There is a huge difference between needs & wants. With extra money, try to pay your credit card debt first. Use cash to buy your needs and stop using credit card until it is fully paid off. There is no other way but to save as much as you can each month and put that extra cash into your credit card debt. If possible try to negotiate with you credit card company to explore ways where they can help you settle the loan with lesser burden or manageable for you & your husband each month based on you combine income. What is the purpose of having to work so hard in your life just to be able to pay your loans? That's not life. Think about it. I sincerely hope that you can overcome this problem.

Answer 2

The key for you is lowering your monthly expenditures enough to have extra money leftover each month to start chipping away at your debt. Here are some ideas:

1. Get the card companies to lower your interest rate for a period of time (tell them you're close to filing bankruptcy even if you're not; it'll motivate them to work with you).

2. Sell one of your cars (if it's worth more than you owe), pay off the loan, and live off one car for awhile. Share it since you both work at different times anyway--or one of you can take public transportation if it's available.

3. Sell one or both of your cars, pay off the loans, and buy cheaper cars (or do without for awhile if public tranportation is available).

4. Try to get a loan from Prosper.com (or anywhere else) to consolidate your car loans and credit card debt. You can lower your monthly payment by consolidating and also start to pay down the debt.

5. Sell your house and use the proceeds to pay off your debt. Rent somewhere for awhile until you amass some savings, or buy another house that's cheaper.

Primarily, though, you and/or your husband should probably find a way to increase your earning potential. It's better to have one well-paying full time job than several low-paying part time jobs. Once you get out of this debt, invest in your educations/skills training.

Answer 3

Live extremely cheaply for a couple years and use any money saved to pay off some of the debt.

Shop cheap- Go to WalMart for groceries, buy off brand or store brand foods. I do this and they are of comparable quality, sometimes they are even better. It saves me almost half my grocery bill...about $100.00 per week. Also, cut out "extras"....expensive snacks, soda, expensive shampoo and conditioner etc.

Buy Used- Our fridge broke and we got a great used fridge for less than half the price of a new one. Its not as pretty as a new fridge, but it works and has a one year warranty from the appliance shop I got it at that covers parts and labor.

Also, shop at the resale shops. I get most of my family clothing from resale shops. Last year, school clothes ran me $300.00 for 3 kids, including coast, jackets, gloves, hats and jammies. You have to look through all the racks for what you need, but its worth the time in money saved. Most of what I get looks brand new and sometimes I have even found new clothes there that someone just didn't like. The way I figure it, once an outfit is worn once and washed, its used anyway. Not to mention, you know the clothes will wash and wear well. I have about 5 shops within a 20 minute drive of my home that I go to when we need something.

Dollar Store/Discount store- I got to the dollar stores in the area and the discount stores like Big Lots or Family Dollar to get the rest of what our household needs. Again, they have name brands and off brands that are of decent quality and less than half the price.

Shopping cheap and putting the money you save toward debt will help greatly, but you have to stop adding more debt while you do it. That means that you will need to stop using the credit cards altogether. When you begin paying them down, send every card its payment every month. Then, pay any extra cash you have saved shopping cheaply to the card with the highest interest rate. Once that card is paid off, move on to the next highest. It will take time, but it works.

You didn't get into this amount of debt over night and you won't get out overnight either, but there is hope as long as you have discipline and want it bad enough.

Answer 4

First of all, make yourself a list (or a spreadsheet, if you're technically inclined) of all your cards, how much you owe on them, what your typical minimum payment is, and what your interest rate is.

Add up all the minimum payments. This is your minimum monthly credit card expense.

Check to see if any of your cards have a pretty low percentage usage. For example, if your $30k is spread among 10 cards, you'd have about a $3k limit on average. Are any of your cards under $1,500? If so, pay every last penny you can toward the card that has the lowest balance until you pay that card off, while you continue to pay the minimum on the other cards.

If you don't have a card close to pay off, you can choose to focus on either the card that has the lowest balance or the one that has the highest interest rate.

If you have some "room" on cards with lower interest rates, it's also not a bad idea to transfer some of your balance from the highest interest card to lower ones, then focus on paying off the now-reduced amount on the high-interest card.

Once you pay off one of your cards, leave it open as an emergency buffer (also known as the broken stove fund). Later, this will be replaced by a bank account buffer, but if you can get a credit buffer going, it's more important to pay off your debt than to have a lot of money in the bank.

Then choose another card to focus on. (The next low balance or high interest card.) Take the minimum amount that you used to pay on the first card and snowball it into the payment of the second. Wash, rinse, repeat.

Example:
Card 1 - 1,200 (minimum payment: 50)
Card 2 - 1,000 (minimum payment: 40)
Card 3 - 800 (minimum payment: 25)

Once you pay off Card 3, you can then pay 65 per month to card 2.

If you want someone to guide you through the process, email me or IM me.

Don't cancel your cards once you pay them off. If you owe $30,000/$32,000 that's a 93.75% usage. If you pay off a $2,000 card it's then $28k/$32k which is 87.5% usage. However, if you close the paid off card it's now $28k/$30k, which is 93.33% usage. Keeping the card open but not used makes you look better, because you're not as close to being totally maxed out. (Plus, that's your emergency fund until you get your credit card payments low enough to make a savings account emergency fund.)

Look into programs that'll help you with your daughter's school costs. You may be able to get her into a free program or find an organization that'll give you money toward her tuition.

Answer 5

If you are caught in the credit card debt trap, approach a debt consolidation company for help, instead of paying high rate of interest to your card issuer. Most of the debt consolidation companies provide loans to help you tide over the credit card debts. These loans are known as credit card debt consolidation loan. The advantage of this loan is that you are charged a low rate of interest. The difference between the interest charged on the credit card and the interest on the credit card debt consolidation loan is substantial, saving you quite a big sum of money.

However you should note that credit card debt consolidation loan may not be right for all. Before applying for any loan, consult your financial advisor and apprise him of your problem. He will analyze your situation, and decide whether credit card debt consolidation loan is right for you or not. Take this loan only if he recommends it.

Most of the financial advisors offer free service or charge a nominal fee. Approaching a financial company that offers credit card debt consolidation loan will save you the consultation fee, since they do not charge for their advice.

Answer 6

Check out the recommendations of others here, but be sure to lock up or cut up your credit cards.
If you never charge another thing, and only make minimum payments, it will still take you over 30 years to pay off the present debt.

Answer 7

have you contacted your credit card compains to ask for a lower interest so you do not have to file bankruptcy. If they fear bankruptcy they may work with you. have you check around on your car and house loans to see if you can find a lower interest rate there? Have you also checked around in the past year on your car and house insurance to make sure you are getting the best price there. You have to look at every single thing you do and buy and see if there was anyway you could cut back.

Answer 8

i might by no potential refinance my homestead for credit card debt. If for no different reason than, the credit card business company can not take her homestead, no count number what. i might communicate getting the homestead paid earlier paying something. $30,000.00 is diverse money. She might desire to easily refinance if she has found out her lesson and forestalls residing previous her potential. different sensible she might desire to be suited returned the place she is now merely with thrice the debt on her homestead too. Then what is going to she do? She desires credit counseling centers to help her study to regulate her money.

Answer 9

well if your credit is already shot, then threaten the cc companies with bancruptcy. most will give you an intitial settlement offer of about half of what you owe. then you wait afew months and the offers will drop even lower, and lower, and lower... again, only do this if your credit is already shot that way you can pay off about 1/4 to a 1/3 instead of all of it... if you have decent credit or dont' wanna screw it, sign up for debt consolidation loan. they are all over the web...

Answer 10

Do not use your Credit Cards anymore.

Example:
You have $30,000.00 in debt.
You pay $3,000.00 ($300.00 in Principal and $2,700.00 in Interest)
Your debt is now reduced to $29,700.00
You charge $400.00
You have $30,100.00 in debt.

At this rate you will die with a balance.

Here is what you should do:
You have $30,000.00 in debt.
You pay $3,000.00 ($300.00 in Principal and $2,700.00 in Interest)
Your debt is now reduced to $29,700.00
DO NOT CHARGE ANYTHING
You have $29,700.00 in debt.

At this rate you will pay your debt in three decades but is better than never.