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Credit Card Debt


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Hi, I just joined today and this is my first post. I am in my mid-twenties, have just moved to a major city, and I have roughly $7,000 in credit card debt. My income is just not enough to pay down the balances I have spread out on a few different credit cards. I make minimum payments every month, and when I can, I pay a little extra. However, I constantly find that I'm strapped for cash and I end up using my credit cards again, and the cycle continues. So, I'm wondering, what is the best way to start to really chip into this debt? The obvious first is to stop using my credit cards but I need a quicker fix I guess so that most of my paycheck is not going to the high interest accruing each month. I'm aware that there are credit debt consolidation companies, and the only other thing I've considered is trying to secure a personal loan at a rate that is considerably lower than some of my credit card rates (some at 23% apr), assuming I could use the help of a worthy co-signer and that I could actually get such a rate.. so that I could then pay down most of the debt with that loan and then make one payment each month. I hope my question makes sense and I appreciate any suggestions/advice and I hope I have provided enough information. Thank You

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Welcome! :)++

What you ought to do is really dependent on your life situation. In my mid-20's, I would have had the option to move to a much cheaper part of the country. I could then have focused on paying down the debt for 2-3 years and then be done with it. Your situation may not allow that (and it wouldn't work for me at this point in my life). Something things to maybe consider:

  • Dave Ramsey's "snowballing" technique
  • A Prosper personal loan
  • Getting a second job (or better paying first job).
  • Cut your expenses to the bone and sell off all your extra stuff. I survived over a year mainly on ramen noodles and peanut butter.

$7,000 really isn't all that much debt even though it might seem like it to you. It's pretty sage to be asking for advice before the house of cards falls apart. I owed about $6,000 in my mid-20's and just ignored the problem, hoping it would go away. The result is that I was sued, got a default judgment against me which has now ballooned to $12k with interest. It was one of my dumbest moves ever and it really screwed up my life for a few years.

The first move though is, as you mentioned, to put down the cards. Literally cut them up with scissors and don't look back. It'll be hard, but it's the only way to do it. When you find yourself in a hole, the first thing to do is stop digging.

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Your first goal right now is debt management instead of credit management.

No prime outfit is going to loan you money but you might find a sub prime or loan shark. But the first thing to do is to forget about your credit scores. You need to have your cash flow fixed before you even start worrying about a credit score.

As shortbus said, you got to cut expenses. That means making drastic changes because if you cannot do it, then you are screwed.

For some folks, that is easier to do than for others. As for myself, I grew up in barrio. When my little sister was born, there were six of us living in a two bedroom one bath house that had no air conditioning (the humid summers in south Texas is brutal) so I know firsthand that there are plenty of things to live without.

My very first apartment I had no VCR (this was before DVDs), no television, no telephone (this was before ten year olds could afford cell phones), or any furniture. I had a mattress and a frame but whenever I ate food, I ate it on a cardboard box as a table.

So the first thing to do is to STOP using those cards. If you cannot cut them up, then close them. It is going to be brutal but there are always ways to save money.

Getting another job sucks but I always had two jobs for the longest time.

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I agree with the above advice.

Might want to only keep one credit card; cut up the rest. If you are saving, I would cut out the savings and focus on paying off your credit cards.

Ebay/craigslist is great for selling the old/useless items around the house.

Write all your expenses down on a sheet of paper or spreadsheet, and post it up somewhere that you can see it everyday.

List the items from being paid first to last - adding each mim. payment to the next credit card you are paying off.

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