cancel
Showing results for 
Search instead for 
Did you mean: 

How to get out of debt? Personal Loan?

tag
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?


@gkinter wrote:

Good afternoon again,

 

My credit cards and their balance/ cl:

  • Best Buy CC- 4265/5000
  • Discover - 2930/3500
  • Amex BCE- 5264/25000
  • Amex Delta - 915/1000
  • Capital One Platinum- 0/800
  • Capital One Venture - 5402/5500 (0apr for a year)
  • Chase Sapphire - 8500-9000 ( 0 apr until november 2018)
  • Citi AA- 1000/8500

Even writing this down makes me feel stupid but I really need help. 

Any ideas? 


Some of the other commenters have come up with some great tips for cutting one's spending further.  A lot of those ideas I had never heard of. 

 

So you can think of this as two blades in a pair of scissors.  You need both blades fully sharpened and working in tandem or the paper won't cut.  One blade is reducing spending.  The other blade is choosing what you will spend the money that gets liberated on.  I will focus on this last piece.

 

First figure out how much it would cost to make double the minimum payment + one dollar for each card.  That is the least you need to spend on every card every month going forward.  Do that even on the 0% cards.  Paying well over the minimum reduces the chance you will be perceived as a risk by the CC issuer.

 

Second, pay all cards that are maxxed out down to 89%  This includes the 0% cards.

 

Third, pay all cards down to 49%, except those that have 0% offers.

 

Fourth, pay all the 0% cards down to 69%.

 

Fifth, pay off entirely any cards with a small balance.  E.g. the Amex Delta.

 

After all that is done and all the new balances have fully registered on your reports, check to see how much your score has gone up.  You will probably be within reach of approval for a personal loan.

 

Throughout this entire process, stop using credit cards for anything.  Only use debit cards until your CC balances are $0.

 

Hope that helps....

 

 

Message 11 of 19
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?


@arkane wrote:

 

Movies... Man the number of times I've been to an actual cinema in the last 5 years I can count on one hand. Dining out, now this is where you can save massive amounts of money if you eat out often. I limited myself to two fast food meals per week in the past 4 years. My health was certainly worse off for it, but my bank account certainly remained nice and fat LOL. Smiley Very HappySmiley Sad

 

 


When I mentor new people now on building wealth, I actually ignore debt completely in my calculations and outlook because it's in the past and not part of the future wealth building exercises.  But what I don't ignore is habits because those are past and future.

 

So the first step I make everyone do is go back over 12 months and do my reverse budget for each and every account.  I don't care about the specifics, I just want the big red written numbers for each of the 12 months.

 

You can not believe what you will see if you just do 3 months of reserve budgeting.  It is absolutely incredible.  Even though I'm a thrifty saver, I still do my own reverse budget every month and a spend-conscious guy like me can still have $200 or $300 of that junk in a month which extrapolates to up to $4000 a year which over 10 years can be enough wasted money to buy a 1 bedroom rental in my target areas.  And that's with a guy who is 99.9% budget conscious every day.

 

So for everywho who is "in debt", the #1 thing they can do, the absolute priority exercise in fact, is to do a reverse budget immediately and completely to see what their habits are and to break them.

 

A few days ago I was working with a guy in person and he swore he had "no major unnecessary spending" going on in 2017, but his Game Stop purchases totalled over $1800 and his Dunkin Donuts total was close to $2100.  He couldn't believe that $4000 of his income was gone in just those two categories.

 

You just can't attack future plans without attacking habit spending, and you can't attack habit spending without auditing those habits.  The reverse budget I wrote up there (I have long articles if anyone cares for them) is the #1 most important thing a person can do every month (after paying minimums on debt of course!), and we all should do it every month like clockwork.  Preferably with family at the dining table looking over things.

Message 12 of 19
arkane
Established Contributor

Re: How to get out of debt? Personal Loan?

Yeah keeping a running budget is the #1 thing anybody who is rebuilding (or even just starting) credit should do. 

 

Although I'm not quite as meticulous as your reverse budgeting, I do keep an Excel spreadsheet to document all incurred expenses. I have a running tally for monthly, quarterly, and yearly expenditures. I like using Excel because I can instantly tell when I'm spending more money, and can then pour over that month's expenses to figure out if it was legitimate (travel, insurance, maintenance etc) or frivolous. 

 

My favorite story is there was one month where I spent $300 more than I anticipated. Upon closer look, I realized I kept buying $30 games that month, to the tune of $300 in total. Because each purchase was only $30, it didn't even register, but make enough of those and they really add up and quickSmiley Mad

 

Another trick I use is to think in terms of dollars spent/saved per year instead of per month. For example even just shaving $5 off my phone bill means an extra $60 per year, which is almost enough to pay for one month of utitilies. And if I gave up that $15 lunch just once a month? Another $180. That's already $240 saved per year with almost 0 effort. 

Active:

Closed:


6/8/20:

Message 13 of 19
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?

Nickels and dimes add up REALLY fast.

 

In 2017 I signed up with StashInvest to strictly use whenever I "just said no" to something I was just about to buy (say Starbucks) or when I made a list to buy things (groceries, clothes) and came in under my budget.  I would immediately send the $$$ that I didn't spend at Starbucks, or send the difference between my projected spend and my actual spend.

 

After a year, I put away almost $1400 into StashInvest and my portfolio grew by 12% or so.  $1560 over a year just in nickels and dimes.  $3.83 per day in money saved.   About 22 cents per waking hour turned into $1560.

 

It is absolutely stunning to see that in 10 years, assuming similar growth, I could have $27,000 socked away -- 22 cents per waking hour in avoiding my habit spend or savings pennies here and there on grocery purchases.

 

When I still sold t-shirts online (one of my many businesses back when I worked) we did a test on one VERY popular product we sold for $9.00.  We lowered the price to $8.99 and sales went up IMMEDIATELY by almost 6%.  It never dropped, so we raised the price to $9.99 and sales were consistently 15% more than at $9.  People see $8.99 and think it's a better value than $9.00, but oddly people see $9.99 and think it's a better value than $10.00 or $9.00.

 

Those $30 video games you bought are probably priced at $29.99, right?

Message 14 of 19
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?


@arkane wrote:

Yeah keeping a running budget is the #1 thing anybody who is rebuilding (or even just starting) credit should do. 

 

Although I'm not quite as meticulous as your reverse budgeting, I do keep an Excel spreadsheet to document all incurred expenses. I have a running tally for monthly, quarterly, and yearly expenditures. I like using Excel because I can instantly tell when I'm spending more money, and can then pour over that month's expenses to figure out if it was legitimate (travel, insurance, maintenance etc) or frivolous. 

 

My favorite story is there was one month where I spent $300 more than I anticipated. Upon closer look, I realized I kept buying $30 games that month, to the tune of $300 in total. Because each purchase was only $30, it didn't even register, but make enough of those and they really add up and quickSmiley Mad

 

Another trick I use is to think in terms of dollars spent/saved per year instead of per month. For example even just shaving $5 off my phone bill means an extra $60 per year, which is almost enough to pay for one month of utitilies. And if I gave up that $15 lunch just once a month? Another $180. That's already $240 saved per year with almost 0 effort. 


So crucial. 

 

I spend summer weekends at the beach. Tolls/Gas/Parking at the ferry didn't seem all that far off the cost of taking the train ($38 round trip) and shuttle bus ($10 round trip) but when I did the math, driving out there costs $40 more per weekend. Over 5 months, I saved $800 by taking the train and a lot of wear and tear on my 11 year old paid off car.

 

It was rumored that the ferry service was raising prices, so I stopped in a couple of weeks ago to see about advance season passes. Bought them at the old rate and verified they will still be honored once the new rate goes into effect. Saved $320 on summer 2018 already Smiley Happy

Message 15 of 19
arkane
Established Contributor

Re: How to get out of debt? Personal Loan?


@Anonymous wrote:

Nickels and dimes add up REALLY fast.

 

In 2017 I signed up with StashInvest to strictly use whenever I "just said no" to something I was just about to buy (say Starbucks) or when I made a list to buy things (groceries, clothes) and came in under my budget.  I would immediately send the $$$ that I didn't spend at Starbucks, or send the difference between my projected spend and my actual spend.

 

After a year, I put away almost $1400 into StashInvest and my portfolio grew by 12% or so.  $1560 over a year just in nickels and dimes.  $3.83 per day in money saved.   About 22 cents per waking hour turned into $1560.

 

It is absolutely stunning to see that in 10 years, assuming similar growth, I could have $27,000 socked away -- 22 cents per waking hour in avoiding my habit spend or savings pennies here and there on grocery purchases.

 

When I still sold t-shirts online (one of my many businesses back when I worked) we did a test on one VERY popular product we sold for $9.00.  We lowered the price to $8.99 and sales went up IMMEDIATELY by almost 6%.  It never dropped, so we raised the price to $9.99 and sales were consistently 15% more than at $9.  People see $8.99 and think it's a better value than $9.00, but oddly people see $9.99 and think it's a better value than $10.00 or $9.00.

 

Those $30 video games you bought are probably priced at $29.99, right?


StashInvest sounds intriguing, will have to look into it. 

 

And yeah the power of that .99, really screws with your perception. Even after becoming aware of the mind game many years back, I still have to make a conscious effort to remind myself to round UP instead of rounding down. 

 

Yeah those games were $29.99, but that's not why I bought them. They're typically $60 a piece, but Steam runs sales every now and then, and I caved in to the 50% off temptation. To be fair I still did get value out of them, but if I were honest I probably wouldn't have bought 3 of those if they weren't half off. 

 

Actually those aren't even the worst. I have a penchant for buying "collector's editions" which cost 50-200% more. I rummage through the contents a few times, ooooh and ahhh at how shiny everything is and promptly SD them. Smiley Sad Now that is an egregious waste of good money. 

Active:

Closed:


6/8/20:

Message 16 of 19
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?


@arkane wrote:


StashInvest sounds intriguing, will have to look into it. 

  

Actually those aren't even the worst. I have a penchant for buying "collector's editions" which cost 50-200% more. I rummage through the contents a few times, ooooh and ahhh at how shiny everything is and promptly SD them. Smiley Sad Now that is an egregious waste of good money. 


<mod edit - sorry, that's not allowed here>  It's a fantastic app, I use it daily.

 

I haven't played a video game in years mostly because of the financial cost.  One thing I used to do back in my no-credit days was save my quarters up and once I had $20 in quarters I would walk to the local pub and play pinball machine games (no alcohol).  Was a fun way to pass the afternoon.

 

I started a pinball share club in my area and we're up to 16 games now and we all throw in $100 a month to cover buying new ones and maintaining old ones.  I am on 3 month hiatus from the club (we have 24 members who rotate every 2-3 months and 8 of us go a quarter without a machine).  $2400 sounds like a lot but those machines are cranky and break a lot, lol.  The Pachinko machine has cost us more than we've put into it individually.  

Message 17 of 19
UncleB
Credit Mentor

Re: How to get out of debt? Personal Loan?

Just a friendly reminder that we can't promote/discuss sharing referral codes on the forums.

 

Thanks,

--UB

Message 18 of 19
Anonymous
Not applicable

Re: How to get out of debt? Personal Loan?

Oops, didn't realize that.  Thought we couldn't post them publicly.  Noted!

Message 19 of 19
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.