Debt Problems

How can I get out of debt when I owe $3,000 with bad credit?

Public Comments

1. Stop spending and start paying. Sell your stuff, get a job (or a second job), get a roommate, sell your car and use public transportation, spend the absolute minimum on food, no new clothes, no new anything - shop at a thrift store if you absolutely must have something. www.daveramesy.com is supposed to be a good site.
2. Set yourself a budget. Pay all the necessities first. Rent, Utilities, Insurance, Gas for auto, Groceries. Next figure out what is left and set a payment to pay monthly. Keep this in mind. Only shop when necessary. Don't shop because you WANT something. Right now you need to SAVE and clean up the bad credit. After my divorce 12 yrs ago, I was $46,661.50 in debt due to my ex. I've paid it all off without filing for bankruptcy. 5 yrs. ago I had enough in the bank (saved) to purchase a mobile home, and last week I established a car loan for a new vehicle.
3. It doesn't have to be one thing or another but the central focus needs to be the desire to work at achieving your goal(s). The two ways to get out of debt are to increase your income and/or reduce your expenses. With that said, what debts are you incurring that you can't afford? You don't have to cut them out completely but you can and should cut back on them. Do you need all of the cable channels you have? Do you need the cell phone or would a pre-paid plan for $10 a month suit your needs for emergencies only? Do you clip and use coupons? Can you work a part time job? Can you move to a less expensive home? Can you sell things that you have that you no longer want or need? Have you clipped your credit cards so you cannot go further in debt? It makes more sense to set your goal and earning 3-4% interest on savings than paying 10-18% to a credit card company. Don't take another loan to pay what you owe... pay what you owe. Have you looked at your credit reports to see if there are errors that are further lowering your scores? They are free under the law. Check out www.annualcreditreport.com to see all 3 bureau reports on you. Other sites have fine print that you need to look at. Can you work a few hours from home selling products or services? It shouldn't matter if you wear a clown suit to entertain at kid's parties or clean toilets at a subway. You need to get out of debt and stay out of debt. Save your credit needs for a home or car or other need rather than want. You see where debt is getting you emotionally and physically so do what you have to do. There's life after debt. Review your budget and know that change of behaviour is the only way to achieve your goals. Set your goals... make them realistic... and cross them off so you can set new goals. Relax... God isn't finished with you yet!!!
4. Call your creditors and make arrangements with them. They will work with you. They can lower your payments, lower or stop your interest and stop additional fees such as late charges and overlimit fees while on their payment program. Do not settle with them--even though it is cheaper, and sounds better--this will not help your credit.
5. $3000 is not a lot of debt. You can pay that off quickly just by cutting expenses wherever you can. If the bad credit is because of late payments on credit cards, pay as much as you can above the minimum due and stop using the cards. To find extra money to reduce debt faster, try some of these. Save gas by not driving unless you have to. Group errands together so you get them done all at once Save on grocery's by buying generic. Burger's instead of steak Eat out less often Save on utilities by keeping the A/C set a little higher or turn it off and open a few windows. Turn lights off that aren't in use Don't buy new clothes unless you really need something, Rent movies instead of going to theater. Suspend your gym membership if you can do it without penalty. Sell unneeded or unwanted items including that second car. You'll think of other ways as you move along to being debt free. The one big one for me, if you smoke, do whatever you can to stop or at least cut back. Cigarettes are a major expense that none of us need. It's money well spent on more important things. Good Luck
6. 1. stop spending. Your debt will never go down if you are still spending. If the debt is on a credit card -- take the card and freeze it in a block of ice. You'll still have the card for emergencies -- but you will have to thaw it out first! Gives you a chance to stop and think "is this really an emergency". 2. pay more than the minimum payment each month. If you only make the minimum payment each month - it will take you 20 years to pay that credit card off. Even 25 a month over the minimum can make a big difference. 3. There are 2 ways to approach paying the debt - and both are valid. Just pick the one that works for you. Option A. Pay down the debt with the highest interest rate first. Make minimum payments on every other debt. Focus all your extra money on the debt with the highest interest rate. Once that one is paid....move onto the next. Option B. Pay the smallest debt first. When you get that one paid off - you get a mental boost for having one less debt and it feels good to know that you just reduced your debt. It gives you a mental boost to keep on paying down your debt. 4. Look at what you are spending your money on. Do you eat out at lunch every day? If so -- take your lunch 4 days a week and eat out one. That will free up money to go onto your debts. Can you cut your cell plan to one that costs less? Keep a diary of every penny you spend for one month. At the end of the month - you will see where you are wasting money and can make adjustments. 5. Stay focused. It took time to get yourself in this financial mess....well - it's going to take time to get yourself out of it. Know that once you get the debt paid off - you can start to save money for the things that you want and for your future. 6. When tempted to buy something - an impulse buy- walk away from it. Make yourself wait 24 hours before you buy it. Most of the time - you walk away and realize you did not really "have" to have that item after all and never go back to get it. 7. Pay all of your bills on time - every month. This will make a big difference on your credit rating. Even if you only make the minimum payment -- make it on time - every time. Once your credit rating improves - you will qualify for better insurance rates, interest rates. All this saves you money and makes your life much easier. 8. Never ever loan money to a friend of family member. First off - you have debt - you don't have the money to lend. Second - if they have to borrow money from you - odds are you are not getting paid back. If they ask for money - just tell them sorry - you don't have it. 9. Brag on yourself. You have probably discussed your money issues with a close friend or family member. So, when you get one of those debts paid off - tell that person. Brag on yourself. You earned it. (Just don't celebrate by spending money -- no "treating yourself" for paying off debt). Getting a pat on the back from a friend or family member does not cost anything and makes you feel really good. 10. Know that you can do this. It takes discipline to do it. But it feels really good once you get it done. I just paid off all my credit card debt. (Literally, made the last payment yesterday). Its taken me a good 2 years to do it. It feels really good to know that I don't have that hanging over my head. Now I can start to save up an emergency fund and for improvements I want to make to my house. You can also get good advice from Suze Orman or Dave Ramsey. You may want to catch one of their programs some time and both have web sites. They both discuss money in a way that makes sense and makes it easy to understand. Stay focused on your goal. In the end - it's worth it. Good Luck.
7. 1. Pay off your highest rate cards/debts first. STOP USING CREDIT CARDS and pare them down. Revolving credit is a kiler to your budget. 2. Contact your debtors and see if you can negotiate a lower rate of interest in return for discontinuing use of the card. 3. Some agencies offer debt counseling at no charge. Check with your local social services agencies and other non-profits in the area to see if they can help or provide referrals. Good luck. ----------------------------------------- http://www.bestcreditrates.net