Where to start? Behind on payments

[harley1961]

Hi, this is my first post and I can already tell there is a lot of useful info here. I did some searching but dont think I found what I needed.

Is there a resource for someone like me who is slowly getting behind? I was leaning toward cc but everything here indicates that is not the best route.

Where do I start? What do I avoid? Is there a primer somewhere in simple terms as to how why and when to start getting back on track? How do I do this on my own?

Now that I have decided to admit I have a problem, I really want to get back on track. Thanks for any input and guidance.

[brokeinok]

#1 - take all the credit cards and put them in a zip lock bag, fill it with water and place it in the freezer. you don't want to cut them up because the idea here is to get control of your debt, if you have good payment history on them, someday that will come in handy.

#2 - sit down and make a list of every credit card, the balance owed, the interest rate and what the minimum monthly payment is.

#3 - sit down and make a realistic budget and determine what you have to work with and what minimum you can pay on each card and still put food on the table and gas in the car.

#4 - two ways to go here. do you have enough to make the minimum on every card while keeping your auto loans and any mortgages current? if yes, then place the cards in order first by interest rate, then by the balance amount, highest to lowest and move onto step #5. if no on the minimums then it's time to get on the phone to the credit card companies and explain that you are having a rough financial patch. many will work with you if you hit them early enough before things get really ugly, reducing interest or making special payment arrangements.

#5 - in your monthly budget, find a way to shave $50-$100 and apply this to the first card on your list along with the regular monthly minimum, also make the minimums on all the other cards. if you can do more than $50-$100 then do it. once the first card is paid off, you take the ENTIRE amount you've been paying on it and add that to the minimum you are paying on the second card. once the second card is paid off, again take the ENTIRE amount and apply it to card number three all the while making the minimums on the other cards. eventually you will have them all paid off.

this only works if those cards stay in the freezer and NEVER come out for anything, nothing, nada, zip, pretend they don't exist. if you cannot do that, then give them to someone else you trust to hold them for you, lock them in a safe deposit box or whatever. the object is to make them difficult to get to and nearly impossible to use. or you could just cut them up and request new ones once you've paid everything off.

regardless, the time to attack the problem is now. waiting is not the answer. when i first started this, i was only barely behind and foolishly listened to advice that i should let them get a little farther behind then i could negotiate a settlement. it didn't work, no one wanted a settlement and by then even this wouldn't work to catch me up.

others might have more advice, it might be helpful if you gave us some idea of the amount of debt you are talking about and what type it is.

[harley1961]

OK, great info. I need to make a list of the debt--honestly I have been afraid to look. We have a truck payment of 550 monthly that is about to eat us alive, and I pay Child Support, and we have a kid that started OSU this fall so the expenses are staggering. Christmas was really down this year--we had very little money to spend because the CC are maxed out. No one's fault but my own but I am tired of living this way. I have always had excellent credit and my greatest fear is not qualifying for my sons financial aid next year. I would really fall apart if that happens because I have promised him I will help him pay for college.

I have 2 Visa's to the tune of about 18000, and several others that are 1000 or less. We have one truck payment (550) that we owe 30000 on, and an RV we owe 20000 on. I have been juggling the minimums for about 6 months now. I can no longer do it. Tomorrow I call the Visa people and see what they will do. Those two alone are 640 dollars a month.

[brokeinok]

Depending on the age of the vehicle, how much is owed and who you have it financed through, you might be able to refi it, stretch the term out a bit more and lower the payment. That decision would have to come after taking a close look at the big picture. Large finance companies aren't going to be willing to do this, but if the loan is through a local bank or credit union and you are honest with them about the situation and your desire to get debt free, they might be able to work with you.

[brokeinok]

http://www.timevalue.com/Tools.aspx

this website has some great financial calculators... you can use the credit card one to see exactly how much money you'll save in interest paying even an extra $20 a month.

also might be time to get a less expensive car and sell the rv. i've been where you are and i'm digging myself out of a hole as well, i slashed my budget to the bones and it's slowly working. if you try to maintain the status quo and pay off the debts, unless you win the lottery or get a $20K a year raise, it just isn't going to happen.