NRR - How do you live within your means?

Spend less than you make. I’m not being sarcastic, but that’s what you need to do. Use the extra money to pay off the debt.

Thanks, simple solution that makes sense. I am in the process of getting rid of some frills like gym membership, cable tv, eating out often plus trying to find a second job to pick up some extra income. Not an excuse but, depression runs in my family and I think it contributed to my spending habits.

sounds like you are on the right path.

Cutting cable TV and cell phone are easy ways to cut expenses.

I cannot believe how many people who have cell phones who don't need them and then complain that they don't have any money.

How to get out of debt quickly - no eating out - recycle bottles and cans, use coupons whenever possible, cut the cell phone, cut the cable, cut the internet (library), see what you can sell off on ebay/craigslist, cut the car and get a bike if possible.

Can your parents/anyone trustworthy provide you with a loan to pay off the cards? Don't go through one of those debt management services, they'll just leave you worse off.

It'll be a rough life for a while, but you can do it.

Just how much are we talking about here?

I'm with you!

Drowning in debt and was depressed and 'fragile' for a long time. Tough, crazy family.

Feeling stronger now and getting a second job to get rid of most of my debt in 2007 (goal is all of it by the end of 2008). That's my priority this year, and I know I can succeed with the right can-do attitude.

You know, in a way, it's like running, very 'mental'. Don't get discouraged when it gets tough and you think you're not making any progress. You can do this!

Best of luck,

TH

drowning in debt wrote:

I am struggling with debt. How have you handled your worst debt situation? I'll admit to reckless spending and now it has me by the throat.

Quit with the reckless spending and you'll be better off. Of course "reckless spending" is subjective. You need to write down all of your expenses, add them up and see if your income is covering them all. If not, start slashing those expenses.

Just curious, but how much debt are you drowning in? A recent study I read said that 75% of people over the age of 30 in the US have CREDIT CARD debt of $15,000 or more!

My answer to help you will depend on lots of things:

1) Do you own a house? If so, I might suggest you sell it and buy a smaller house. I'm not one to recommend getting a loan based on equity.

2) Do you have good credit? This is important to know, because if you do, you would be eligible for credit cards that offer 0% interest for up to 18 months. You can park some debt there and slowly pay it off while not incurring more debt. Just make sure you figure in a way to take big chunks of that debt down. When the 18 months is over, if you've still got debt there, move it to another credit card with 0% interest until you can pay it off.

3) Sell anything of value that you don't need or want. Don't sell stuff you need or want...you'll regret it later.

Just make getting rid of that debt a priority. Obviously pay off the higher interest debt first. Sounds like since you're recognized a problem and you're taking steps to correct it that you've got the right idea. Once you get that debt to zero, then start investing so that your money is working for you every day.

Good luck.

Credit card debt is probably close to $13k. I don't own a house currently. My car's loan is about $1K over blue book value. I have another vehicle that is paid off if I can figure a way to get this one sold.

May I suggest Dave Ramsey? It's simple but it works. Save a grand, get out of debt(except for the house) by using a debt snowball, get 3-6 months of expenses in the bank and then start putting money towards retirement and other things to prepare for the future.

It also helps me to keep track of everything – almost like a running log. Then I see where I’m spending my money. Opposite of my running log where I try to run more, I spend less.

Dave Ramsey isn't someone I would recommend.

Best to pay off your highest interest debt first - probably your credit card.

Then work on your next highest interest debt (but pay enough on this debt so you won't get penalties).

Credit card debt is a bitch. They rape you with the interest they charge. When you pay it down quickly, you are saving the 9-18% they charge you.

Keep a record of every expenditure (every single one, even the tip you give to the barista) you make over the next 30-90 days, this will allow you to analyze where you could be cutting out superfluous expenses (i.e. make your own coffee rather than pay Starbucks).

What's wrong with Dave Ramsey?

I have only limited experience listening to his program but I have heard him say pay off lowest amount debt first rather than the highest interest debt first. This makes no sense.

I have also heard him tell people to pay off their mortgage with extra money witnout even hearing what interest rate they have on their mortgage. If they have a low interest rate, they would probably be much better off maxing out their 401(k) and Roth and investing it and using the extra cash for expesnes rather than paying off a low interest rate mortgage if they itemize.

Cookie Monster wrote:

Cutting cable TV and cell phone are easy ways to cut expenses.

I cannot believe how many people who have cell phones who don't need them and then complain that they don't have any money.

I actually got rid of my land line and kept my cell phone. Same idea. A lot of people don't need a land line and a cell phone.

cookie monster wrote:

I have only limited experience listening to his program but I have heard him say pay off lowest amount debt first rather than the highest interest debt first. This makes no sense.

I have also heard him tell people to pay off their mortgage with extra money witnout even hearing what interest rate they have on their mortgage. If they have a low interest rate, they would probably be much better off maxing out their 401(k) and Roth and investing it and using the extra cash for expesnes rather than paying off a low interest rate mortgage if they itemize.

this is getting a bit off topic, but i find that interesting. there is a woman who writes for the washington post - michele singletary - who gives similar advice. it makes me cringe when i think of how techinically incorrect it is. at the same time though, she has many adoring fans (perhaps that's overstating it) who have found that they benefitted from seeing progress using her method.

so now i'm torn. her advice is clearly bad advice in terms of building wealth, assuming you have self-control. on the other hand, it's clear that people who have built up unmanageable amounts of debt have self-control issues when it comes to spending. so maybe she/ramsey have it right for that category of people.

drowning in debt wrote:

... Not an excuse but, depression runs in my family and I think it contributed to my spending habits.

Get checked out. People who are bi-polar can be horrendous spenders when they are up, only to realize the extent of their debt when they are down.

If you are at all concerned about this, you should stop using credit cards. Destroy them.

Flagpole,

I believe you, but where did you read that study about 75% of adults having $15,000 in credit card debt? That certainly puts my student loans in perspective... holy moly.

drowning in debt wrote:

Credit card debt is probably close to $13k. I don't own a house currently. My car's loan is about $1K over blue book value. I have another vehicle that is paid off if I can figure a way to get this one sold.

Definitely sell one of those vehicles.

Make a plan to get that $13,000 gone in three years. If you can get a 0% interest credit card, then do that. Go through 2 or three cycles of 0% interest credit cards if you have to, but that credit card debt has got to be paid off. Second job, be more frugal than a monk, but spend the next 36 months making sure you can get that debt gone.

Good luck.

dean moriarty wrote:

Flagpole,

I believe you, but where did you read that study about 75% of adults having $15,000 in credit card debt? That certainly puts my student loans in perspective... holy moly.

Dean,

Not sure where I read that, but a quick search pulls up SIMILAR results (says average credit card debt for people with at least one card is $9,205; since many people have NO credit card debt, myself included, it isn't too far of a stretch to imagine that 75% of Americans over 30 have $15,000 in credit card debt) -

Here's the relevant text:

# Average per household debt in the U.S., not counting mortgage debt, is about $14,500

# A typical credit card purchase ends up costing 112 percent more than if cash were used.

# Some 40 percent of American families annually spend more than they earn.

# About 60 percent of active credit card accounts are not paid off monthly.

# Average card debt among people who have at least one card is $9,205 -- triple what it was in 1990.

# Average personal wealth of a 50-year-old American, including home equity: less than $40,000. [Flagpole Willy comment -- THIS ONE IS SCARY!]

# A typical American family today pays about $1,200 annually in credit card interest.

# The average interest rate on credit cards is 18.9 percent.

# Last year the credit card industry took in $43 billion in card fees.

# Nine of 10 Americans claim credit card debt has never been a source of worry.

# Twenty-three percent of Americans admit to maxing out a credit card.

# Eleven percent of Americans admit card debts went to collection.

# Thirteen percent of Americans have been 30 days late paying credit card bills in the past year.