Financial Debt Help

[FREAKYSTLYEY]

Im not sure what to do, I have a little debt in unsecured loans [credit cards] that I do not believe I can no longer afford.

A little history as to why. Im 21 and was making 60k a year for the past 2-3 years. When all of a sudden layoffs finally struck. I didn't see it coming and was on my way to paying of the credit cards putting 1,000$ a week towards them.

Im now still unemployed, am seeking employment and am beginning college this semester. Im now going to be a VERY poor college student. Living off of about 300-350$ a week.

45-90$ a week will be going to gas alone. If Im lucky enough to carpool with a friend every day.
25$ a week to insurance
35$ a week to phone bill
40$ a week to food.
17$ a week for gym [two memberships dealing with this now]

And I need to find a place to live.
OH and school

Now my debt is 12,000$ between two cards.
I have a vehicle payed off that is worth 4-5k
and an autoloan for my girlfriends vehicle, but she pays that every month.

Im haven't missed any payments yet or anything, but I know I can't keep this up. I know I can call and TRY to get lower interest and such, or work out a payment plan. Or settle it [considering], but I dont have much to loose [property or credit score] and doubt I will be sued. Literally to my name I own about the following worth any value.

Vehicle.
Macbook.
Bass.
Engagement ring.

So what should I do?

I have read into this alot! But just cant decide on anything.
My first action may to be just settle the debt.
Second Action will be to simply not pay it. Let it go to collections. I have read all about this and know they will call and send letters and POSSIBLY and very slim in my state of louisiana ESPECIALLY for 10,000$ take me to court. Sure my credit score will be hurt, but I wont be needing it for the next 4 years of my life anyway, and yes I know it stays on there for 7 YEARS.

I understand Im fully at fault. And was living outside of my budget. TRUST ME I HAVE LEARNED MY LESSION. But I was making GOOD money, paying it off VERY quickly and NEVER saw this coming.

Any help?

Just talking/typing about it really helps.

[blendermassacre]

here's what you do. and you're not going to like it.

sell the engagement ring. It's a lot better to start out your married life financially stable, because it will lead to a more stress free marriage. Sell your bass stuff. This sucks, but for now, you'll have to. if you can sell your car, and downgrade to a $2k car, that's helpful too. see if you can dump your cell contract and get a cricket phone. It's 30 or 40 / month not a week.

Then try to call and restructure your CC payments to something that's affordable.

how are you paying for school? Why so much in gas?

[bwv1013]

first of all, keep up what you're doing, which is keeping your head on straight. staying on top of things and not making any rash decisions will pay off down the road.

now, on to practical matters:

-if you were laid off you may be eligible for unemployment. a few minutes of paperwork can put money in your pocket in the months ahead while you look for work.

-cut expenses. it seems obvious, but cut out everything that is non-essential, i.e. gym membership, etc. every bit helps.

-the rule of thumb for credit cards is to pay off the smallest card balance first, making only minimum payments on the others. each card you knock out leaves more money to attack the next biggest card.

-apply for every single form of financial aid that you are even remotely eligible for. many types of student aid will factor in living expenses for students.

-look for an on-campus job. the pay may be minimum wage, but this works to your advantage. you will pay less in taxes, and will still be eligible for unemployment benefits as long as you stay below a certain income threshold. make the system work for you.

hope this helps. best of luck and keep your chin up, better days are coming.

[blendermassacre]

also, kudos for you for a) keeping a sober mind about it and b) asking for help before you were in way too deep.

[FREAKYSTLYEY]

Originally Posted by blendermassacre

here's what you do. and you're not going to like it.

sell the engagement ring. It's a lot better to start out your married life financially stable, because it will lead to a more stress free marriage. Sell your bass stuff. This sucks, but for now, you'll have to. if you can sell your car, and downgrade to a $2k car, that's helpful too. see if you can dump your cell contract and get a cricket phone. It's 30 or 40 / month not a week.

Then try to call and restructure your CC payments to something that's affordable.

how are you paying for school? Why so much in gas?

I honestly dont think im going to sell anything. I have already which is why Im left with the few things I do have. And everytime it did not seem worth it. I either loose enough money on something I simply have to buy agian for the marked up cost. Or find my self not finding the the money worth it.

-The ring aint going
-My bass could POSSIBLY go. But it would only get me 700$. And Id get another one sooner than latter.
-My computer CAN go, but its my only access to the internet. Thought I could sell and get a cheaper one.
-The truck would be the last thing to go, second to the ring.
-Your right about my cell phone, but Im paying for my girlfriend also.

School is going to be grants and paying during the semester, via payment plan.

[GregC]

Originally Posted by blendermassacre

here's what you do. and you're not going to like it.

sell the engagement ring. It's a lot better to start out your married life financially stable, because it will lead to a more stress free marriage. Sell your bass stuff. This sucks, but for now, you'll have to. if you can sell your car, and downgrade to a $2k car, that's helpful too. see if you can dump your cell contract and get a cricket phone. It's 30 or 40 / month not a week.

Then try to call and restructure your CC payments to something that's affordable.

how are you paying for school? Why so much in gas?

+1. In particular, $35 a week on the phone is way too much.

[blendermassacre]

if you don't want to sell anything, than so be it. I know exactly where you're coming from. Don't sell your computer. You'll need it in school.

I would then just try to come up with a payment plan you can afford with your creditors. That's your only option, IMO.

even if you cut your payments for cell phone in half, it would be worth it. $80/ month is better than $35/ week.

also, know that I'm coming at this just having cut expenses to the bone. I've sold off over $2k worth of bass stuff in the last 6 months because we needed the money more than I needed the stuff. I really didn't want to, but I needed a car, and we're moving in a couple months, and I'm in school. It sucks, but it's worth it in the end. I wish you the best of luck. Hopefully you can find employment soon.

[FREAKYSTLYEY]

Originally Posted by bwv1013

first of all, keep up what you're doing, which is keeping your head on straight. staying on top of things and not making any rash decisions will pay off down the road.

now, on to practical matters:

-if you were laid off you may be eligible for unemployment. a few minutes of paperwork can put money in your pocket in the months ahead while you look for work.

-cut expenses. it seems obvious, but cut out everything that is non-essential, i.e. gym membership, etc. every bit helps.

-the rule of thumb for credit cards is to pay off the smallest card balance first, making only minimum payments on the others. each card you knock out leaves more money to attack the next biggest card.

-apply for every single form of financial aid that you are even remotely eligible for. many types of student aid will factor in living expenses for students.

-look for an on-campus job. the pay may be minimum wage, but this works to your advantage. you will pay less in taxes, and will still be eligible for unemployment benefits as long as you stay below a certain income threshold. make the system work for you.

hope this helps. best of luck and keep your chin up, better days are coming.

- I am currently on unemployment.

- I have cut everything possible. Im trying to cancel one membership [I moved] but the other one, Im pretty sure I have no way out of.

- I was paying off the smallest first and it was working great.

- I feel like i have rid myself of everything I possibly am WILLING to. down to my few things listed.

-Ring
-1 bass
-Vehicle
-Computer
-Cellphone plan [may be next to go]
-Gym membership [trying to get rid of one but the other I doubt I can back out, nor am I WILLING to.

Oh and gas is so expensive because I live in a very remote area and have to drive 15-30 miles one way just for work. And if i were to drive to school it would be 45 Miles one way. And my truck aint the most effecient But I love it.

I know there are some things that WOULD help like the vehicle,ring,bass and gym. But those are 4 things I do not find worth giving up.

When reading these types of situations online, usually the answers are settle or just dont pay it off and take the hit.
People actually seem to encourage these two. Im past the point of believing I can really pay these off, without settling and placing them into a consolidation [personal] loan.

But some people simply just stop paying and feel fine. They get the calls, and mails, and RARELY are summoned to court. And usually the saying is, if you honestly cannot afford to make the payments you will not be forced to. And if you have no assets for them to seize then usually you just come out with a bad credit score. Worse case, they garnish your wages. I just find it very hard to stop paying because I know they will tack on fees and interest will continue to compile untill.. [Im not sure when]

I know it seems like Im trying to escape this debt, well I am. I want it out of my life and I seriously cannot see myself paying this off in my current situation. On top of this all, my credit score aint nothing pretty [I know I can get a loan only because I know someone at the bank] but really to me it isn't worth protecting.

Feel free to bash me.

[m0nst3r]

Alright, if you have 12K in debt, that means that your min payment is about $240, correct?

The first thing I would do is to assess what I can sell. Unfortunately, I agree with blendermassacre. Sell the engagement ring. You'd be surprised how many marriages end because of financial instability, and you don't want to be doomed from the start, right?

I don't know if I agree about selling your car though. I'm guessing you live far away from the school, which is why you're paying so much for gas, so having a reliable car is very important. On the other hand, if you're driving a car with a high insurance premium that consumes a lot of gas, then I would consider downgrading, or buying another car with a lower insurance premium and good MPG. You don't really need to be driving around in a fancy sports car that only gets 20mpg, only takes premium, costs a lot to maintain, right? (not saying that's what you drive) Also, try checking out public transportation, or even a carpooling service. You'd be surprised as what you can find.

Sell all of your bass gear, except one bass. If it's a particurly expensive bass, then downgrade. You're a bass player, and not having a bass to play is going to drive you crazy.

The second thing is to cut back. With the plans they have out now, no one needs an individual plan where they have to pay $140/month. That's pretty crazy. This would be the first thing to cut back on. Really assess what you need your phone for, and then go from there. Do you really need internet on your phone? Do you really need unlimited minutes? Etc. If you have a really expensive phone, sell it. There are plans out there where you can get a decent phone for free with a good plan. Do you really need that iphone, blackberry, droid, etc.?

I would also get rid of the gym membership. That frees up $68 right there. Often times there are gyms on campus that the students can use for free, so I would look into that. Also, if you don't have to pay extra for it, consider taking a PE class.

The third thing is to try and get that interest rate lowered. The worst thing that can happen is that they'll say no, right? So why not try.

The fourth is to apply for FAFSA, scholarships, and any ther financial aid. There is tons of free money out there, you just have to look. If you decide to take out student loans, be very attentive about the interest rates and terms and conditions. Unlike CC debt, if you file for backruptcy, it's most likely not going to go away.

I pretty much regurgitated what the others said, since they have such good advice. Good luck, and I hope everything works out.

[FREAKYSTLYEY]

Originally Posted by GregC

+1. In particular, $35 a week on the phone is way too much.

Phone plan is..
ATT Family Plan
550 mins 50$
Unlimited Texting 30$
Data Plan 30$
Extra Line 10$

But your right.

[blendermassacre]

I don't think anyone's trying to bash you. However, I think this conversation went from "I'm trying to do what I can" to "I'm not going to give up xyz, so whatever happens happens". those are not the same. If you are morally okay with racking up $12k and debt, not paying and running the risk of ruining your credit score, then so be it. This is america after all. IMO, that's something that I could not do. I am scratching and clawing my way out of debt and trying to repair my credit score.

[FREAKYSTLYEY]

Alright, if you have 12K in debt, that means that your min payment is about $240, correct?

300$

I don't know if I agree about selling your car though. I'm guessing you live far away from the school, which is why you're paying so much for gas, so having a reliable car is very important. On the other hand, if you're driving a car with a high insurance premium that consumes a lot of gas, then I would consider downgrading, or buying another car with a lower insurance premium and good MPG. You don't really need to be driving around in a fancy sports car that only gets 20mpg, only takes premium, costs a lot to maintain, right?

Your pretty close! Its a Land Rover Discovery
I offroad when Im not broke, and I LOVE IT.
Insurance is pretty low for my age. 80$
Gas Mileage is 18HWY 12 City
Does Use Premium

Sell all of your bass gear, except one bass.

Did it.

I would also get rid of the gym membership. That frees up $68 right there. Often times there are gyms on campus that the students can use for free, so I would look into that. Also, if you don't have to pay extra for it, consider taking a PE class.

I belong to two which is why its 68$ a month.. But your completely right I forgot the college Im attending does have a free GYM unfortunately Im in a contract.

The third thing is to try and get that interest rate lowered. The worst thing that can happen is that they'll say no, right? So why not try.

Im not afraid to try anything.

The fourth is to apply for FAFSA, scholarships, and any ther financial aid. There is tons of free money out there, you just have to look. If you decide to take out student loans, be very attentive about the interest rates and terms and conditions. Unlike CC debt, if you file for backruptcy, it's most likely not going to go away.

Believe me Im not getting into ANY more debt.

[MJ5150]

Originally Posted by FREAKYSTLYEY

.......I seriously cannot see myself paying this off in my current situation..

Keep your chin up soldier. It's not that bad. You'll be back making your $60K soon enough.

-Mike

[FREAKYSTLYEY]

Originally Posted by blendermassacre

I don't think anyone's trying to bash you. However, I think this conversation went from "I'm trying to do what I can" to "I'm not going to give up xyz, so whatever happens happens". those are not the same. If you are morally okay with racking up $12k and debt, not paying and running the risk of ruining your credit score, then so be it. This is america after all. IMO, that's something that I could not do. I am scratching and clawing my way out of debt and trying to repair my credit score.

I hear ya. And I knew I would come off like that. It just doesn't seem possible or worth it to pay off. I'll admit the cellphone is too much, computer could be cheaper. But the rest I don't plan on dropping. Bad enough I have to find a way to pay for school while im in school. AND find a place to live, AND pay off my other bills.

By the way I had a new vehicle a 2007 frontier I bought in 2008 for 18,9 [4wd] but thankfully I sold that about 1 year ago, THAT loan would have completely messed me up.
500$ month on car note and 350$ in insurance. Best part is I didn't loose much at all!

[TheSuzie]

Please read all of what I say carefully.

***Do not call the credit card company when your account is current and tell them you might stop paying. They will instantly freeze your accounts and raise your rates. In today's environment I can guarantee that they will not lower your rate if you ask.

You can usually preempt a regular rate raise when you are informed by mail that one is coming by sending a certified letter requesting that your account be frozen and that the rate be frozen. This assumes the account is in good standing and you must never charge to that account again or they will raise your rate. This is usually all covered in the small print of the agreement.

Credit card companies will likely not settle with you if you have been paying. You will have to let yourself get behind before they will consider dealing with you. They also don't usually do not want to consider payment plans for settlement. When talking settlement, they are more likely to want to see a chunk of cash.

My advice is to do anything you can on the side to earn cash so that you can either reduce your debt over time or accumulate a chunk of cash to eventually use to negotiate a settlement.

Remember that the interest you have and will be paying could probably go a long way toward replacing anything you may have to sell to get out of this mess.

Good Luck,
S

[blendermassacre]

what the hell were you doing at 21 to make 60k a year?

[FREAKYSTLYEY]

Originally Posted by MJ5150

Keep your chin up soldier. It's not that bad. You'll be back making your $60K soon enough.

-Mike

Hah hope so! This whole situation is a real humbling experience. I went from making 150$ a week to making 1300-2000 a week in no time. I was living the life, bought two new [to me] cars could afford anything I wanted. Had New amps and basses and such every month. Making 3x more than any of my friends. To being a poor college student.

Thing I miss most is ALWAYS having gas.

[FREAKYSTLYEY]

Originally Posted by TheSuzie

Please read all of what I say carefully.

***Do not call the credit card company when your account is current and tell them you might stop paying. They will instantly freeze your accounts and raise your rates. In today's environment I can guarantee that they will not lower your rate if you ask.

You can usually preempt a regular rate raise when you are informed by mail that one is coming by sending a certified letter requesting that your account be frozen and that the rate be frozen. This assumes the account is in good standing and you must never charge to that account again or they will raise your rate. This is usually all covered in the small print of the agreement.

Credit card companies will likely not settle with you if you have been paying. You will have to let yourself get behind before they will consider dealing with you. They also don't usually do not want to consider payment plans for settlement. When talking settlement, they are more likely to want to see a chunk of cash.

My advice is to do anything you can on the side to earn cash so that you can either reduce your debt over time or accumulate a chunk of cash to eventually use to negotiate a settlement.

Remember that the interest you have and will be paying could probably go a long way toward replacing anything you may have to sell to get out of this mess.

Good Luck,
S

Thanks I wasn't aware about them not lowering interest rates.

I was aware of the settling deal though and them wanting cash.

[FREAKYSTLYEY]

Originally Posted by blendermassacre

what the hell were you doing at 21 to make 60k a year?

Industrial Electrican 24$ hr. 60$ PERDIEM
50-70 Hours a week.

[blendermassacre]

Union?

I had a buddy who was a journeyman electrician who got laid off for 5 months. Almost drove him crazy, but he did his best, and also quit smoking while he was at it.