dangerdanger!'s Personal Debt Cutters Thread

[dangerdanger!]

Debt Cutters

How much debt do you need to reduce?

nearly 40,000

How did you get in debt?

My husband and I both went through a depressive phase when we first got married and spent money like crazy going on vacations and buying anything and everything to try and make us feel better. He has about 5,000 in student loans and I have about 10,000

You've accrued debt. What are the main factors that keep you from reducing it now?

Not enough income to go around. My husband has a great job, but I unfortunately work part time for nearly minimum wage.

Have you created a budget?

Yes, though we never seem able to stick to it.

List your top 5 budget busters?

1. Eating Out, 2. I'm addicted to shopping - I've stopped getting frivolous things, but still can't seem to stop myself in groceries and other things I think we need 3. High energy bills 4. Impulse purchases 5.

What is your plan to get out of debt?

Joined a debt management program to lower interest rates and make more of an impact on my debt. Also hope to cut down on frivolous spending to help pay even more off.

List your debt with balance, monthly payment, and interest rates.

I use a debt management program for my consumer debt. The collective interest rate is about 11% on 25,000 worth of debt. I have to pay the debt management company $628 a month. Student Loans - 15,000 balance; payment - $200 min payment, interest 6.8%

How much will you try to reduce your debt by this year?

minimum payments require $11,000; would like to pay off an addition $2000+

What kind of support do you need from fellow Debt Cutters to help keep you on track?

Please help me with my shopaholic ways!!!!

[manders13]

I would look into the Debt people you are with. I was going to join one, I have roughly $35000 in debt, and it sounded good on the phone untill i got the papers. I was going to pay them more then what i actually owed.

I know/have heard you can save yourself money by calling the people you owe money to and working it out.

In my case that's what i'm doing. Not to mention (this isn't ALWAYS the case but just be aware) that if these debt people DO save you any money (off the actual balance of what you owe) The company you owe, can turn it into the IRS (for the amount they knocked off) and it will come back on you as income or something of that nature. I don't have all the info, i'll see if i can google and come up with some info for ya.

Hth :)

[manders13]

This is a VERY good article..

Debt Settlement Pros and Cons

[dangerdanger!]

My money problems began fairly early in life. My parents, though I love them dearly, were HORRIBLE examples for how to handle money. We lived each month paycheck-to-paycheck and sometimes my mom would just not pay bills or just enough to barely squeak by, even though we'd still buy toys, movies, and whatever else our hearts desired. Our family motto was get what makes you feel happy and pay for it later! That's what credit cards are for, right?

When I was still a junior in high school and got my first job, the credit card offers started pouring in. I signed up for three of them right away. In the beginning, I had it in my mind that I was going to get a head start on my credit-building. I did fairly well for myself in the beginning. At least, I was paying off my credit cards in full each month, or carrying over only a $25 balance or so. However, I had absolutely no concept of saving money. My parents never had any, and whenever us kids got money for birthday or christmas it was off to the store to buy stuff. I'm not blaming them for this mess, I'm just explaining that to me, savings just wasn't something that was necessary. So I'd be blowing my $400/mo income on gas, accessories, clothing, etc instead of saving it for college.

College is when I really started getting in trouble. Right away I convinced myself I NEEDED a laptop. So I went off and used my new shiny credit card (my sixth or seventh one by now) and got the biggest and bestest. That soon became my pattern with things. As that first year progressed, my spending continued to spiral out of control. I was consistently dropping $400 nearly every weekend on purchases for my new apartment with my husband (then my boyfriend) or clothing that I would never wear. At the end of the school year, we decided to get married and thinking we were being thrifty by not having a big ceremony, decided to use the "money" (credit cards) we would have used to pay for the wedding on a honeymoon. We booked a stay at Walt Disney World, sparing no expense because as we kept telling ourselves this was going to be the last vacation in a long time. But instead, four months later we were in Connecticut, and two months after that we went to Seattle.

My husband lost his job and I dropped out of school at around the same time. We didn't realize it at the time, but we were both incredibly depressed. We just weren't rational beings, and being together made that fact worse. We had zero income, I had zero future prospects at that point, and yet we'd still go out nearly every night to eat out or buy something we didn't really need. We couldn't stop.

When we went to Connecticut that summer for yet another vacation, it really hit us that we had a problem when our card was denied and we were stranded in Canada on the way home with no money. American Express dropped my card limit from 17,000 to the amount that was on the card. Soon the other credit cards started following suit as the economy tanked. All of my credit cards were now maxed out. Our monthly minimum payments were sky high though we weren't getting anywhere on our cards. I finally found a job after two years of doing nothing with my life, and we started to be able to lift our heads above water a little. We were even paying extra on our cards, and no longer creating more debt!

We were pretty comfortable in our new maturity, until we found out I was pregnant. When I began to crunch numbers, I realized that it was going to be a challenge to pay the minimums - as in, some months we'd have to decide whether to eat or to pay bills. I started working as many hours as work would let me and did everything I could think of to save money. However, as I watched our credit card statements come in I realized we were making absolutely no headway at all because of the interest rates, despite the fact we were sending in over a $1000 a month in payments. That's when I read about debt management programs in Kiplingers' magazine.

That article was definitely a turning point. Through contacting the NCCF and the BBB, we found a company called Greenpath that was able to reduce our monthly payments to $628 and cut our interest rates in half if not more. We joined in April of 2009 and since then have paid off $5652 of our debt. It was a great thing for us, because it was something we struggled with on our own.

Money is still a problem for me, though I am 400% better than I used to be. I have a hard time staying in budget. I'll crunch numbers that make logical sense, plan on some savings, but either blow it all in the beginning of the month and have nothing left or come up with stupid excuses to spend money. We eat out far too much, and I'm still addicted to shopping to a degree.

I need that extra motivation to stay in budget. I'm hoping that sharing this shameful information with strangers will help me stay more motivated. I also love reading your stories and triumphs, they really give me hope that we will be able to do the same.

[manders13]

You can always check into Shop-a-holics- annonymous...

As for eating out, don't cut it totally out. Set an amount that you know you can afford. If you spend it in one shot then well no more eating out untill the money replenishes (man i wish i'd listen to my own advice! LOL)

As for debt cutters- I'm glad they are helping you. Just be prepared IF you get a letter from the IRS. They are some mean nasty people! I'm glad uncle same wasn't my dad i would have ran away!


Sticking to a budget- Mindset. Mindset that you CAN do this. Baby steps will be helpful. But make realistic goals as well. I think one of my big problems (your story is kind of similar to my debt problems) is i make these goals that really are not even reachable just yet.

Right now i am totally upside down. I pay out more then we bring in. I now see the flaw and am working my butt off to get it flipped back around. I have however found myself stopping myself from buying things we don't need or going to that ONE extra dinner..

"Hey this $20 could go towards......"


The other thing? Look into getting rid of old items you don't need anymore. Rather using craigslist etc.

Check with your cable company/ see if you can downgrade get a decent sale price on service.

But make a budget and STICK to it.

Make sure hubby is on board. I noticed the first 100 times i tried it, DH just didn't care. He would constantly want to eat out and isntead of fighting with him, i caved.

So sit down with DH, write out a "PLAN" and make it realistic.

[dangerdanger!]

This is a VERY good article..

Debt Settlement Pros and Cons

It is hard to believe the amount of unscrupulous companies that take advantage of people who are way above their head and are just trying to make a wrong right. Fortunately, I was aware enough of this fact to do my research before joining Greenpath, an association that is accredited with both the BBB, National Foudating of Credit Couseling Agencies, and featured in Kiplinger's finance magazine.

The difference between a debt management company like mine and a debt settlement company, is that I have to pay every single penny I owe. What the debt management company does is act as a liason of sorts between me and my debtors. They lower interest rates and payments so that I can make more headway on my debts. As part of the program, my husband and I also have to undergo credit counseling which involves various programs and classes. We also had to close all of our credit cards and agree not to open any more or create any more debt of any kind for the next four years, which is the duration of our payment plan.

To join, we did have to make some sacrifices. Like I said, we are not allowed to create more debt until our current plan is up or else the deal is void. I also had to close all of my cards, which made my credit score plummet. It shows on my credit report that my accounts are managed by a debt management company, which stays on there and can look bad to prospective loaners when I reach the point that I can make debt again (not that I ever want to again at this point). I do have to pay them a monthly fee of $50, but that is what is to be expected from a non-profit debt management company. So yes, that amount is more than my debt, but to me it's worth it to lower the interest rates and payments and know that even if I make the minimum payments, I'll be debt free in a little over three years.

I'm very glad that you were not duped. Some of these companies are worse than the credit card companies themselves. If anyone is thinking about joining one, they definitely need to check with the BBB and various non-profit financial institutions to make sure that the company is accredited.

Thank you for keeping an eye out for me, Manders!

[dangerdanger!]

Uh-oh. I think I made a newbie mistake when I was trying to reply to your post, Manders. It said I needed moderator approval??? Oh dear, I'm going to get myself kicked off for being completely incompetent. LOL

Yes, Greenpath (my debt management company) is accredited by the BBB and the two major credit counseling non-profit associations. I tried explaining how it works in my other post, maybe if that one doesn't pop back up I'll post it again.

Anyway, thank you very much for your replies, especially your advice. It's very common sense, something I can tend to lack LOL. I think that like you said, one of my major problems with sticking to the budget is making goals that are so hard to reach. Then once you blow it, it's so easy to say "Oh this budget is fragged this month, I'll just do whatever and get back on track next month."

I agree with you about spouses needing to agree on the budget. Mine and my hubby's problem is that our debt issues have caused so much contention between us in that department that it's so hard to talk about it with each other. He wants me to take care of the money side of things, because I like doing it and I like learning how to improve our situation, but at the same time he is just so distrustful of me because of what's happened. We have a great relationship besides this fact. I don't know, maybe it's something I should bring up to our credit counselor and see if she has any advice.

Maybe I do need to join a Shop-A-Holics organization or something. I think I've just felt that since I made such an improvement from the way I used to be, I don't always think it's necessary. But if it's still this hard to stay within a reasonable budget, and if I still feel the need to quell certain feelings with shopping whether or not it's just groceries, maybe I do need some additional kind of help or support group.

[manders13]

your fine! If they kicked ya out for being incompatent, i woulda been gone a long time ago! LOL :)

i'm actually doing a budget this year just on shopping, for this month i've already blown through what i was suppose to spend plus some. Sometimes hitting your goal isn't possible. But always strive for it.

it sounds like your headed in the right directoin and just keep it up! Look at the pot of gold at the end.

check into marriage counsling strictly for money problems. Dh came into this marriage with a ton of baggage including bad credit. We really havent done anything to help his situation. We want to start working on it once i get a few things paid off.


Just know your not the only one going through this. Keep your chin up!

Just set goals that you can reach and move up the ladder!!!!

[nateNnatsmommy]

Danger your situation sounds so much like mine when I was a teenager, and later in college. My family was like yours and I started out just like you did....it was a very expensive lesson to learn.

I still sometimes have urges to do some frivolous shopping, so I try to tamp those down by living vicariously through other shopaholics..mainly in books. I like the "Confessions of a Shopaholic" series, and "Save Karen" is a true story of a girl that shops herself into some REAL trouble...reading these makes me feel more normal, and reading about others' purchases satisfies my own urges to shop.

Does your husband blame your shopping for the debt situation?

he is just so distrustful of me because of what's happened.