$47828 in Credit card debt- looking for ideas

[ilovejeshua]

@skelly You're missing a lot of expenses, how much money to you have to put toward debt each month?

 

[skelly]

@ilovejeshua $1200

 

[ilovejeshua]

@skelly $1200 in addition to the minimums or $1200 including the minimums? Because $1200 barely covers the minimums. If you can't find a way to drastically cut your expenses (especially that "other" $1951/mo) or increase your income (2nd job, 3rd job), your only options are bankruptcy or an aggressive consolidation loan. Though a bankruptcy is going to stick with you until your mid-30s (at least) so I'd really be sure you can't change your income or expenses before pulling that trigger.

 

[roninmd]

@skelly Hi. I work in this industry, specifically I work with consumer loans. I would recommend trying to get a consolidation loan which is basically just a personal loan. Try to find the best option for you but I highly recommend a local credit union. Credit unions were made for the people by the people and banks usually have higher rates. If you can get approved, you can consolidate all of it into one payment a month and pay off all those credit cards at once. Not only will that help improve your credit score but the interest will be way less than what you are paying now. Whatever option you go with, you can do it! Working with people to help them achieve their financial goals is a very rewarding thing especially because a lot of stuff work against us.

 

[lw7891]

@roninmd I've tried a credit union recently DCU. They approved me for 3k but then declined me for a checking account to accept the loan. According to their rules, in order for one to receive the loan they need to be a member of the credit union bank. It's crazy how I was able to get approved for the loan but not the bank account.

 

[roninmd]

@lw7891 Did they let you know what your credit score was at the time? I'm wondering if you'd get approved where I work. With a good enough credit score, the loans we have go up to 50k with no collateral.

And yeah, I'm surprised they couldn't find a way to qualify you. Credit unions usually have specific requirements for membership because they were created to service a specific demographic when they first came about. Like the one I work at was originally for school teachers but we have expanded since then and have lots of ways to qualify.

 

[lw7891]

@roninmd Yes it's strange they approve me for a 3k loan but not approve me to open a bank account. My score sadly is in very bad condition 536 slowly going back up. Been using self and extra to boost my credit score. I wanted to try chime but they asking too much for a company that I can not physically walk into which is a direct deposit in order for them to boost your credit.

 

[froggyjones]

@skelly First of all you can dig yourself out. This sucks and the feeling of helplessness and shame is real, but you’re going to be fine if you just take action. Great news is you have a really healthy take home pay so you have a choice.

I had about 20k that I paid off years ago while I was making about 60k/year. I was also considering bankruptcy because the balance just kept going up and my credit score was tanking.

For a couple years I was doing a combo of snowball and avalanche — primarily avalanche but if I got within payoff distance on any balance over 0% interest I would just knock it out and add that to my payments. Avalanche is better in terms of $ saved but the psychological benefit is huge on knocking out a payment and it’s not that much of a deviation from avalanche. I did not move in with family because I felt too much shame over the situation I was in.

Then I finally got sick of it and took a personal loan. That was a game changer. In retrospect I wish I had shopped with FCUs because my interest rate was 11% and likely could have been lower. But that gave me one monthly payment and zeroed out my cards. Also slingshotted my credit score into the 700s because the bureaus treat installment loans favorably and revolving credit unfavorably.

The interest and savings were obviously big but the most important thing to me was that it put me in a frame of mind where I could treat my credit card like a debit card — watch my transactions like a HAWK and pay them all off every month. No exceptions. I started compulsively checking Mint the way that some people check their notifications. At least for me, seeing the balances at zero and feeling that relief for the first time in years made the cards feel completely different and made it way easier to use them responsibly (in part because I didn’t want to go through it today).

Whether you want to use any of the methods I used is up to you. I think the biggest non-negotiable is that you need to have a budget and you need to micromanage your expenses while you pay this down. But you have the tools and you should be able to do it in a few years — and reclaim some autonomy over your finances well before then.

 

[discussdocs]

@skelly I know you said you made mistakes and I’m not trying to kick you while you are down but you need to understand your budget and expenses deeper than what you are sharing.

You clear $5,600 a month and only show $2,400 in expenses but are $50k in debt. You are clearly spending more than $2,400 - where?

Unless you made a change and truly only spend $2,400 a month you aren’t going to fix the real issue.

 

[thestudentlinda]

@discussdocs Where is food, clothes, gas, entertainment ...

 

[jonrgrover]

@skelly Do you have any tangible assets that you bought with the credit cards you can sell?

 

[zero1]

@skelly I was in a simmilar situation with 160k on Amex and total CC debt around 300k. I was making 250k per year. This was 2018.

My advice is - as painful as it is, make drastic painful moves now. I got rid of all car payments, and everything in my case, with the exception of the house. Start with the highest interest first and work your way down.

It sucks, pride wise, but what you can learn paying off and being disciplined, budgeting etc will serve you well.

I’m now debt free, and saving 50-70% of my take home pay every month - and have a paid off house. You can do it, it will suck.

Random tip - when I finally took a step back, my largest consuming category was eating out/entertainment - most people think it’s mortgage/rent.

 

[troberson]

@zero1 Agree!!! Wise words from someone who has been through it!! Glad you’re doing better!

 

[mili]

@skelly Don’t forget annual fees on some of those cards. Nothing sucks worse than feeling like you’re making progress paying down your debt, and suddenly getting an extra $100-600 added to it.

Some of those cards have pretty pricey annual fees, so that’s probably $1k year at least (or an extra $100/mo in fees spread across the year)

 

[resjudicata]

@skelly Off the bat, end your car lease if possible. Leasing is the most expensive way to own a car. Buy a beater. You make a great salary — if you cut back on expenses enough, you could throw most of your money at this debt and pay it off in a few years. If I was in this situation, I’d move back in with family to be able to slash living expenses, or file for bankruptcy. I’d recommend researching bankruptcy to see if it would be a good option for you.

 

[yue]

@resjudicata Leasing is going to cost a lot to end…usually has huge penalties. Look into subleasing it. There’s a couple of sites that offer this, but I have never tried it myself, so cannot verify that’s the right direction here, but it’s worth a try maybe? I always advise against leases for this reason. It usually ends up being a stuck cost until the lease is up and then you might have a huge payment for mileage overages.

 

[resjudicata]

Yeah I definitely agree bankruptcy might be an option in this situation...also I hate to be that person but how did OP keep getting approved for credit cards?

 

[skelly]

@resjudicata I never missed a payment. I believe that's the reason

 

[resjudicata]

@skelly I'll defer to whoever knows more about this stuff

 

[resjudicata]

Just because you have debt doesn’t mean your credit is bad lol, you may just be spending more than the minimum payments you’re making. As long as you’re making minimum payments on time, credit score should hold and shouldn’t effect ability to apply for cards, though obviously not a good idea considering.