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Shifting Debt no longer working

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Valued Contributor

Re: Shifting Debt no longer working


@Sbrooks1 wrote:

For the last 2 years I have shifted debt between personal loans, 401 K loans, CC balance transfers etc... but I have continued to charge up CC after. I need a game plan to tackle this. Currently 23000 loan on my 401, a personal loan for a balance of 17000 and now another 8000 in CC debt. Guys I have to stop. I have no hobbies , dont get manipedis, but 4000 of my new debt is pet related. Advice or tips? I work FT about 60 hours a week as a salary RN Director, make only about 300 bucks more than I did last year. I can shift all I want right now with scores near perfect but that option is ending soon. 


From what you typed it sounds like you have a budget issue and have lived above your means (which can happen to the best of us).

The very first step is making and sticking to a budget after that comes what is the best way to tackle paying off your current debt. 

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Message 11 of 41
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Valued Contributor

Re: Shifting Debt no longer working


@SouthJamaica wrote:

@Sbrooks1 wrote:

For the last 2 years I have shifted debt between personal loans, 401 K loans, CC balance transfers etc... but I have continued to charge up CC after. I need a game plan to tackle this. Currently 23000 loan on my 401, a personal loan for a balance of 17000 and now another 8000 in CC debt. Guys I have to stop. I have no hobbies , dont get manipedis, but 4000 of my new debt is pet related. Advice or tips? I work FT about 60 hours a week as a salary RN Director, make only about 300 bucks more than I did last year. I can shift all I want right now with scores near perfect but that option is ending soon. 


I don't agree with some of the drastic advice you've been given.

IMHO you should tackle the revolving debt first, using the snowball method:

1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.

 

Once you've got the credit card debt paid off, then you can start reducing the installment loan.

 

Once you've got the installment loan down to 9% of the original loan amount, then you can start getting rid of the 401k loan.


I agree with this, especially the point about the drastic suggestions.

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Message 12 of 41
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Frequent Contributor

Re: Shifting Debt no longer working

I think this is a common tactic. Move it to zero, plan to pay it off and then more spending happens.   I had this happen a couple of years ago, but when I saw my overall debt was NoT dropping month over month I made some changes 

 

get a good snapshot right now.  All outstanding debt. Individual Amounts and Total Amount

 

curb spending. Throw all extra dollars at payoff.  Check your Total Amount every month.  It HAS to be dropping or you need to make more changes.  

you can do it.  

July 31/2019. EX-712. EQ-704. TU-726
Oct 25 2019. EX-715 EQ-712 TU-734
Dec 16/2019. EX. 721. EQ. 723. TU 746
Jan 17/2020 EX. 725. EQ. 720. TU 748
Feb 16\2020 EX. 726 EQ. 729 TU 752
Message 13 of 41
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Valued Contributor

Re: Shifting Debt no longer working


@Sbrooks1 wrote:

For the last 2 years I have shifted debt between personal loans, 401 K loans, CC balance transfers etc... but I have continued to charge up CC after. I need a game plan to tackle this. Currently 23000 loan on my 401, a personal loan for a balance of 17000 and now another 8000 in CC debt. Guys I have to stop. I have no hobbies , dont get manipedis, but 4000 of my new debt is pet related. Advice or tips? I work FT about 60 hours a week as a salary RN Director, make only about 300 bucks more than I did last year. I can shift all I want right now with scores near perfect but that option is ending soon. 


Like others have suggested, the only way you're going to break the cycle is to change your budget/spending habits such that you can put more toward the debt. If you're adding new debt to the existing, that also has to stop. It will probably require some lifestyle changes. More importantly, if you don't address the spending first, nothing will stop you from falling back into debt at a later time. Yo-yo debt elimination doesn't work any better than yo-yo dieting.

 

Start by finding monthly expenses that can be curbed or eliminated, even little ones. Netflix? Noflix. Bottled water? Tap water. Starbucks in the morning? Mr. Coffee in the morning. Even an extra $100 a month is going to knock things down that much faster.

 

After that, find ways to stretch what you have further. Repair clothing rather than replace. Keep using that 5-year-old smartphone with a cracked screen until it doesn't power on anymore. My new favorite old-timey saying is "use it up, wear it out, make it do or do without" and if doing so saves you from spending $1,000 per year on things you didn't need to replace, well, that's almost another $100/month that can be thrown at this.

Message 14 of 41
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Member

Re: Shifting Debt no longer working


@iced wrote:

@Sbrooks1 wrote:

For the last 2 years I have shifted debt between personal loans, 401 K loans, CC balance transfers etc... but I have continued to charge up CC after. I need a game plan to tackle this. Currently 23000 loan on my 401, a personal loan for a balance of 17000 and now another 8000 in CC debt. Guys I have to stop. I have no hobbies , dont get manipedis, but 4000 of my new debt is pet related. Advice or tips? I work FT about 60 hours a week as a salary RN Director, make only about 300 bucks more than I did last year. I can shift all I want right now with scores near perfect but that option is ending soon. 


Like others have suggested, the only way you're going to break the cycle is to change your budget/spending habits such that you can put more toward the debt. If you're adding new debt to the existing, that also has to stop. It will probably require some lifestyle changes. More importantly, if you don't address the spending first, nothing will stop you from falling back into debt at a later time. Yo-yo debt elimination doesn't work any better than yo-yo dieting.

 

Start by finding monthly expenses that can be curbed or eliminated, even little ones. Netflix? Noflix. Bottled water? Tap water. Starbucks in the morning? Mr. Coffee in the morning. Even an extra $100 a month is going to knock things down that much faster.

 

After that, find ways to stretch what you have further. Repair clothing rather than replace. Keep using that 5-year-old smartphone with a cracked screen until it doesn't power on anymore. My new favorite old-timey saying is "use it up, wear it out, make it do or do without" and if doing so saves you from spending $1,000 per year on things you didn't need to replace, well, that's almost another $100/month that can be thrown at this.


OP, You've already taken the first step by acknowledging the problem.

 

May I ask if your work is either 1) Garnishing wages to automatically repay the 401K plus interest, or 2) if they have you on a quarterly loan repayment plan? You have 5 years to repay the 401K loan, and it sounds as if you’re down to a 3 years left.  Although the interest on this one is lower than on a PL, this *might* take

precedent if you're close to the 5 yr mark else you'll owe some nasty taxes on that loan.

 

If you’re already being garnished then the 401K loan will take care of itself. Your remaining cash-flow is what you’ll have to work with to repay the higher interest CC and PL debts.

 

Is the pet-spending for medical reasons or spoiling reasons? Medical reasons are really tough.

 If it’s on spoiling the pet, you need to examine the real reason you’re spending. You’re trying to fill a hollow.  Remember, pets love us for our companionship, not for expensive things. My dog lets $20 kongs float down the river, but would happily play with “free” tennis balls all day long if we’re there to throw it.

Message 15 of 41
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Valued Contributor

Re: Shifting Debt no longer working

My job doesnt really pay that well. I could make more as a staff RN than being a Department Head. I do not get any OT and my annual raise is only at the max 2% ( that is all the hospital allows). House was purchased for 174500 3 years ago and car is a Kia Optima, just purchased last March. When I look over my spending it is a whole lot of Wal Mart, Amazon and vet bills. Rarely eat out and lunch is always leftovers. 

Message 16 of 41
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Valued Contributor

Re: Shifting Debt no longer working

That is my thought process also. I have already cut up the cards a few months ago and deleted them from amazon etc. The personalloan has an interest rate of 7 % so not bad. It sucks my 401 isnt earning money on that portion, but I cant stress over that. It will be paid off on 4 years  if I dont do anything. 

Message 17 of 41
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Regular Contributor

Re: Shifting Debt no longer working

Drastic is subjective. The OP admittedly says they have a problem and cannot stop. So any measures that are used must match to what is needed. If they are unable to stop doing something, you take it away. No different than drugs or alcohol. Take the source away. 



Jan 2020
Currently rebuilding. Cards aren't worth bragging about yet.
Message 18 of 41
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Valued Contributor

Re: Shifting Debt no longer working

Pretty much, I am looking for another job as I have major resposibilities and my salary is 74000. I never get a raise unless it is review time and our max is 2% (which I always get). I have been with this company for 10 years.  I know a big issue is I simply have too many pets (7) and several are special needs rescues. I also order random things like an air compressor that I will never need.

Message 19 of 41
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Valued Contributor

Re: Shifting Debt no longer working

Thank you, I did use my tax return to pay of PP and Chase. They are already cut up so bye bye!!

Message 20 of 41
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