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Getting out of debt
- Thread starter souldawg
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Check out Dave Ramsey, he's the real deal. He has a step by step way to get out of debt and stay out of debt the old fashioned way. He HATES credit cards and credit card companies, and does not accept credit cards as payment for any of his books or programs. His method handles the behavioral side of money management as well as the arithmetic side, so it's well balanced IMO. I'm not affiliated in any way, just glad I tuned in to him several years ago.
@The Doctor
It appears on your credit report, "Under debt management" if there are any inquiries. But other than that, No. Most companies, see it as you paying off all you owe, and nothing written off, or in Bankruptcy.
It appears on your credit report, "Under debt management" if there are any inquiries. But other than that, No. Most companies, see it as you paying off all you owe, and nothing written off, or in Bankruptcy.
That is the reason I said to consolidate the loans while you can, if you think you won't be able to get out of them.
If you transfer them to a credit card or a personal loan, they become something you can write off in a BK.
But, most people know their student loan debt and will know if they can manage that nut rather quick.
Juggling credit cards now and talking to debt counselors would mean you might as well take out a couple more credit cards to balance transfer the student loans and then listen to the debt collectors while waiting for the statute of limitations on the credit cards for new transfers to expire to eliminate them.
Though if you get an American Express card, they will do their best to beat you to the BK filing and get a court judgment against you if you leave them holding too much. Charge $100k and go bust rather quick and they file criminally.
Edit: Nothing new in info, likely the laws that were passed to go after the people gaming the system before are likely still doing it today and still writing off the student loans while the poor people get trapped because they tend not to have people help them do it.
Consolidate your loans to a low interest rate if possible. Use an approved consolidator, not just someone from the yellow pages or off the internet ads.
Then, nickle-and-dime your way out of debt. It can be done. We often disregard "small" purchases because we think they ultimately don't matter. Not true. Add up those coffees at Starbucks, plus the scone or donut, and it can easily reach $30-40 or more a month. Going out to eat is also expensive, unless you buy the very cheap and unhealthy offerings from the dollar menu at McD's.
Eat at home. A LOT. Make going out to eat, even fast food, a special treat, not a regular occurrence. Learn to make frugal meals, and then eat left overs the next day. Pack your own lunch for work/school, and eat smart and frugal. Buy canned fruit if it's too expensive to buy fresh, but fresh is best of course.
If you are frugal, you can eat on $300 a month no problem. That ends up about $10 a day, and you can do less, especially if you buy a big can of tomatoes and make your own spaghetti sauce or something stock like that. Think about how much it costs to eat out: one average restaurant will cost the average person about $9-15 a meal, not including dessert.
Stop bad habits that are expensive and unhealthy. Give up soda, except as a rare treat. Buy the big gallon things of water instead of water bottles, and use a reusable water bottle to carry it out. Avoid packaged ready to eat foods that are almost ALWAYS more expensive than making it yourself. Look for all the special deals at the grocery store. Ask for a flyer to be sent to your house they'll gladly add you to their mailing list. Stop buying useless junk food that has become a stable of the Western household, especially in America.
Avoid purchasing things at convenience stores, or any impulse buys at the register.
BUDGET! Do what I do if you have to -- make envelopes for the different kinds of expenses. I have one for groceries, one for doctor visits, one for entertainment expenses, and so on. I take the envelope and use the money that is in it. If I run out, I'm out for the rest of the month. I reset it to the set amount every month on a certain day. Then, I compare month to month expenditures, using all of the receipts I kept. It's useful to see where money is wasted. For example, I realized that buying individual bottles of tea were using up a fair chunk of change, and that by buying a BIG bottle of tea and filling a reusable thermos, I was able to save money and the environment!
Couple rules to live by:
1) DO NOT BUY STUFF! It's that simple, the best way to save money is NOT BUY ANYTHING. Don't fall for the cheap items that you don't need, because you are still spending money. Don't go broke "saving money."
2) USE WHAT YOU HAVE. Instead of buying something, find something in your place that you can use. I had a thermos lying around, so instead of buying a nice Nalgene water bottle, I just used my thermos. Saved a couple bucks.
3) USE IT TIL YOU LOSE IT! Use your stuff until it wears out. Wear holes in your clothing. Use older shirts as "sleep" shirts so you don't sleep in nice shirts (I do that to avoid stretching my nice shirts). If you didn't sweat much, wear the same shirt the next day (as long as you don't sleep in it). I reuse work shirts numeorus times before washing, and I don't iron them, to keep them in good shape.
4) AVOID CONSUMERIST TRAPS! Don't make your homepage the Apple store, and don't make trips to the mall a regular part of your life. Don't buy into the consumer mentality, that you always have to be buying stuff, more stuff, better stuff. If your stuff right now works, keep using it. If it isn't broken, don't replace it. Avoid places that tempt you to buy things, especially expensive things.
5) COMMIT TO SOME "NO-BUY" ITEMS. Make rules for yourself, and write them down somewhere in plain sight. For example, one rule I have right now to save money is: "I will not buy an iPhone for two years." That started a couple months ago, and I will stick to it. If I still REALLY want one in two years, I might consider it, but probably I'll commit again to not buying it if I need to save money
6) PAY NOW, NOT LATER. As much as possible, avoid any sort of loans or credit card use. Pay for what you need now. Don't buy that new computer and tell yourself that you will nickle-and-dime your way to paying it later. Save up for items first, then buy them with real money. Your best bet, however, is to keep using what you got until you hit a wall with it. So what, you got an older iBook G4. Does it still do everything you need it to do? Then keep using it, and love it
P.S. A few practice pieces of advice:
* Reduce utilities as much as possible. Shut off all appliances not in use. Especially computers (monitors) and TVs. Unplug your internet when not in use to save energy. Take very fast showers, turning water off when you're lathering up. Use smaller amounts of water on lower pressure to wash hands, etc. Never leave water running.
* NEVER go to the movie theater. OK, maybe, if you really want to, squeeze in one a month out of your entertainment expenses. But it's infinitely cheaper to just rent the movie.
* Take up reading and borrow books from the library. Bike or walk to the library if possible. If you do that, you will be participating in a hobby that requires nothing but the possible low-watt light bulb at night. During the daytime, reading is free!
* Replace old, expensive hobbies with new, cheaper (free) hobbies like the above mentioned reading. Instead of expensive (mostly unused) gym memberships, walk/jog/run, and use gallon jugs of water for weightlifting.
* Turn off your AC... leave it off. Open the windows, and use a fan when it's just too hot. AC is a HUGE contributor to electric bills and overall energy use. Turn your thermostat down as much as is reasonable, and wear a big heavy sweater that you have stored in a box in your closet. Sleep with an extra blanket or two. Shut vents to rooms not in use, or rooms that can be cold without any problems (remember to shut the door to that room, too). This will help direct more heat elsewhere.
* Don't use your car any more than necessary. Combine trips out to places, and take the most direct route. Drive at a moderate speed, and speed and slow down reasonably. Use your ability to coast down hills and slopes. Turn off your engine at long lights or waits in the parking lot. Use some acetone in your tank to save money. Look it up online, but be careful.
* If you can live without the car, get rid of it. If it's an expensive or new one, sell it and get a cheaper, more economical used car.
* Can someone you know cut your hair for free or cheaper than a barber?
* Use items sparingly. Use only as much shampoo, shaving leather, etc. as you need.
* Buy generic items whenever possible.
* Avoid wasteful medical expenses. Useless wastes of money include visitations to the doctor and prescriptions for colds, over the counter cold medicine, expensive throat lozenges, scam vitamins and mineral supplements, etc.
* Saving money for the future is great. But, look at your savings options. Chances are, you are accruing more interest on your loans then interest from a savings account of ANY kind. Wait until you can get more from your savings, otherwise money put into savings would be better put into paying down debt.
* Carefully watch and analyze all your money and spending. Find "leaks" fast, before they become problematic. I had no probs with my American bank account, so I didn't check it closely for like 4 months (only glanced at the totals). I realized, 5 months later, that I was being charged a service fee of $5 a month... I quickly stopped that, but couldn't get my cash back... <cries>. I also stopped my wasteful spending on buying candy at the convenience store, which I realized was more than I thought it was.
* Turn your fridge's temp down, and use your food more frequently. If you are using what you have and not going out to eat much, you shouldn't need to have the fridge operating at very low temperatures. Turning down the heat in winter helps the fridge work less hard, too.
* Avoid using the oven, and opt for the microwave. An oven generally uses up more of your money just preheating itself than does a microwave to cook whatever you are cooking. I know it's not always an option, but use it as little as possible. My wife and I do not own an oven, BTW.
* Replace your most frequently used one or two lights with energy-saving bulbs. Replacing all the bulbs is not practical if they are not used often. Use daylight as much as possible, and just avoid turning on lights that you don't need.
* Use your computer at the library, which offers free electrical outlet use.
* Sell junk you don't need, but be careful not to sell something you will have to buy back later! eBay is great, so is Craigslist.org. Garage sales are great ways to sell stuff not "sellable" on eBay.
* Hairdryers take an exorbitant amount of energy to run. Get your hair cut shorter and let it air dry.
* Hang your clothes out to dry. Only use as much water as necessary in the washing machine, on a per-load basis.
* Hang your towels out to dry after a shower, and don't wash them as often.
* See if you can pick up a side job. Many restaurants and stores have trouble staffing on Friday/Saturday evenings, cause everyone wants those days off. If you ask specifically for those two evenings, you will find many managers will jump at the chance to hire you. Worked for me. Crappy hours though!
Then, nickle-and-dime your way out of debt. It can be done. We often disregard "small" purchases because we think they ultimately don't matter. Not true. Add up those coffees at Starbucks, plus the scone or donut, and it can easily reach $30-40 or more a month. Going out to eat is also expensive, unless you buy the very cheap and unhealthy offerings from the dollar menu at McD's.
Eat at home. A LOT. Make going out to eat, even fast food, a special treat, not a regular occurrence. Learn to make frugal meals, and then eat left overs the next day. Pack your own lunch for work/school, and eat smart and frugal. Buy canned fruit if it's too expensive to buy fresh, but fresh is best of course.
If you are frugal, you can eat on $300 a month no problem. That ends up about $10 a day, and you can do less, especially if you buy a big can of tomatoes and make your own spaghetti sauce or something stock like that. Think about how much it costs to eat out: one average restaurant will cost the average person about $9-15 a meal, not including dessert.
Stop bad habits that are expensive and unhealthy. Give up soda, except as a rare treat. Buy the big gallon things of water instead of water bottles, and use a reusable water bottle to carry it out. Avoid packaged ready to eat foods that are almost ALWAYS more expensive than making it yourself. Look for all the special deals at the grocery store. Ask for a flyer to be sent to your house they'll gladly add you to their mailing list. Stop buying useless junk food that has become a stable of the Western household, especially in America.
Avoid purchasing things at convenience stores, or any impulse buys at the register.
BUDGET! Do what I do if you have to -- make envelopes for the different kinds of expenses. I have one for groceries, one for doctor visits, one for entertainment expenses, and so on. I take the envelope and use the money that is in it. If I run out, I'm out for the rest of the month. I reset it to the set amount every month on a certain day. Then, I compare month to month expenditures, using all of the receipts I kept. It's useful to see where money is wasted. For example, I realized that buying individual bottles of tea were using up a fair chunk of change, and that by buying a BIG bottle of tea and filling a reusable thermos, I was able to save money and the environment!
Couple rules to live by:
1) DO NOT BUY STUFF! It's that simple, the best way to save money is NOT BUY ANYTHING. Don't fall for the cheap items that you don't need, because you are still spending money. Don't go broke "saving money."
2) USE WHAT YOU HAVE. Instead of buying something, find something in your place that you can use. I had a thermos lying around, so instead of buying a nice Nalgene water bottle, I just used my thermos. Saved a couple bucks.
3) USE IT TIL YOU LOSE IT! Use your stuff until it wears out. Wear holes in your clothing. Use older shirts as "sleep" shirts so you don't sleep in nice shirts (I do that to avoid stretching my nice shirts). If you didn't sweat much, wear the same shirt the next day (as long as you don't sleep in it). I reuse work shirts numeorus times before washing, and I don't iron them, to keep them in good shape.
4) AVOID CONSUMERIST TRAPS! Don't make your homepage the Apple store, and don't make trips to the mall a regular part of your life. Don't buy into the consumer mentality, that you always have to be buying stuff, more stuff, better stuff. If your stuff right now works, keep using it. If it isn't broken, don't replace it. Avoid places that tempt you to buy things, especially expensive things.
5) COMMIT TO SOME "NO-BUY" ITEMS. Make rules for yourself, and write them down somewhere in plain sight. For example, one rule I have right now to save money is: "I will not buy an iPhone for two years." That started a couple months ago, and I will stick to it. If I still REALLY want one in two years, I might consider it, but probably I'll commit again to not buying it if I need to save money
6) PAY NOW, NOT LATER. As much as possible, avoid any sort of loans or credit card use. Pay for what you need now. Don't buy that new computer and tell yourself that you will nickle-and-dime your way to paying it later. Save up for items first, then buy them with real money. Your best bet, however, is to keep using what you got until you hit a wall with it. So what, you got an older iBook G4. Does it still do everything you need it to do? Then keep using it, and love it
P.S. A few practice pieces of advice:
* Reduce utilities as much as possible. Shut off all appliances not in use. Especially computers (monitors) and TVs. Unplug your internet when not in use to save energy. Take very fast showers, turning water off when you're lathering up. Use smaller amounts of water on lower pressure to wash hands, etc. Never leave water running.
* NEVER go to the movie theater. OK, maybe, if you really want to, squeeze in one a month out of your entertainment expenses. But it's infinitely cheaper to just rent the movie.
* Take up reading and borrow books from the library. Bike or walk to the library if possible. If you do that, you will be participating in a hobby that requires nothing but the possible low-watt light bulb at night. During the daytime, reading is free!
* Replace old, expensive hobbies with new, cheaper (free) hobbies like the above mentioned reading. Instead of expensive (mostly unused) gym memberships, walk/jog/run, and use gallon jugs of water for weightlifting.
* Turn off your AC... leave it off. Open the windows, and use a fan when it's just too hot. AC is a HUGE contributor to electric bills and overall energy use. Turn your thermostat down as much as is reasonable, and wear a big heavy sweater that you have stored in a box in your closet. Sleep with an extra blanket or two. Shut vents to rooms not in use, or rooms that can be cold without any problems (remember to shut the door to that room, too). This will help direct more heat elsewhere.
* Don't use your car any more than necessary. Combine trips out to places, and take the most direct route. Drive at a moderate speed, and speed and slow down reasonably. Use your ability to coast down hills and slopes. Turn off your engine at long lights or waits in the parking lot. Use some acetone in your tank to save money. Look it up online, but be careful.
* If you can live without the car, get rid of it. If it's an expensive or new one, sell it and get a cheaper, more economical used car.
* Can someone you know cut your hair for free or cheaper than a barber?
* Use items sparingly. Use only as much shampoo, shaving leather, etc. as you need.
* Buy generic items whenever possible.
* Avoid wasteful medical expenses. Useless wastes of money include visitations to the doctor and prescriptions for colds, over the counter cold medicine, expensive throat lozenges, scam vitamins and mineral supplements, etc.
* Saving money for the future is great. But, look at your savings options. Chances are, you are accruing more interest on your loans then interest from a savings account of ANY kind. Wait until you can get more from your savings, otherwise money put into savings would be better put into paying down debt.
* Carefully watch and analyze all your money and spending. Find "leaks" fast, before they become problematic. I had no probs with my American bank account, so I didn't check it closely for like 4 months (only glanced at the totals). I realized, 5 months later, that I was being charged a service fee of $5 a month... I quickly stopped that, but couldn't get my cash back... <cries>. I also stopped my wasteful spending on buying candy at the convenience store, which I realized was more than I thought it was.
* Turn your fridge's temp down, and use your food more frequently. If you are using what you have and not going out to eat much, you shouldn't need to have the fridge operating at very low temperatures. Turning down the heat in winter helps the fridge work less hard, too.
* Avoid using the oven, and opt for the microwave. An oven generally uses up more of your money just preheating itself than does a microwave to cook whatever you are cooking. I know it's not always an option, but use it as little as possible. My wife and I do not own an oven, BTW.
* Replace your most frequently used one or two lights with energy-saving bulbs. Replacing all the bulbs is not practical if they are not used often. Use daylight as much as possible, and just avoid turning on lights that you don't need.
* Use your computer at the library, which offers free electrical outlet use.
* Sell junk you don't need, but be careful not to sell something you will have to buy back later! eBay is great, so is Craigslist.org. Garage sales are great ways to sell stuff not "sellable" on eBay.
* Hairdryers take an exorbitant amount of energy to run. Get your hair cut shorter and let it air dry.
* Hang your clothes out to dry. Only use as much water as necessary in the washing machine, on a per-load basis.
* Hang your towels out to dry after a shower, and don't wash them as often.
* See if you can pick up a side job. Many restaurants and stores have trouble staffing on Friday/Saturday evenings, cause everyone wants those days off. If you ask specifically for those two evenings, you will find many managers will jump at the chance to hire you. Worked for me. Crappy hours though!
Okay, I see what you mean now but like you said you have to be very careful with this because they will come after you if it looks suspicious. I was just stating reasonable suggestions for him to stay afloat and maintain a good credit.