Can I be saved, or am I in deep s**t?

[Anonymous]

I apologize - I didn't realize until I just re-read my "advice" how "girl" everything was!

But seriously...find a barbershop, not a salon for your haircuts.

You've just listed a BUNCH of things that can free up a good amount of money...between cutting out going out to eat so much, finding a less expensive place to get your hair cut, getting rid of the concerts, and possibly finding a less expensive car...that's a really nice amount of money that you can use each month to get yourself out of debt.

Is it possible for you to switch your cable plans?  So many places (at least where I live) are offering so many different incentives for switching plans and cable companies.  Just something to think about.

[CreditDrama85]

i did not read through the enitre thread so i dont know if this has been suggested before but, i think you should.

1. call all creditors and attempt to get a structured pp with significantly reduced interest

2. you should try to sell your car and use public trans / occassionally rent a car for a while (that would be $400 a month you could use towards your goal)

GOOD LUCK! have you made any progress yet? keep us posted

[Anonymous]

I think a lot of people have had great ideas on how to save money.  But here's a few things I didn't see mentioned.

I filed for Ch7 bankruptcy, and it was probably one of the smartest financial decisions I've made.  Was it easy sailing, and did I know what would happen every step of the way?  No.  The lawyer firm was a bunch of scatterbrained morons, and there was even suggestion I wouldn't qualify.  But the end result was very well worth it.  It cost about $300 in court costs and about $1000 to the lawyer; CH7 you have to pay up front before they file it (otherwise, duh, their bill gets wiped by the bankruptcy too).

Now for part 2.  No more credit.  ABSOLUTELY NO 401K LOANS.  Credit card debt is "dischargeable", and things like 401k loans, student loans, etc. are not dischargeable, meaning the debt follows you after the bankruptcy.  I have seen where debt has gotten me, and I promised myself I would not take out any more credit except when I buy a house with a very good down payment.  I have only one credit (gas) card, and I use it once a month to fuel up, and then I pay it off in full.  I gave back my new car and the attached $450/month payment promptly after the Ch7 bankruptcy was over.  I bought another car with CASH.  Every time I buy something, I pay with Debit (out of my checking account) and I keep track of every dime, every day, on an Excel spreadsheet.  When you do that, you end up dreading to enter all those darn transactions, you end up doing your best to keep the checking account balance high.  Most people call this a budget.  But first you should just write things down and observe where your money goes...THEN you will be in a better position to see where you can make cuts.

So, 16 months after my discharge, I have 647 FICOs, no stupid monthly payments, a car that's paid for in cash.  Not bad, I'd say.

Most important of all though...figure out what your fears, challenges, and risks are; what is the void in your life?  Once you start working on that, other things will fall into place.

[smallfry]

Well said Nick. I went BK7 at 48. It is almost 10 years now. I have had no problem getting credit for autos and after a few months I could get credit cards again. Going BK is not a death sentence. If you cannot budget then get no credit since you will repeat the same behaviour. Going BK at 24 you will be rid of the debt and by 34 it will be off your reports. Unless you are sure you can repay all the debt in a few years at most it is best not to throw good money after bad.

[MattH]

As others have pointed out, you may not be able to dig yourself out (in which case bankruptcy might be your only option), but if you can dig yourself out that will only happen by some combination of increasing income and decreasing expenses.  Simple, though difficult, arithmetic: you accumulated debt by spending more than you earned, so in order to decrease that debt you must spend less than you earn.  Unfortunately for you, due to the interest on your debts the period of spending less than you earn will probably end up being longer than the period of spending more than you earn has been.

So, how to cut spending: learn the difference between wants and needs.  Anything directly related to your health and safety, the health of loved ones, or your ability to earn your income is a need.  Absolutely everything else is a want.  Even some expenses you think are needs may not be.  For instance, if you cannot get to your job by public transit then a car is a need, but an expensive car is a want (if you can get to work by public transit then any car is a want).  Similarly, a safe place to live is a need, but an expensive place to live is a want.  You get my drift, I think.

To figure out how best to cut expenses, start by writing down as accurately as possible every cent you have spent over the previous 36 months.  I say 36 months because a reality-based budget must take into account what I call "unsurprising surprises" like repairs to my old car. Each individual problem comes as a surprise to me, but the general fact that such things happen from time to time with an old car does not come as a surprise to me.  Therefore, in most months I need to be saving some cash for the occasional month when my car or my home needs something fixed.  If my budget only took account of the predictable expenses that occur in each month, then when the car needed fixing I'd have to incur debt each time.

Anyway, once you have a complete list of expenses (and realistic estimates for those where you lack hard data), list them all in order from biggest to smallest.  Take a hard look at those expenses, beginning with the biggest, and figure out how you can cut them.  It's important to scrutinze the biggest expenses first because those are where changes will have the most impact: if your housing cost is half your income, then cutting back on Starbucks Lattes will not make much of a difference.  Unfortunately, cutting your biggest expenses might entail significant lifestyle changes such as moving to a smaller residence.  But failure to get your budget into balance will entail having major lifestyle changes imposed upon you by external reality sooner or later.

[bigtim]

I know many on here are not big fans, but another option, maybe the best option, is to consider a professional credt/debt counselor as a liason between you and your creditors. They may be able to negotiate a lower payment/settlement - something managable for you that would save you from BK - also getting a lower interest rate, and lower balance on your debts.

This would save you from BK, and when completed, any sign would be removed salvaging your future credit...

Good luck.

[CreditDrama85]

i agree with the others that BK is not a death sentence but i think it is something you have to think carefully about. while your ficos will recover, you have a mark on you for the next 7 years if you go BK.

you mentioned you are 24....do you expect your income to stay the same for the rest of your life? are you still in school? do you hope to get a better job one day? (a BK might not make u eligible in a background check)

figure out what your goals are and sell that car if you can.

[Anonymous]

I am only a few years older than you and if I were in your shoes here's what I would do:

Try to dig myself out for a year.  After 1 year re-assess and see how far you've gotten.  Maybe put off school for that amount of time.  If you dont see the light at the end of the tunnel, re-think the BK, but keep in mind that you are young and although some say BK might be the best answer it also might not.  It may be easy to get a loan and cc after you file but at what rates?  Secured $300 cc and auto loan at 21%? 

Try to make some sacrifices.  I've had to do it myself and it's not the end of the world. 

Def get rid of your cable.  In my area the HD antenna convertor boxes cost an initial amount (there are govmnt coupons) but after that no monthly charges and 20+ channels including MTV.  Tell your roommate that you cant pay for cable anymore and he wants to keep it he has to pay for it.  I called my phone co and got a plan that gives me DSL and 100 min outgoing calls & unlimited incoming calls for $24/month.   You can try something like that, use the pay-as-you-go cell to call your friends to have them call you back on your home phone. 

Definetly give up the eating out.  Get that way of thinking out of your head.  Everyone has to make sacrifices.  I knew people in Ivy League colleges who lived on Top Ramen and bologna sandwiches when they were there.  Sacrafices. 

Sell your car and buy a beater.  It'll suck for a while but you'll be **bleep** glad you did when your cc's are paid off and you go to the dealership with an 800+ score.  And you'll not only save the car payment but also a higher insurance and possibly gas cost.

Try the bartending on the weekends.  You'll get free drinks and still be able to hang with friends AND make some much needed moolah. 

I'm telling you this because I have worked hard for where I am, getting out of debt, etc.  I wouldnt feel as proud as myself if I didnt try to do it.  Know that BK is always there, but once you do it, you cant go back. 

[Anonymous]

You need to take that 2nd job as soon as possible... with the income you're currently bringing in you may never pay off your debt. How were you able to obtain credit limits that were that high in the first place? Most young kids only get 3-5k on a credit card when they apply. Your life needs to be devoted to cutting costs and working as much as possible. Luckilly you are young and your body can handle it. I'm in a similar situation except I have a lot less debt. I took on a second job working 3rd shift. Originally I was working 5 nights a week, but as the debt has gone down I've cut back to 3 nights a week. Good luck!

[wndrwmn78]

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@Anonymous wrote:

I am only a few years older than you and if I were in your shoes here's what I would do:

Try to dig myself out for a year.  After 1 year re-assess and see how far you've gotten.  Maybe put off school for that amount of time.  If you dont see the light at the end of the tunnel, re-think the BK, but keep in mind that you are young and although some say BK might be the best answer it also might not. 

---

I like this idea - it's a good compromise. Still gives you the option of BK if you can't pay off a good portion of debt in a year.

Most posters have been recommending to adjust your way of living, and I couldn't agree more. But you're also going to need to figure out why you've been spending so much...if it's truly an addiction, you can get help...but if it's just a lack of financial responsibility from being young, then you really need to find a good mentor to help you through this, whether a family member or an older friend.

The reason I am so concerned about your spending habits is because my family income is only twice yours, but our bills are also more than twice, with two small children, one still in daycare. And we make ends meet.

So I'm worried about what you're spending that money on...what REALLY worried me is when you said that you have to use your cards for gas and food or you'll starve. I don't understand where the income is going after your bills are paid if you've stopped spending money on frivolous items? So the idea of you filing BK is worrisome in that I don't want you finding yourself in this situation again 10 years in the future.

I don't mean this as a criticism to you, but as a wake-up call that other people bringing in less income with more bills are getting by, so it's not hopeless. Yes I know that the debt will take a good portion of your income for a long time, so that's why you need the second job. Even just working two nights a week will make a huge difference. I have to tell you that if I didn't have small kids, I would have a second job socking away money for retirement!

Good luck to you, and I know you can do it!!! Also - do your parents live in an area you would consider living in again? Honestly, moving back in with them would solve so many things - it would cut out most of your living expenses, plus give you that moral support system that you need right now to dig out of this hole. Unfortunately, your "friends" are not giving you that - they are instead "enabling" you.