sam1000
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I have 17k in debt and trying to pay it off but can't seem to make any real progress. Every time I try to pay down the balance I seem to have some unexpected bills like something breaks down etc. I have setup a budget but can't seem to follow it.
My bills per month are around $1800 which includes my rent, truck payment, food, utilities, cell phone, directv, misc bills etc. The minimum payments for my cards are around $400 so the total is $2200 or so.
I earn $84,000/yr (around $4400/month take home) and know I should have extra income but I always seem to be dead broke! I have no savings, and my checking account balance right now is $30 and my wallet has $5 in it.
So here is my question. Should I first build up some savings for unexpected expenses before paying down my debt?
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Thu Jul 28, 2005 6:34 pm |
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pearljammer
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I'm no expert on this, other than the fact that I've never been in debt, so here's my suggestions.
#1 Consolidate all of your debt. Typically, you would like to get a low interest rate loan or even a low interest credit card to pay off all of your other cards. This way, you will be paying less interest every month and you will also have one credit card bill instead of many.
#2 If you seriously need to save money, LOSE the Cell Phone and the DirectTV! I know it sounds tough, but those are wants, not needs.
#3 I WISH I made that much a month!!! I only bring home about $2300 a month and I can manage to pay for my mortgage, insurance, car, car insurance, and HELLA Bills... with money left over to eat and be well entertained. My suggestion... get a roommate or somebody to help you with the rent bills and utilities.
...hope this helps
one more thing... if you're paying for internet, you'll probably need to give that up too. You really need to decide: Luxory or Debt Free (that kinda rhymes)
http://www.lottomagik.com
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Thu Jul 28, 2005 11:43 pm |
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ssi1111
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I don't understand... you bring home $4,400 a month and you spend $2,200 a month on bills. You still have $2,200. You may not have included all your expenses, but you still have a huge margin. I really can't think of unexpected bills, repairs costing you more than $700 - 1000 and that too definitely not every month. What do you do with the $2,200... just curious...
Check out http://www.expenseregister.com
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Fri Jul 29, 2005 2:30 pm |
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sam1000
Full Member
Cash: $ 21.05
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Thanks for the tips pearljammer.
quote:
Originally posted by ssi1111
What do you do with the $2,200... just curious...
Good question. I just tend to spend it on little things here and there and it adds up. I live in Southern California and living is expensive here.
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Fri Jul 29, 2005 5:40 pm |
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MattL
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Write down every penny you spend for 1 month. Then sit down and go over the list. After you pick your jaw up off of the floor, write out a plan on paying your credit cards off, then after they are paid off pay yourself first when you get your paycheck. Allow yourself a budget for walking around money, but stick to it.
To pay off the current debt as quick as possible go through your bills and cut out what you don't need (things like; a cheaper cell phone plan with less minutes, the movie channels on satellite).
Then get a credit card with a low/0 into APR. Pay as much as possible each month (double or triple the min). When the higher APR is about to kick in transfer that to another card with an intro APR. Do that a few times unitl you have it paid off. Then stop carrying a balance on your card. Take the amount you were using to pay off your cards and start saving it. If you were feeling tight or being aggressive at paying of the credit cards you can save a little less than you were paying.
Stay on course!
$$$ Debt Elimination
Software | Computers | Electronics
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Fri Jul 29, 2005 6:54 pm |
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sayyes
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Location: Newport, RI
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To answer your question: "No, you should not build up savings before paying down your debt." Think about it, your savings account will only earn about 3% if you're lucky. You'll be paying 10% on the money you owe your credit cards...that is a hefty loss every month. Focus ALL your money on paying off your debt and if you run into expenses, put them on the credit cards. It's better to be aggressive and cut down your debt. As long as you make progress every month you'll get there sooner or later.
With that much debt you should consider refinancing your home or consolidating your debt. Check out my website for details of how to do this, or PM me with any questions/concerns you might have:
http://www.ManageYourDollars.net/ReduceDebt
Money Blog | Financial Goals Explained | Bargains Online | Refinance
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Fri Jul 29, 2005 9:12 pm |
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sam1000
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Cash: $ 21.05
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Thanks for the advice. I was wondering if bankruptcy is a good approach to discharge the debt?
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Sat Jul 30, 2005 6:08 am |
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sayyes
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Bankruptcy should be a last resort. You mentioned that you spend things "here or there" and it adds up. Well, I would cut down on those things and pay down your debt.
After college I had about 10K of credit card debt and I never thought I would pay it down, but I did. I just consolidated all my bills under a low interest rate and paid as much as I could towards that every month.
If you were to claim bankruptcy, your credit rating will suffer for the next 7 years. However, if you pull yourself out of a debt of 17K, banks will be banging down your door to give you a loan. That's my experience, anyway.
The consolidation company I worked with even talked my credit cards into removing some of my debt. They would rather do that than have me declare bankruptcy.
Try contacting them. I have a link to them on this website:
http://www.ManageYourDollars.net/ReduceDebt
Good Luck, and let me know how things turn out.
Money Blog | Financial Goals Explained | Bargains Online | Refinance
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Sat Jul 30, 2005 4:13 pm |
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Rolo
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You got to be shiooooting me!
quote:
Originally posted by sam1000
Thanks for the advice. I was wondering if bankruptcy is a good approach to discharge the debt?
Not unless you want to ruin your financial life.
- + -
Obviously you aren't taking your money seriously. If you have no idea where your money is going, why are you surprised that you have no control over it?
What good is a 'budget' if you do not stick to it?
Instead of budget, make a Financial Schedule. ** You must conform to this schedule for your plan to succeed, so make it a good one and no excuses. ** That is your way out.
Personally, I use Excel for my schedule. It is easy and I can tailor it to whatever I need, quickly. All of my taxes and contributions are computed automatically, so I know precisely where my money goes to the dollar. I also use Quicken to keep on top of things.
You have to decide if you will commit to having money work for you rather than the other way around.
Let me know if you need any help.
"Expect me when you see me."
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Sat Jul 30, 2005 7:15 pm |
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sam1000
Full Member
Cash: $ 21.05
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Joined: 28 Jul 2005
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Thanks for the help. I looked at my expenses over the past 3 months and most of the money seems to be cash withdrawals at ATMs and I spend about $20/day eating out.
I also should state that I have made good progress since Jan, since I initially had 25k in Jan of this year and now I have 17k and I'm trying to regulate my expenses even more.
I guess I was not clear in stating that I do pay a lot extra on my cards but sometimes I pay too much towards my cards and then have a cash flow problem because I go over budget on my other expenses and then it winds up on my cards again. I am trying to allocate at least $2k towards my debt and stick to the budget and pay it off in next 8-9 months. Thanks.
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Tue Aug 02, 2005 4:28 pm |
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