Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
No one is fixing today what took a long time to create. If you read the OP, they have a bunch of cards and suddenly can't afford to pay the minimums due to financial constraints.
Bankruptcy isn't the answer here because that just makes everything else worse too.
Today, not tomorrow or next week, the OP should call each and every credit card company they do business with and ask them for a one month extension if they pay 1/2 the minimum payment. That gives them immediate relief and prevents any damages for right now.
Then they have a month to get their act together. They can explore all the possibilities and choose the right one. If they can't manage to figure it all out within the month, then no one here can really do anything for them either.
The OP has already shown that they simply waited until disaster knocked on the door before running to an Internet forum which by itself is probably the worst place to go because no one here really knows the full story and no matter what is said it still won't be the whole story, it will be bits and pieces and in all likelihood important things will get left unsaid.
The Op needs some face time with someone who can listen to the whole story and then equipped with all of the right tools, present the OP with a reality check and real options. Then it is up to the OP.
I'm betting that the OP has already asked for extensions, had late pays and so on and this is just the end of the rope as far as the card companies are concerned. It would be nice if that isn't correct but somehow by the time people head for Internet forums they are hoping someone has a magic wand.
Going without credit only works if you have not already gotten into debt trouble and have a really big emergency fund (6 months expenses + full vehicle replacement at minimum, so total about $25k)
Having bad credit is certainly an issue, and in some cases, having no credit can also be a problem. but to say you can't get a good job with no credit history is simply not true - I've done it, as have both my parents. Even the pro-credit crowd on this forum will concede that you can get a job without a credit score.
I recommend an Emergency Fund equal to 2 years of your personal expenses total based on the format of this "new economy" that we are in, where if you are currently making a good income and LOSE that source...you might need to obtain additional training, move to a new city, etc. to bring that level of income back, and the Emergency Fund will be needed to manage that.
In regards to the Employment, I don't know, Employers are cracking down on those with bad credit and no credit as they are using the credit report to add to the "background check" of the employee. In a nutshell, anybody listening to Dave Ramsey telling them to OPT OUT of the Fico System and OPT OUT of having an established, built and good credit report....is following bad advice.
Most of what Dave Ramsey says is true, but when he starts saying all DEBT is bad DEBT, I have to turn ol' Ramsey off because he's just railing against debt because he thinks it's what caused his bankruptcy in his early years but instead....what caused his bankruptcy was his own OVER-LEVERAGING and mis-management.
I recommend an Emergency Fund equal to 2 years of your personal expenses total based on the format of this "new economy" that we are in, where if you are currently making a good income and LOSE that source...you might need to obtain additional training, move to a new city, etc. to bring that level of income back, and the Emergency Fund will be needed to manage that.
2 year emergency fund? At a 10% return and assuming essential expenses equal to 70 percent of after-tax income, a 2-year cash position has an opportunity cost of 14% of after tax income!
The opportunity cost is too damn high.
Quote:
Originally Posted by jotucker99
In regards to the Employment, I don't know, Employers are cracking down on those with bad credit and no credit as they are using the credit report to add to the "background check" of the employee. In a nutshell, anybody listening to Dave Ramsey telling them to OPT OUT of the Fico System and OPT OUT of having an established, built and good credit report....is following bad advice.
You are failing to distinguish between no credit and bad credit. Ramsey is encouraging no credit, which employers don't have an issue with. What employers look for is "red flags" that a person was mismanaging their money - the default position in the absence of evidence to the contrary is that the employee is fair game (non-credit criteria such as skills and education notwithstanding).
Quote:
Originally Posted by jotucker99
Most of what Dave Ramsey says is true, but when he starts saying all DEBT is bad DEBT, I have to turn ol' Ramsey off because he's just railing against debt because he thinks it's what caused his bankruptcy in his early years but instead....what caused his bankruptcy was his own OVER-LEVERAGING and mis-management.
Over-leveraging is too much debt (in relation to equity).
I recommend an Emergency Fund equal to 2 years of your personal expenses total based on the format of this "new economy" that we are in, where if you are currently making a good income and LOSE that source...you might need to obtain additional training, move to a new city, etc. to bring that level of income back, and the Emergency Fund will be needed to manage that.
In regards to the Employment, I don't know, Employers are cracking down on those with bad credit and no credit as they are using the credit report to add to the "background check" of the employee. In a nutshell, anybody listening to Dave Ramsey telling them to OPT OUT of the Fico System and OPT OUT of having an established, built and good credit report....is following bad advice.
Most of what Dave Ramsey says is true, but when he starts saying all DEBT is bad DEBT, I have to turn ol' Ramsey off because he's just railing against debt because he thinks it's what caused his bankruptcy in his early years but instead....what caused his bankruptcy was his own OVER-LEVERAGING and mis-management.
Unless its a home mortgage/loan then all debt is bad
debt.
2 year emergency fund? At a 10% return and assuming essential expenses equal to 70 percent of after-tax income, a 2-year cash position has an opportunity cost of 14% of after tax income!
The opportunity cost is too damn high.
You are failing to distinguish between no credit and bad credit. Ramsey is encouraging no credit, which employers don't have an issue with. What employers look for is "red flags" that a person was mismanaging their money - the default position in the absence of evidence to the contrary is that the employee is fair game (non-credit criteria such as skills and education notwithstanding).
Over-leveraging is too much debt (in relation to equity).
About Opportunity Costs, it depends on how you invest your money. The monies included in my Emergency Fund are also what I call my "conservative base monies," which are monies that are ONLY invested in guaranteed/insured accounts to protect the principal and have "some growth". Other monies are invested into various business projects in which I pull at least 400% - 500% returns. When you add it all up....I'm doing much better with my overall investment, financial management, etc. "system" than most Americans.
In regards to the Credit topic, I say it depends on the Employer. A lot of Employers in my network/industry (Finance/Accounting/Banking) does take into account the credit status of the individual. If there's NO established credit history and the person is over the age of 25, the Employer would wonder what might be the issue here.
In my opinion, while not to get too technical with textbook definitions, I believe that Debt = Leverage....Leverage in that it helps me "lean over" to a higher place in a more rapid fashion, that would have taken me longer to "climb up to" through the normal process of work activity.
For example, while we are discussing credit cards I will use them as an example. Many of my cards will offer No Interest for 12 months with a 3% upfront fee on the amount taken out. So if I want to acquire a piece of equipment for $10,000 I would use the No Interest for 12 months offer and pay $300 to utilize the capital for one year. That piece of equipment turns around and creates $40,000 in revenue for me which is a 400% return minus the 3% cost of funds which is a 397% net return. Surely, I could have "saved" on the 3% cost and just used my stored equity dollars to buy the equipment, but why do that when I can use leverage? The Leverage allows me to KEEP my bank balances and savings in tact, acquire the equipment and PAY for the acquisition of the equipment through the profits FROM the equipment.
But most Americans are stupid with money, stupid with finances, stupid with budgeting, and stupid with investing. My strategy works for those who are prudent financial mangers of their income, taxes and expenses, NOT for the idiot that runs out to the Shopping Mall to buy clothes, electronics and other junk every single weekend that he won't use and doesn't need.
Unless its a home mortgage/loan then all debt is bad
debt.
Totally disagree. Debt is only GOOD based on what it's going to be used for and the ROI as a result of the usage. See my example in the previous response.
If you don't pay anything for 6 months, they're likely to be willing to settle for 30% - 50% of what you owe, but before you consider this option you should try to find ways to come up with the money to make good on your credit card debt.
If you don't pay for 6 months, your credit history will be hideous and your balances will skyrocket due to late payment penalties, interest, etc.
You could go to a reputable credit counseling agency, not one that quits paying your cards and tries to settle later, but one that sets up payment plans at every account for you. I used to work at one several years ago. The credit card companies would lower interest rates to 0-10%, stop late charges, lower payments and people would be able to have them paid off in about 3 years. You make one payment a month to the CC agency and they distribute the funds to your accounts.
Or, see a bankruptcy attorney, usually first visits are free.
Of course it's better to pay it off on your own, but once you get to a certain level of debt and maxed out all your cards, you probably need help to get things under control and paid off.
Unless its a home mortgage/loan then all debt is bad
debt.
Spoken like a Ramsey Parrot
Debt is good any time the cost of taking out the debt is lower than the cost of not taking out the debt. Going to lose your job because you can't pay for your car repair? Paying an extra $10/month in interest so that you can make $1000 that month is worth it. Going to die because you can't eat food? That interest is worth it. Going to be able to invest in something (stocks, a business expansion, yourself) that will return more money than the interest? Still worth it.
The collateral behind the loan is irrelevant. If I take out a home equity loan to improve the value of my house by more than the loan, that's good. If I take out the same loan to go on a massive shopping spree, that's not good.
Debt is never truly "bad" it can just be a bad idea to take it out because it costs more than it's worth. Just like any tool, it's inherently neutral.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
