I am going through a difficult time. My husband walked out on me and our three kids, and of course, I am stuck with all the credit card bills! I am trying to find a full time job, go to school, and work part time on the weekends. How can I pay off the bills when I can't afford the minimum amount due each month. Has anyone put the bills on hold and concentrated on paying off one by one? Is that the secret? I'd also like to know what the secret is in finding a lawyer who is willing to help me.
In reply to KA, whose husband left her with a large credit card debt, I recommend the book How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis. It teaches a number of principles from Debtors Anonymous (which I can't get to in my area). I have found it invaluable.
First, get a lawyer soon! The best way to find a lawyer who will help you and work hard for YOUR money is to ask friends. Even if they have not needed one, they may know someone else who has. I found mine from a friend who went through hell and survived. Keep asking, and really listen to those who have won the skirmishes. Being organized is the only way to handle single parenting, full time work AND going to school. Do not procrastinate since there is no time for catch-up. Get a large and varied a network of positive people around you.
Smile, and get your sleep first, even if that means getting up at 4am to study. It is so quiet before the morning hustle. Break down everything into small parts. Never plan to do more than 5 tasks in one day. This is not overwhelming and you feel really accomplished when you actually do 7 or 8!
Do two things at a time (dusting while on the phone). Put classwork on index cards. This forces a rewrite that helps learning, also makes it portable for those times when your have to wait for an appointment, kids, traffic jams, whenever there is down time unexpectedly. Have the whole family do homework together, or at least designate quiet-time when you have to do it. Involve the kids in reviewing for tests. They can quiz you, and they will learn something, feel really good when you get it wrong, and will celebrate with you when you get a good grade. This helps compensate for the time you cannot be concentrating on them. Let their teachers know you are in school - they know how rigorous it can be, and should be supportive of education! Do not feel guilty about not volunteering, doing fund-raisers, chaperoning, PTA etc. You need to selfishly look out for #1 until you are securely on your feet. Then, you can help others. Let people know how pushed for time you are.
Do not feel sorry for yourself and they will admire you for coping, and your stress load will drop. As a student, there is free legal, medical and many reduced events you can take advantage of, and should. It is a hectic lifestyle, but not chaotic if you stay organized.
I would advise her to go to her local consumer credit counseling service. It is a non-profit organization that can help. Don't pay an attorney when you don't need one. I went and they really helped a lot. I am on my way to being debt-free.
In response to K.A.'s question about reducing credit card debt, I'd like to share my family's financial game plan. Although we do not have much debt, I recently quit my job reducing our family income 50%. We have been able to make it by changing our spending and consumption habits, but my husband and I established the following game plan just in case.
We determined what was important to each of us in terms of our material possessions. For my husband, it was the premium cable subscription and for me, my cherished antiques. Beyond that, everything else (except the children) was fair game.
#1 - the Cars
We have two paid-for cars. We determined that we could sell the more valuable car for about $10,000. We could then manage with 1 car, which is an unlikely scenario for a single mom, we could purchase an inexpensive used car with part of the money and bank the remainder (or, of course, pay bills) or we could lease an inexpensive car with a smaller portion of the money and make small lease payments.
This plan would work equally well for a car that wasn't fully paid for. You wouldn't get as much cash, but you would theoretically get out from under a larger monthly car payment. You could then take the money you were spending on your car payment and direct it towards your credit card bills.
#2- the House
Are you living as inexpensively as possible? We determined that if we had to sell our house to get out from under the enormous payment and property taxes, we would do that. This is something that would need to be carefully weighed in relation to the benefits of interest deductions on our taxes but it remains an option. We know that home is where the family is, not the building.
Another option that would be great for a a single mom is house sharing. Any house that is 3 bedroom or larger could accommodate two single moms and their children. Not only would you receive income to pay the mortgage and utilities, but hopefully you would establish a mutually beneficial friendship. Any inconvenience and sacrifice by you and your children will be short lived.
#3- Credit Card Interest
You've probably read this one a million times, but one of the first things I did with the minimal debt we had was to transfer the balance to a credit card company with lower interest, usually a really low introductory rate of 5.9%. Every six months when the introductory rate was to expire, I would transfer it again to another credit card company. On one occassion, I called my current card and received an additional low rate so I didn't have to transfer.
#4- the Debit Card
The next thing I did was to get a Mastercard debit card. This card looks and acts like a regular credit card, but instead of rolling credit, it deducts funds directly from your checking account. The value here was that we would use the credit card for convenience purchases and our balances continued to grow despite the payments. This combined with the interest rate was an extremely important step in eliminating our debt altogether.
I believe that people often look for ways to increase their income in order maintain their lifestyle instead of altering their lifestyle to fit their income. We have found that living within our means is much more satisfying and less stressful.
Don't try to pay only one at a time. It gets you in more trouble from the ones that aren't getting paid. (Voice of experience here!) Contact all of your debtors and explain the problem. Ask to be put on a lower payment plan while you try to get back on your feet. This lets them know that, while you are not able to meet the minimums, you are not trying to run out on the debt. Most companies are willing to work with you a little bit. I even had one cancel all interest for six months as long as I made the agreed-on new minimum.
I have a couple of suggestions for you to try. First of all, be sure that your husband is no longer an authorized user of the credit cards. If he is, call the credit card companies, and have him removed immediately. If he still has a card, report it stolen.
Contact all of the credit card companies and explain the situation. Tell them that you want to pay off the balance, but you just cannot afford to right now. Most will be willing to work out something with you. They may let you pay just the interest each month, or pay a small amount until you can get your feet back on solid ground.
Consider consolidating your debt. Transfer all the balances onto the card with the lowest interest rate. The minimum payment on one card with a large balance is less than several cards with a smaller balance.
If you own a house, consider a home equity loan. This will also lower your payments, and the interest may be tax deductible. (I'm not giving tax advice here. Check with your accountant or attorney for details regarding your own personal situations.)
Although I'm not a proponent of this, talk to a lawyer about filing bankruptcy.
Filing for divorce is another possibility. As part of the divorce agreement, keep the house and give him the credit card debt and the house payments. Remember, he is still legally responsible for supporting you and your children.
Always make yourself available to the credit card companies if they should happen to call you. If they try to threaten you, tell them that if you can't work something out, you'll be forced to declare bankruptcy. If you declare bankruptcy, they'll get nothing. If you work something out, they'll get paid in full, eventually.
I think it's great that you're trying to work all this out on your own. However, given the circumstances, you may be entitled for some government assistance. Check with any family members that may be able to help out. Asking for help is not easy, but given the circumstances, it's certainly understandable.
TM in NJ
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