Extreme Debt

[ctazx]

Hello I would appreciate any advice.
I have extreme debt and don't see how I will every be able to payoff.
I didn't work for a year but was still able to make my minimum payments, and survived by using all my savings to make payments on time. I have a stable contract job now & paid on 1099.
I haven't been late ever, but am in jeopardy in just a few weeks of having late payments.
Due to the overwhelming amount owed & just plain tired of trying I'm getting older by the minute. I have adjusted my ways since incurring debt, i.e. couponing and getting by on little as possible. I'm also looking for a 2nd part-time job but now luck due to limited hours after my day job. I'm just wondering if bankruptcy at this point is the way to go to start over and rebuild. I only have a low credit score due to my high debt ratio, not for missed or late payments. But don't see how I can continue.

My Income is approx $4600 per month ($2300 every two weeks)
My Household Expenses are $3750 (Rent, Utilities, Gas for car, limited amount for groceries etc)
My Credit Card Minimums are $2500 per month. (I owe 80K, plus 10K to IRS that I'm making payments of $210. It was 15K but I have paid 5K down with payments and still owe 10K)
Any help with advice or if bankruptcy is the answer? Thank you in advance.

[riverwed070707]

Can we see a more detailed breakdown of your expenses? Is it just you? $3700 in regular monthly expenses doesn't sound minimal, especially for one person. You have a decent income and we may be able to help you scale back some more to tackle that debt.

[ctazx]

Thank you so much for reviewing and answering my post.

Rent is $2250 (been that for 6 years without increase, have dogs difficult & expensive to move.)
Car Payment $336.00 (2007 car 8.64%)
Car & Renter Insurance $92.00
Auto Xfr to Savings $25.00
Utilities Gas & Elec $124.00 (varies goes down some in winter)
Cable, Phone, Internet $165.00 (Process of cancelling phone & cable - not sure if keeping Internet)
Cell w Data $120 (Need for work, but may cut back somewhere?)
Medicine $13.00
Pet Food $100 per qtr
Gasoline approx $250
Groceries $335

Didn't add in Expenses: Oil Change & Car Servicing, Periodic Dr. Appts, Periodic Vet Appts & Meds, Dining Out or Entertainment as I try to limit or cut back entirely on non necessities like entertainment.

I know other periodic expenses come up, I just paid car renewal tags.
I'm sure I can cut back somewhere but to come up with the total shortage per month is tough.
My credit card interest rates are awful as they have increased interest rates to 29.9% even though I've never been late, so it is hard to see a dent in them. I guess I shouldn't worry about my credit score at this point. Just trying to figure out if it's a good decision to take years to pay everything off little by little or do bankruptcy and start over with a real budget and no credit cards. I have no desire for credit cards, just good credit when I need it to rent or have utilities in my name etc....? I'm just afraid if I keep trying to pay everything and something comes up like now being finally short was it worth it and a good decision instead of restarting with a budget and possibly saving the difference of my credit cards payout... I'm sorry to rattle on, I'm just confused & stressed.

[Shewillbemine]

Sell the car. Not sure why you got a loan with a ridiculous APR when you are swimming in debt (but then again, that would explain everything wouldn't it?).

Buy a beater car for $1000 or so and work on your debts.

Also, $2260 is quite high for rent especially if you live by yourself. You are slowly killing yourself financially with these two expenses that can be changed. You have extreme debt. You will have to go to extreme measures to conquer it.

[ir_dizzle]

Originally Posted by ctazx

Rent is $2250 (been that for 6 years without increase, have dogs difficult & expensive to move.)
Car Payment $336.00 (2007 car 8.64%)
Car & Renter Insurance $92.00
Auto Xfr to Savings $25.00
Utilities Gas & Elec $124.00 (varies goes down some in winter)
Cable, Phone, Internet $165.00 (Process of cancelling phone & cable - not sure if keeping Internet)
Cell w Data $120 (Need for work, but may cut back somewhere?)
Medicine $13.00
Pet Food $100 per qtr
Gasoline approx $250
Groceries $335

I would try my hardest to cut down on expenses before I would explore bankruptcy. I believe you're renting and don't own a home. Although it will be difficult to move I would try to find a cheaper place to live. Regarding your car can you downgrade? Why are you paying $25 to transfer your money to a savings account? Many banks would do this for free - maybe I'm unsure of why you have to transfer the money, but if it's just for you there are plenty of free alternatives. Your cell - if you use it for work you can deduct some of those costs on your personal tax return.

Based on the information you presented it appears you can cut some costs that can hopefully help with your situation. I wish you the best of luck... My uncle is currently going through bankruptcy and he has a good attorney. I'm hoping you can avoid bankruptcy, but if it gets to that point let me know and I can give you his attorney's contact information if you need it (he's in San Diego).

[disneysteve]

Originally Posted by ctazx

My Income is approx $4600 per month
My Household Expenses are $3750
My Credit Card Minimums are $2500 per month

Originally Posted by ctazx

Rent is $2250
Car Payment $336.00 (2007 car 8.64%)
Cell w Data $120 (Need for work, but may cut back somewhere?)
Gasoline approx $250
Groceries $335

You don't need bankruptcy. You DO need to start living within your means.

Housing should cost no more than 28% of income. You are spending about 49% of income for rent. That is way out of line and not sustainable. Even if you filed BK and got rid of the credit card debt, you still couldn't afford your apartment. You either need to take in a roommate who will split that rent with you or you need to move to a much cheaper place. If that means finding a new home for the dog, so be it. Pets are luxuries and right now you really can't afford luxuries.

How much is the car worth and how much do you still owe? Selling it might be a good idea depending on the numbers.

$120/month is a lot for the cell phone. If work requires it, why aren't they paying for it?

$250/month for gas is a lot. I'm guessing you have a long commute. How about moving closer to work?

How many people are you feeding for $335/month in groceries?

[riverwed070707]

Originally Posted by ctazx

Thank you so much for reviewing and answering my post.

Rent is $2250 (been that for 6 years without increase, have dogs difficult & expensive to move.)
Car Payment $336.00 (2007 car 8.64%)
Car & Renter Insurance $92.00
Auto Xfr to Savings $25.00
Utilities Gas & Elec $124.00 (varies goes down some in winter)
Cable, Phone, Internet $165.00 (Process of cancelling phone & cable - not sure if keeping Internet)
Cell w Data $120 (Need for work, but may cut back somewhere?)
Medicine $13.00
Pet Food $100 per qtr
Gasoline approx $250
Groceries $335

Didn't add in Expenses: Oil Change & Car Servicing, Periodic Dr. Appts, Periodic Vet Appts & Meds, Dining Out or Entertainment as I try to limit or cut back entirely on non necessities like entertainment.

I know other periodic expenses come up, I just paid car renewal tags.
I'm sure I can cut back somewhere but to come up with the total shortage per month is tough.
My credit card interest rates are awful as they have increased interest rates to 29.9% even though I've never been late, so it is hard to see a dent in them. I guess I shouldn't worry about my credit score at this point. Just trying to figure out if it's a good decision to take years to pay everything off little by little or do bankruptcy and start over with a real budget and no credit cards. I have no desire for credit cards, just good credit when I need it to rent or have utilities in my name etc....? I'm just afraid if I keep trying to pay everything and something comes up like now being finally short was it worth it and a good decision instead of restarting with a budget and possibly saving the difference of my credit cards payout... I'm sorry to rattle on, I'm just confused & stressed.

Your housing and grocery are really high for one person. Are you in a HCOL area? If you couldn't move, I would suggest a roommate but its hard for me to imagine a roomate even wanting to pay half that to share a house becuase that is a huge rent payment. Sure moving is no picnic (I have dogs too, and I understand) but it beats not being able to pay the bills. I really think you should reconsider your living arrangemnt. Think about how quickly you could knock out that debt with an extra $1k/mo...

If you need data for work, they should be paying for it. If they aren't then it's not a need, its a convenience. If they truly expect you to have it, ask about reimbursement, even if its only a portion of your bill.

Sell the car. You can't afford it.

Can you pick up a second job for a while? This could help take some of the heat off as well.

[Petunia 100]

OP said s/he is a contractor. "Work" (their client) isn't going to pay any of their business expenses.

[Petunia 100]

Originally Posted by ir_dizzle

Regarding your car can you downgrade? Why are you paying $25 to transfer your money to a savings account? Many banks would do this for free - maybe I'm unsure of why you have to transfer the money, but if it's just for you there are plenty of free alternatives.

OP is transferring $25 to a savings account, not paying a $25 fee.

[disneysteve]

Originally Posted by Petunia 100

OP said s/he is a contractor. "Work" (their client) isn't going to pay any of their business expenses.

Good point. I missed that. At least that makes it a deductible business expense. Still, $120/month seems like a lot. I'd see if you can do any better on that.

As said, though, it is the rent that is really killing your budget.

[riverwed070707]

Originally Posted by Petunia 100

OP said s/he is a contractor. "Work" (their client) isn't going to pay any of their business expenses.

In that case I would reevaluate whether it it truly a need or just a convenience.

[disneysteve]

Originally Posted by riverwed070707

In that case I would reevaluate whether it it truly a need or just a convenience.

It certainly could be a requirement of the job but since OP is a contract worker, he/she is responsible for the cost. Only OP knows for sure.

[riverwed070707]

I didn't say it wasn't, I just said I would reevaluate.

[Redraidernurse]

That rent payment is like a stab in your heart (aka wallet) every month - that is insane! Dogs or not, you need to find a cheaper place to live.

[thefrugallery]

If you have made it this long without being delinquent, don't give up now! I would hate to see you throw away your credit by declaring bankruptcy. I think you need to make some drastic changes if you want to move forward.

Here are some ideas:
get a roommate
sell unneeded items on Ebay
explore discount cell service (Boost Mobile, Metro PCS, etc).
ditch cable (check out hulu or netflix or get shows direectly from the broadcaster's website)
sell the car (take the bus or get a much cheaper one)
get rid of the phone/cable/internet (i realize internet may be a must).

If you can eliminate many of these expenses, funnel that money towards your debts. I know it seems daunting, but stick with it. One dollar at a time and you'll get there eventually!

[LuckyRobin]

I would definitely get rid of the landline. You have an expensive cell package so a landline is kind of ridiculous on top of that. Get rid of the cable. Virtually any show out there is available from the network website within 24 hours or at worst, one week later. Why pay for watching it "right now" when you can get it for free with a little patience?

Your grocery budget is very high for one person. I feed four people on $500 a month (quite a bit of the food is organic) so you can definitely cut that expense, I'd say in half.

Is there anyone you can carpool with to cut your gas expenditure in half?

These may seem like small things, but you could probably free up $300 to $400 a month doing them. And if you can find a cheaper place to live it would solve a lot of your problems right there.

[riverwed070707]

Originally Posted by LuckyRobin

I would definitely get rid of the landline. You have an expensive cell package so a landline is kind of ridiculous on top of that. Get rid of the cable. Virtually any show out there is available from the network website within 24 hours or at worst, one week later. Why pay for watching it "right now" when you can get it for free with a little patience?

Your grocery budget is very high for one person. I feed four people on $500 a month (quite a bit of the food is organic) so you can definitely cut that expense, I'd say in half.

Is there anyone you can carpool with to cut your gas expenditure in half?

These may seem like small things, but you could probably free up $300 to $400 a month doing them. And if you can find a cheaper place to live it would solve a lot of your problems right there.

Not true -- I love Suits but USA doesn't allow Hulu to play it for a full 30 days after it airs! It's not availalbe on USA's site, just clips.

Not enough to get my to pay for cable/satellite, but some stations are definintely starting to take steps to keep their viewers.

[Eric80]

Bankruptcy is not the answer and should be your last resort as this may affect you for a very long time, you will get no credit, your credit score goes through the floor and you will get nothing from banks or equivalent. I highly recommend a debt advisor where they will be able to guide and advise you honestly.

[ctazx]

Thank you all for the input.
I certainly can do some of those things. I'm just looking for best way to handle things in steps. 1st what is the most I can do right now, then what would be the next middle step, and finally start paying off debt obviously any other actions I can do down the road.
Taking the following advice that was posted, but if someone can also advise if there is anything I can do with credit cards to get the minimums reduced to further meet my budget for now? Is the best method doing that myself or through non profit credit counselor? Any advice on what to do or approach would be greatly appreciated.

I can & did get rid of cable & regular phone. I'm actually annoyed with myself I didn't do it sooner. I hardly watch the thing other then news and the mindless entertainment. It is amazing how much is out there for free. I won't even spend 7.99 for Huluplus as posted. All this is (even free) is a un-needed luxury to focus on right now given my situation. Same with the cell phone, I'm just researching what is the best option & price for me before I change my plan by tomorrow.

My groceries I can cut back and have.
Rent, I can look at getting a roommate in the near future & second job for now. Then would eventually move to improve my rent amount. I don't have the means to move at the moment, but again that would be a 2nd step.
I'm also going to ask to get a bump in my salary next week. Hopefully the answer will be yes!

Yes, the one poster is correct, the $25 is transfer from checking to savings to avoid fees. Not really "spending" $25, try to keep for emergencies by transferring.

The car has been the problem at this point to quick fix. I called and found out I have 3 more years & owe 10K at $336 per month. They said I could refinance the balance 10K to lower my payment which was originally based on $18k OR get into a car that would fit a lower payment through them. Then they ran my credit and even though I have never been late, due to debt amount they wouldn't lower my payment via refi or another purchase. I don't have the money for a down or to pay cash for a beater... I need a safe reliable car, don't need anything special... Don't know if going to a dealer based on payment would be a better option or what? My car may only fetch $1,000 over loan if lucky.

My take away from here is to at all costs avoid bankruptcy. Just not sure what's in store for me when I can't make my minimums on credit cards. Making the adjustments per above has only helped very little really. I plan on continuing paying rent, car, insurance & utlities on time. I guess make whatever I can on credit cards I suppose, that is where I will have trouble. I also don't know how I will ever pay off the amount of debt owed in full and not sure if settling is an option on that? I'm still stressing very much as you can tell by detail.

[Hector]

Originally Posted by ctazx

Rent, I can look at getting a roommate in the near future & second job for now. Then would eventually move to improve my rent amount. I don't have the means to move at the moment, but again that would be a 2nd step.

I dont know what do you mean by saying you dont have the means to move at this moment, but as others mentioned moving to a cheaper place seems obvious first step.