Getting out of debt help...

Anybody who can help me out with this, I appreciate it:

So I'm trying to climb out from the small molehill of debt I got myself under a few years back. First step: I called one collection agency and set up one payment plan. Second step: I checked myFICO and got my equifax score, and then dealt with a couple of collections that were still on there as unpaid, even though they were paid years ago. Third step: I just got another CC payment down from the $2,300 I owe to $1,400 over three payments (it was about to go to court).

Now what? Just make those payments, handle my student loans as I can, and try to keep my nose clean? Is there anything else I can do? I'm not really in a hurry to salvage my credit (definitely not buying a house any time soon), but I do want to propose to my girlfriend in the next year and a half.

Anyone who's gone through this, again, thanks.

 

Money should have nothing to do with proposing. If it does, you shouldn't get married.

Can't offer any advice for the rest of it, but it looks like you're doing everything you can. I know when I went into some debt I took a second job as a pizza delivery guy for a few months that made a huge difference financially.

Good luck.

 

Money shouldn't have anything to do with proposing, since engagements can last as long as you want, but it always helps to be financially prepared when you get married.

 

Bingo. I don't want to bring my debt into the relationship.

 

If you're not ready to be saddled with years of unsurmountable debt, you shouldn't get married.

 

Does your girlfriend have a good paying job? Does she come from money?

 

1) Are you saying you owed $2,300 and they agreed to accept $1,400? Be aware that you will be taxed on the $900 difference as income.

2) There's only one thing you need to do: For the rest of your life, your foreseeable expenses *must* be less than what you make. If they aren't, you need to make more or cut expenses. And foreseeable includes irregular but inevitable expenses such as medical bills, car repairs, home repairs, vacations, whatever.

 

Get the credit card payments taken care of first, before you worry about student loans. Student loans usually have a really low interest rate, so there's no hurry to pay them off. Credit cards have god-awful interest rates, so pay them down first!

 

Went through this some time back. Here's a couple things that helped me (and mind you, I am by no means an expert and am not claiming to be):

If you have more CCs out there, it never hurts to call them up and ask if they are willing to lower their interest rate. Some will, some won't.

If you don't plan to use a CC anymore, close the account, then contact the company and ask if you can just pay off the amount owed (in other words, see if they will freeze the balance as is, without accruing anymore interest, with you still making monthly payments. Longshot, but good if you find one.

With either of the above, make sure you have the new specifics of the agreement in writing (you don't want to have a company agree to you paying off a specific amount, only to find out they put the rest as a write off against your credit)

Next, focus on the CC you owe the least on and the one charging the highest interest. Make minimal payments to the rest, then take whatever extra you can pay apply most of it above the minimum payment to the lowest balance, then the rest to the high percentage rate (I used about an 75/25 ratio).

And most importantly, learn to live within your means. Look at everything in your life and ask if you can do without, or can you do better? Do you really need 10,000 cell phone minutes? Do you really need 2000 cable channels? Do I really need the a/c on 72? Is there a cheaper internet provider out there? Can I cut back on fast food or dining out? Do I need as many adult beverages? Do I have to buy them at 7-11?
During that time, I went without TV for 2 years. Amazingly I didn't miss it. And yes I have TV now.

Good luck.

 

The better your credit score, the better rate you can get on that ring.

 

Not sure where your credit score is at, but if you can get a personal loan, use that to pay off the credit cards. That's what I did. I had $7,000 in debt (don't ask) and a minimum monthly payment of $230. Couldn't get anywhere in terms of paying it off. I took out a 3-year loan for $8,000, paid off the credit cards (and some car repairs) and have been paying $194 a month at 3.5% interest instead of 23%. I'll be caught up in January.

My credit score, which had dipped to about 520 from 760 before I even knew what was happening, is now back up to 650 and rising quickly now.

Another option (again, depending on your score) is if you can get a credit card with a 0% balance transfer offer. Transfer your debt to that one, pay it at 0% for a year and then look for another one and do the same thing (your score should improve a bit in the meantime as well.