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Old 07-20-2009, 01:09 PM
 
Location: SoCal native (Riverside), now in the Seattle area...
102 posts, read 352,577 times
Reputation: 47

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My situation:

50K+ in debt on CC's (7 total), not able to keep up with minimums (starting TODAY), been debating on what course of action to take. Just got caught up in paying regular bills (utilities, cell, DirecTV, etc) with CC's and didn't have any problems keeping up (make about 45K a year), until the interest rates skyrocketed (despite NEVER having missed a payment) and with my debt ratio, the limits on said cards dropped dramatically too.. Just a vicious cycle, and my own fault, but like the procrastinator I truly am, waiting till the last minute to find a resolution.. Credit rating is right around 700 and I know either way it's gonna take a significant hit, just wondering what would affect it more adversely...

Best part? The wife has no clue (all the cards in my name), but the house in both our names.. Wondering how either scenario would affect her credit, and I know I'll have to break it to her in the very near future, but trying to get some kind of decision resolved before breaking the news..
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Old 07-20-2009, 01:34 PM
 
21,613 posts, read 36,683,059 times
Reputation: 10657
I have seen worse -- your income about $45K and you have about $50K in revolving credit card debt ON TOP of regular expenses and house, but the real 'meat' is going to be about your mortgage and such.

If you are sure about your credit and you have the ability to get a better rate on a secured loan against your home either through HELOC or cash out refi you really should pursue that FAST, like YESTERDAY. If you are at least current on your CCs and not digging a deeper hole with new purchases you might be able to go that route.

Cash out is MUCH MUCH harder than it used to be, so you might have to stick with HELOC, if you already have that in place then just drawn on it to pay off highest rate cards.

If you do not have a HELOC you need to get one. If your home is worth less than you owe that won't be an option.

$50,000 is alot of money, especially on $45K salary. You have to change your spending habits.

If you have an expensive car or other things that are easy to cut back on you have to immeadiately try to shift to get things paid off.
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Old 07-20-2009, 01:57 PM
 
Location: Sacramento
2,395 posts, read 4,062,372 times
Reputation: 1662
Quote:
Originally Posted by chet everett View Post
If you are sure about your credit and you have the ability to get a better rate on a secured loan against your home either through HELOC or cash out refi you really should pursue that FAST, like YESTERDAY. If you are at least current on your CCs and not digging a deeper hole with new purchases you might be able to go that route.

NOOOOOOOOOOOO. People who have done that in the past have turned around and maxed their cc again. Then they lost their home.

To the OP. Are you still charging to your cc? I am a big fan of Suze Orman and the first thing she would tell you is to stop living a lie and to tell your wife about your financial situation.
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Old 07-20-2009, 02:27 PM
 
Location: SoCal native (Riverside), now in the Seattle area...
102 posts, read 352,577 times
Reputation: 47
Quote:
Originally Posted by suzie02 View Post
NOOOOOOOOOOOO. People who have done that in the past have turned around and maxed their cc again. Then they lost their home.

To the OP. Are you still charging to your cc? I am a big fan of Suze Orman and the first thing she would tell you is to stop living a lie and to tell your wife about your financial situation.
Yes, I am.. I know I shouldn't be but it's just piddly stuff and at this point I'll be maxed out on all of 'em by the end of the week or so.. and yes, I need to let the wife know ASAP, but trying to figure out some sort of resolution as to what I might do so at least I have some sort of "plan"..
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Old 07-20-2009, 02:32 PM
 
Location: SoCal native (Riverside), now in the Seattle area...
102 posts, read 352,577 times
Reputation: 47
Quote:
Originally Posted by chet everett View Post
I have seen worse -- your income about $45K and you have about $50K in revolving credit card debt ON TOP of regular expenses and house, but the real 'meat' is going to be about your mortgage and such.

If you are sure about your credit and you have the ability to get a better rate on a secured loan against your home either through HELOC or cash out refi you really should pursue that FAST, like YESTERDAY. If you are at least current on your CCs and not digging a deeper hole with new purchases you might be able to go that route.

Cash out is MUCH MUCH harder than it used to be, so you might have to stick with HELOC, if you already have that in place then just drawn on it to pay off highest rate cards.

If you do not have a HELOC you need to get one. If your home is worth less than you owe that won't be an option.

$50,000 is alot of money, especially on $45K salary. You have to change your spending habits.

If you have an expensive car or other things that are easy to cut back on you have to immeadiately try to shift to get things paid off.

Yep, thought about a HELOC somewhat, I need to give a call to my real estate guy that sold us the house, get his input... And I've already cut down the DirecTV bill and internet, need to work on getting the cell bill next.. But everything else is pretty much set (utilities, truck payment -435 month-, insurance, etc)... Really put myself into a hole here, but like I said, my own fault.. Just trying to dig myself out..
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Old 07-20-2009, 02:52 PM
 
Location: Sacramento
2,395 posts, read 4,062,372 times
Reputation: 1662
Quote:
Originally Posted by nwraider View Post
Yes, I am.. I know I shouldn't be but it's just piddly stuff and at this point I'll be maxed out on all of 'em by the end of the week or so.. and yes, I need to let the wife know ASAP, but trying to figure out some sort of resolution as to what I might do so at least I have some sort of "plan"..
Why would you charge piddly stuff? If it is piddly then you do not need it. You need a serious behavior change so please do not transfer this debt into your home. I hope your wife has the sense not to allow it.

Regarding your original question, who cares about your FICO score? You need a financial overhaul and if having bad FICO keeps you from getting into any more debt then that can be the best thing that happens to you.
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Old 07-20-2009, 03:08 PM
 
21,613 posts, read 36,683,059 times
Reputation: 10657
I understand where s02 is coming from, I am not trying to make judgments. When I had tenants in rentals there were some just like the OP, maybe worse. They would have shiny new cars, motorcycles, wave runners, all financed and they would pay me as much in rent as they could have paid a bank for a mortgage to own some of the places I rented BUT they had no cash for downpayment and no sense that CC interest was increasing their indebtedness every time the thing left their wallet...

As standards for borrowing got lax the same sort of people could get into houses for next to nothing and if values climbed they could tap equity to keep up crazy spending.

In most parts of the country that is no longer the case and those that were using equity as piggy bank are already in deep doo doo.

If the OP has equity AND CAN STOP DIGGING A DEBT HOLE, then there might be a "path out" and if his wife does not know about this problem and does not smack him with a frying pan they need to work on this together ASAP...
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Old 07-20-2009, 03:39 PM
 
Location: 23.7 million to 162 million miles North of Venus
1,418 posts, read 1,925,750 times
Reputation: 1310
Quote:
Originally Posted by suzie02 View Post
NOOOOOOOOOOOO. People who have done that in the past have turned around and maxed their cc again. Then they lost their home.


Trading unsecured debt to secured debt is never a good idea.
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Old 08-19-2009, 01:26 AM
 
3 posts, read 9,448 times
Reputation: 11
First - DO NOT use your home to pay off unsecured debt. This may be a safer move in a normal real estate market, but it's a bad move when you don't know where the value of your home will be in 12 months.

Second - DO NOT use debt settlement. This most often will appear negatively on your credit, cost about $10,000 (based on $50,000 debt) and you have NO GUARANTEE your creditors will truly accept the deal. Debt Settlement has really received a horrible reputation.

A much better option would be CREDIT COUNSELING. When you rack up $50,000 on an income of $45,000 it shows you need a better comprehension of money and credit, a credit counselor can help you with that. Careful, many DEBT SETTLEMENT companies like to put CREDIT COUNSELING in their name, just approach with caution.

Also, be sure to check out the Federal Trade Commission website, they have a ton of great information in dealing with your creditors and your rights. You can also look at affordable services like HelpUBuyTime that will help you communicate your position and plan to your creditors that will help get you the time to make it happen. With most credible options you'll still be paying off the debt, they'll just help you with setting up time lines, interest rates, etc... Stay away from people/companies that claim you can just walk away from your LEGAL obligation to your creditors - they're full of crap.

Good Luck,
Richard Jacobs
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Old 07-28-2010, 10:41 AM
 
4 posts, read 2,598 times
Reputation: 10
I would suggest to you debt resolution. That way it can dillute the bill amounts to 50 percent or lower and the mthly payment are alot lower than your minimum credit card payments.
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