Crushing Credit
Card Debts

I have unfortunately gotten into some hefty debts with my credit cards. I currently have five credit cards totaling $20K in debt. I have tried to consolidate, and have moved from credit card to credit card whenever I can get the lower promotional rates, and have transferred balances until I am blue in the face. The promotional rates have all expired, and now I can't get another credit card because of excessive credit, excessive balances, etc. I pay about twice the minimum amount each month, and can't afford too much more. How can I get out from under this mess? Need help fast.
M.E.

First of all....do not...repeat...do not file for bankruptcy if you can at all avoid it!

I have "been there, done that" and believe me, it takes at least 10 years to get out from under the stigma of that, and even then I think they look at you with a "jaundiced eye".

Another thing....don't keep applying for credit card offers which come in the mail telling you that "you are already pre-approved!" When you apply and get turned down (as you probably have been, judging from what you say) there is a notation made to your credit history. If you go to get a loan (consolidation or other) the fact there have been several credit inquiries made has a negative effect on your ability to get that loan.

Your best bet....quit buying!!! Stop buy the things you want....just buy what you need....!!!

Then, you are going to have to go to your creditors and try to work out payment plans with them. You don't need a credit service or anything like that as there is a charge for them to handle this...unless you are not going to be disciplined enough to do some of the above.

I built a house of cards (credit cards) and when the cards started to fall, as they will, it was a disaster!!!! It has been a long 7 years with 3 more to go before the bankruptcy "disappears" from the files, but as I said...there is no gaurantee it will not be there, somewhere.
Jerry

Three years ago, I was fresh out of college, without enough experience to get a good paying job and had $18,000 in credit card and bank loan debt. I worked two jobs for over a year, making only $19,000 total. I was totally without willpower and I am now debt- free- anyone can do this. I feel so rich now, I have $600-1000 more a month and I never buy anything if I can't pay cash for it. If I want it badly enough, I'll save the money and get it later.

STOP bouncing your balances around- you are just robbing Peter to pay Paul and procrastinating dealing with the problem. The first thing you have to do is get angry- angry enough with yourself to readjust your thinking and your habits. You are paying interest on food long since digested and "must have's" that you haven't touched in a year. Get angry with the credit card company. Cancel all your cards now, don't charge another thing. Don't let the credit card company make you lose your judgement. Bill collectors will try to make you so angry that you will write them a check to get them off your back even if it means you may not make rent.

There is a fantastic book by Dave Ramsey called Financial Peace, what a motivational tool! I still read it periodically to get myself re-psyched up to save for a house. This book will help you reprogram your ideas about money! You can order copies of this book through the Lampo Group @ 615-371-8881.
Andrea H in Nashville, TN

A year and a half ago, my husband and I also had thousands of dollars on our credit cards. In an attempt to get a lower monthly payment or interest rate he began calling our credit card companies. The first told him that the only way they could work with us is if we went through Consumer Credit Counseling Services. CCCS is an alternative to filing bankruptcy. We felt responsible for our debt and wanted to pay our balance off in full. CCCS is a nonprofit organization. They work with your creditors to get payments and interest rates reduced. They reduced our monthly payments by $600 a month and to date, all of our card companies but one have completely dropped our interest charge! One draw back for some is that when you sign your contract, you cut up all of your credit cards before you leave their offices. This has been a blessing to us and we have vowed never to get into that kind of debt again! What do you have to lose? The service is completely FREE!! Look in the yellow pages for the office nearest you. Good luck!!
Karla

Take out a bank loan to cover the card debt. Bank interest rates are down now and it would be cheaper than the interest rate you would pay on the cards. If you work for a company with a credit union, they also often have loan programs at reasonable interest rates.
Karen L.

Have you contacted your local Extension Office? Many states & counties are now offering a program called Money 2000, which encourages and helps participants learn to save or reduce their debt by $2,000 (or another amount of their choice) by the end of the year 2000. If your local Extension agent is not familiar with Money 2000, it is likely that he or she will have access to other materials (or programs) that will help you get organized and learn about some ways of reducing debt. Some of the biggest challenges are: getting organized; learning how to STOP accruing MORE debt (by living within your means); and knowing when and where to go for help. I encourage you to work with your local Extension agent, as his or her role is to provide non-biased educational information to clients. Remember, you didn't get into this situation overnight, and you won't be able to get out of it that quickly either, but you CAN get out of debt -- even $20K worth -- if you are serious about it.
PVM in Ohio

If your credit card companies are offering low rates to everyone but you, call them. Tell them that you have given them a lot of business and you want your finance charge lowered. If that's not acceptable, you will close the account and just pay off the balance, taking your business elsewhere. My friend did that and they gave her 3 months of the introductory rate! You have to be prepared to make good on that 'promise.'

Most cards base their finance charge on average daily balance. So, to bring down that *average*, instead of making one large payment make 2 smaller payments. Instead of making a double payment once a month, make a single payment each paycheck, using your credit card bill to make your own pay slips with your name and account number. This plan will bring down the finance charge you pay and apply more of your payment to the balance. You will pay less finance charges with the same amount of payment.
Anne P.

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