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I am 26 years old and have gathered about $12,000 in CC debt over the past 6 years. It really was under control until last year when I had to move out of town (cost of living low) to Chicago (cost of living very high) along with going to a post undergrad school that didn't let me work a lot of hours.
Up until this past summer I have kept up with most bills, however times are getting tougher and tougher, and I've fallen behind big time. Here's my rundown:
The problem recently is that my interest rates have jumped so high, that it put me over my limits, which led to late fees on certain cards while I tried to pay others off, and as of right now, all I can really afford is minimum payments which put me right underneath my balance, but fees put me back over and then I get charged over the limit fees again. Right now I am about 2 months behind on Citi and one month on Chase. I have enough to make the chase payment (to get me back to my balance) but then nothing for Citi.
Anyone have any suggestions on what to do? I don't have a car and I rent an apartment. Is there any kind of credit union I could turn to in order to consolidate my balances under a lower rate (anything under 20%) without any collateral? My fico is about 690.
These don't include my student loans, which I am also behind on now too. I just don't know what to do!
What's your monthly income? What kind of assets do you have?
Monthly income comes to be about $1,600 recently (was abouut $2,000). I work in the service industry but as I said, times are affecting what people are spending.
My rent is about half of that. As far as assets, most of this debt was spent on goods (TV, Xbox etc) so it's not like I don't have anything to show for it. But I've looked at selling some of my stuff, and I'd be lucky to get back 30% of what I paid for it.
1) Try opening up a zero percent credit card. (Do they still offer those these days? I know they used to) Or a low interest credit card. See if you can transfer the balance for free or low cost.
2) Get another job on the side. Doing anything, cleaning, painting, etc.
3) Sell all that stuff especially from Best Buy, get rid of it. You don't need it! You don't need a $400 TV that turns into 1600 TV after interest. Or a $300 Xbox that is $900 after interest.
4) Stop using your credit cards. Learn to budget. Take a small amount of money each week in cash from the ATM and *ONLY* use that. If you have nothing left by Thursday then you can't buy anything more till the next week.
5) Can you find another place to live that's cheaper? Your rent is too high. Rent a room at someone's house instead for example. You are lucky, you are young and it's managable!
6) Have you tried calling the credit card companies to try to reduce the interest? Call them and argue with them. Speak to a manager. If they still say no, call again and speak to someone else. Try this a few times.
You can ask that the credit cards be closed and they put you in a lower interest category. They usually work with you so they don't lose it all if you do a bankruptcy.
1) Try opening up a zero percent credit card. (Do they still offer those these days? I know they used to) Or a low interest credit card. See if you can transfer the balance for free or low cost.
2) Get another job on the side. Doing anything, cleaning, painting, etc.
3) Sell all that stuff especially from Best Buy, get rid of it. You don't need it! You don't need a $400 TV that turns into 1600 TV after interest. Or a $300 Xbox that is $900 after interest.
4) Stop using your credit cards. Learn to budget. Take a small amount of money each week in cash from the ATM and *ONLY* use that. If you have nothing left by Thursday then you can't buy anything more till the next week.
5) Can you find another place to live that's cheaper? Your rent is too high. Rent a room at someone's house instead for example. You are lucky, you are young and it's managable!
6) Have you tried calling the credit card companies to try to reduce the interest? Call them and argue with them. Speak to a manager. If they still say no, call again and speak to someone else. Try this a few times.
Perfectly said. Now to get out of a hole, the first step is to quit digging.
Spending must decrease, and if at all possible increase income to pay down the debt (not to reward yourself ).
Reality check: you make $1600/month, and only have about $800 to pay down CC debt. That is not going to work out. DO NOT UNDER AN CIRCUMSTANCES attempt to BORROW MORE MONEY!!!! Not from a credit union, not from a guy with too many vowels in his name. not from a priest!
You have to increase your income. A lot. And soon. Those CCs are going to be an albatross. Have you thought about getting roommate? Do you relatives that you could ask for a gift of some cash? I would not really call it a loan, as right now you could not afford to pay it back, but MAYBE if you could get enough to GET RID of all your stupid CCs and agree to pay a relative MORE than they are getting on a CD (about 4%) it could work out over time...
Please please please tell us that you studied something that pays well. Did you take a student loan? Where is that?
I wouldn't normally recommend credit counseling but if the interest rates are so high you can't make the payments and you have too much debt to pay the minimums anyway, you might go that route. Just know that it is going to really mess up your credit rating until you are finished paying them off. If you do go that route I know for a fact that careonecredit.com is a reputable, good company to work with. And I know that once your cards are paid off through them your credit report will show never late/pays as agreed. But while you are in the process of paying your credit rating will take a hit and you probably won't be able to borrow money. I did this many years ago when I had a Discover card with interest at about 30% and I had been paying on the card for FIVE YEARS and not making a dent in the balance because of the interest rate. I enrolled in credit counseling and finally got that thing paid off once the interest was reduced through credit counseling.
But like others said, call the CC companies yourself first and see if they will work with you/lower your interest.
Right now I am under a lease for another 6 months.
I have one semester left at school (Creative Advertising) which, as I said, limits my hours. I work close to 40 hours a week and go to school every day.
I haven't spent anything on the Chase, Best Buy or Citi Card in the past four to five months simply because I am already over the limit. Infact, I believe my Chase and Citi Cards are suspended from spending.
My student loans are consolidated through Wells Fargo and Sallie Mae.
I have contemplated trying a settlement with Citi Card. I have gathered about $400 in fees which keep me over my limit, and I haven't been able to pay it for almost 90 days. I know this would look bad on my credit, but I am desperate.
You MUST get some cash to the CCs. They will send you to collection agencies. I am serious about cutting up the cards, begging for help from a relative and just wiping the slate clean.
It is never too late to get the CC companies to close the accounts. If you call them you have to ask for a supervisor, hopefully someone from the delinquent accounts area, that has the ability to either get rid of the penalties or send you to a department that can, it won't be easy as you are not some "big fish" but as your income is so low you are frankly headed for bankruptcy -- which would not do you or them any good as you'd still be required to pay them back over a long period and you'd have the messed up credit history PLUS the seven years of bankruptcy on the report too...
Get some money together and start calling. Ideally if you could hit up relatives for about $5000 you could keep the train together.
I think you have a taken a good first step, but it going to be hard to admit that you have dug a BIG hole, I hope you can count on somebody to throw you a rope. If you get a job that pays better you should pay them back WITH INTEREST as quick as you can and learn that credit has consequences...
btw -- your career choice is not what I hoping to hear. Those are not "easy to land" jobs unlike say healthcare. You are going to have to bust your tail to make your studies pay off. If you can get some internships DO IT, hopefully you get something that BOTH pays OK and gives you an in for a better full time job.
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