What should i do with credit card debt?

[Zman85]

Hello! New to the forum! I am in need some advice on what to do.

Currently i have $15k in credit card debt, 13k car loan and about 20k in student loans. I need some advice on what to do with my credit card debt. Im not worried about the car loan and student loans, those will go away eventually, since i can not charge to them But anways, i am a 23yr old with 15k in credit card debt. I can just basically afford the minimum payments on my credits and still have a tiny bit leftover for the bare essentials example: food, rent, utilities gas....

Being this much in debt at such a young age...makes me very worried and because of it my life has become very stressfull and not being able to sleep. I take in around 1600 a month from my job, after everything is all paid for after one month...i believe i have about 150 dollars to spare. I have been trying to do the snowball effect on my debt, but unfortuanatlly it hasnt been very successfull. I have been thinking about getting a second job, but i would not be able to start a second job untill after jan 09 due to business travel that has been scheduled for a while now.

Im willing to sacrafice my sleep in order to start making my debt go away, but i know that will not be good for me and will probably not help out my relationship with my gf, because im already stressed out and am always in a down mood. I do want to marry my gf eventually, but i hate telling my gf every time we talk about marriage, that marriage will have to wait because i can not afford a ring right now. Ok sorry for this long post. But honestly im just asking for advice on what i can do to make my debt go away faster?? Anyone have any hidden secrets?? anyone know how to really get money to grow on a tree?? Thanks everyone for any help provided!!

[terry1156]

You may be getting ahead of yourself if the snowball method hasn't been working.

Do you understand how you got there in the first place and have you taken steps to address the reasons the debt built up? Before you can tackle the debt, you need to be aware of what caused it in the first place and have a plan to make sure it doesn't happen again. It makes little sense to address the debt you have now if it will just reappear again because you haven't dealt with the root cause first.

[mommyof4]

My suggestion is to go to your local public library and check out Dave Ramsey's Total Money Makeover.

Good luck to you!

[disneysteve]

Welcome to the forum. I think you'll find lots of useful advice and support here.

Can you explain why the snowball isn't working? An extra $150/month to the CCs should help quite a bit.

Are you still using any of the cards? If so, you need to STOP IMMEDIATELY. The debt will never go away if you are constantly adding to it.

Can you post your complete budget? List everything you spend and we can try and help point out places to trim spending and free up more money for debt reduction.

What did you get for that $15,000? If any of it went for tangible items that you could sell, you should sell them. Even if you take in less than you paid (which is probable), the money could go straight to debt reduction.

[Tree0164]

You need to stop charging. I also recommend picking up Dave Ramsey's book Total Money Makeover as well.

Here are his baby steps
1. Baby emergency fund $1000
2. Pay off debts starting with the lowest $$ amount to the highest
3. 6 months emergency fund
4. 15% for Retirement
5. Save for College
6. Pay off house
7. Live like noone else

Also what is your car payment if the car is taking too much of your salary you might consider selling it.

[maat55]

You should also look at selling anything you can, possibly your car. Can you get a second job? Cut your cards up now.

A second job with a tight budget is your best option.

[mrpaseo]

Let's see, first question:
"what i can do to make my debt go away faster??"
A: Pay more on your debt, stop charging more debt.


Second question:
"Anyone have any hidden secrets??"
If I told you i would have to kill you, sorry there is a reason they are called, "Hidden Secrets".

Third Question:
"anyone know how to really get money to grow on a tree??"
Money does not grow on trees, I'm not sure where you heard this from but it's impossible. Money is manufactures by the Federal Government.

You said: "Thanks everyone for any help provided!!"

My pleasure.

Now that the humor is out of the way, I also recommend the Dave Ramsey program. Not only will it help you get out of debt but it will offer a great frame of mind for your future.

One thing I would highly recommend, figure out your net worth on a monthly basis. This will help you see that your net worth is going up every month due to you paying down on your debt and not charging anymore.

Good luck,
Ray

[Alex_Adviser]

Here are three ways to quickly whittle those balances down:

Drop your rate
The average credit card interest rate is about 14%. But many credit cards feature a special, low-rate introductory offer, such as 0% for six months. Transfer your balance to a low-rate card, and more of your monthly payment will be applied to your principal rather than interest, which drops your balance faster. If you can't find a lower rate card, try calling your current credit card company and asking for a lower rate.

Boost your payment
Making just the minimum payment on the balance means it could take more than time to pay off your debt if you have a 0% interest rate. Paying more than the minimum is the best way to pay off your balance quickly. Send in some extra dollars per month and you'll be free of your debt in a much lesser time.

Consolidate it
If you find yourself in need of extra help, consider a loan consolidator or debt negotiator. These professionals can help you negotiate with credit card companies for a lower interest rate or even a new debt amount. A successful negotiation can help cut the amount you owe down to 50% of the original total, and lowering your balance means you'll be able to pay it off faster.

All the best....................

[tripods68]

Your first priority is to get a second or maybe a 3rd job to pay off your debt quickly. I agree, you should read Dave Ramsey's book.

At this point of your life, marriage is the last think you should even think about without first improving your income, debt, and retirement planning.

Enjoy life while young!

[KB24]

If your student loans are stafford loans, you can defer the payments. All you need to do is show them that you are having financial hardship, which your case probably qualifies.

You may also consider selling your car and getting something cheaper.

Your other options is loan consolidation. If your credit card interest rate is high, and I'm assuming it is, you're debt is just building up more and more every month.

Good luck

[Alex_Adviser]

You should also try for some extra income opportunities to pay off your debts faster. There are several part time jobs available these, even a pizza delivery boy can earn up to $1500. Or try out some online job sites for work at home opportunities.

All the best..............

[Bimmer]

13k car loan for a 23 yr old says a lot. I would look at that closely. Sell the car, suck it up and buy a $3000 or less honda/toyota. Pay off credit cards then you can look at a car upgrade (say $6000 car). Build your savings then you can start looking at 10-15k cars if you must have one.

Before that, examine what you are doing to rack up that much CC debt and stop! Do not spend money you do not really have. If you cannot pay the balance in full each month, you are spending more money than you have.

Credit cards are only good for their rewards programs (then only some CC's), and their ability to help your FICO score. However, they only help your FICO if your balance to available credit limit ratio is low (ie you have a $1000 limit and only have a $50 balance).

[disneysteve]

they only help your FICO if your balance to available credit limit ratio is low (ie you have a $1000 limit and only have a $50 balance).

It is important to keep your utilization ratio low, but you don't have to keep it that low. It is best, though, to use no more than 30% of your credit line. If you have a $1,000 limit, that means not ever charging more than $300.

[Gjowers]

Consider selling the car and look for ways to reduce expenses. I bet you can live without cable, or a gym membership, or magazine subscriptions, go out to eat less, etc. Use those budget saving to really go after that CC debt. That stuff is a killer. Cut up your cards; you don't need the temptation.

[Bimmer]

It is important to keep your utilization ratio low, but you don't have to keep it that low. It is best, though, to use no more than 30% of your credit line. If you have a $1,000 limit, that means not ever charging more than $300.

True, I just threw that out there as an example. I could not remember the exact percentage when I wrote that. At any rate, its better to have a low balance relative to card limit then being maxed or nearly maxed out!