Maxed out cards soon to miss payments

[BrokeBob]

There is another thread on this topic in the Off Topic section. Some interesting comments.

I'm just starting on my journey. I've already maxed out a large line of credit to make minimum payments for the past couple of years, and now I've just gone through a fairly large tax refund. YES, I know I was stupid to try to borrow my way out of debt. I thought I would get either a promotion or a better paying job by now, instead I got a pay cut and some car and house repairs, and some medical expenses (my son has new braces). So, in a couple of days, I will start missing some minimum payments. (The minimum payments on my debts add up to more than what my wife and I bring home every month, and we have 4 kids, so this point was inevitable).

What worries me is that my wife tends to freak out on the subject of debt collections. Once they start calling, she will almost certainly demand that I DO SOMETHING ABOUT IT RIGHT NOW! If I can just make sure she never answers the phone for any debt collectors, and that she keep her cool, I think I now have enough information to get through this. If we have to go the BK route, we do what we have to do. In the meantime, no more CC use at all, no more borrowing from Peter to pay Paul. If we can settle, great. If not, BK is not the end of the world.

[legal_loansharking]

If you do go the BK route, use the cards to pay bills including paying the BK attorney by credit card, then file.

[bingo]

If you do go the BK route, use the cards to pay bills including paying the BK attorney by credit card, then file.

That's an incredibly foolish thing to suggest.

If you want an uneventful bk, the best course of action is to stop using credit cards once bk becomes a viable option.

[Denita]

You do want to stop using the cards right away. Once you know you are insolvent if you continue to charge either the BK can be dismissed or the debt you charged while insolvent has a chance of not being dischargable.

You need to plan your BK - even if you have not altogether decided to file yet. It does not hurt to have a Plan A and and Plan B (BK). There are some 'rules' to filing that can complicate the process - that's why you want to 'plan your filing'.

Several of the major rules are: 1) No charging on any credit cards or LOC's within 90 days of filing. 2) No cash advances or balance transfers within 70 days of filing. And if you have had a large balance transfer - you may want to put as much time as possible between it and the filing date (like a year if the amount is large). 3) Don't take out 401k funds or 403b funds during the 6 mths leading up to your filing - this will be included as INCOME on your means test. 4) Don't borrow from friends and family as it can be considered income. Don't repay friends and family because it can be considered an "insider payment" and the lookback period is one year.

There are other 'rules' but these are the one's that can really come back to bite you!

Look at the BK forum here - you will see a lot of good info to help you plan. Also take a look at www.bkforum.com for additional info.

If you decide to try to settle with the OC's - remember, call before you default. Try to work out a hardship program - have them reduce the interest to zero or 2% - close your accounts and if you do that the min payments should be substantially reduced. This may buy you some time (you can do a short term or long term hardship program).

Before you call, download all of your statements and save to your harddrive (go back as far as possible at least 2+ yrs). When you default many times they will cut off your on line access and you need to have the statements for your possible BK filing.

Once you default, the calls will come. Count on it.

[bingo]

3) Don't take out 401k funds or 403b funds during the 6 mths leading up to your filing - this will be included as INCOME on your means test.

An excellent post but, let me expand point 3. Another reason not to loot these accounts is, they {along with IRA's} are exempt assets in bk. Meaning, you keep them.

[BrokeBob]

Thanks for the advice. I already stopped using all CCs. I think I used them once or twice since early Feb, not at all in March. Everything is cash, check or debit card. This way, I have a record of not using each card for at least a couple of months before I default.

I think the key is for me not to get discouraged too easily. I had no luck at all (so far) dealing with the Sears MC (run by Citigroup). Not only were they not helpful, they were the opposite of helpful. I found their behavior to be completely unethical. That really discouraged me. I don't want to get into any detail, but a long, long time ago my family had very strong ties with what was then First National City Bank of NY, and my grandfather was on their board before I was born. Even when I still had connections, that didn't help much. One time in the mid 1980s an elderly branch manager talked to me for a long time as soon as he heard my name, but said he couldn't do anything for me. Another time I had a nice talk with a member of the Board of Directors, but he couldn't help me either. These days I'm just one more guy for them to screw over. That account is due in a couple of days, so I'll try again tonight.

My Discover Card bill is due in a few days. I was pleased that they very quickly gave me info for their hardship program. Not that I've gotten anywhere, but at least they gave me the info right away. The best thing is, that kept me from getting too discouraged.

I have another card due in a few days as well. I think I will at least give them a call this evening. I was so discouraged dealing with Sears MC that I stopped making calls. Yes, I know that was stupid. Getting my emotions in check is going to be quite crucial.

My income was just cut, and that starts with my next paycheck. So, I will start saving all of my and my wife's pay stubs.

[Denita]

BTW - just so you know - SEARS is a real son of a gun and has been for decades! Its not you - its them. They have a policy of not being cooperative.

Many years ago I got a divorce, circa 1990. Sears put a judgment on me with sewer service (never got the judgment - never knew about it). PS 4 yrs later I was selling my home and that judgment blew up to $7200. Had to pay it at the closing and they put it on my report as Settlement! Then they kept moving the date up every three months so it looked like a new default. They did that from 1994 to 2000. :shock:They do not play by the rules.

All of that was my own fault because I did not take the right steps after the divorce and after the sale of the house. Didn't know about this forum:)

You will do much better because you came here first!

[BrokeBob]

I called Sears again last night. Persistence pays off. This took several phone calls and a letter. They slipped in something in one of my statements raising my rate from about 8% to 24%. The problem was, I was out of the country when it came in, and out of town again right before the next bill was due. I've had similar situations with other CCs in the past, and I was always able to get them to close my account and reset the rate. For Sears, it took 2 phone calls plus a letter to get them to reset the rate, but they weren't going to put my minimum payment back down. Finally, last night I got them to do that. So, my next payment (due by tomorrow, but I'll probably stop by Sears this evening) went from over $500 to $410 to $310 to $150. All that work, just to close my account and get the status quo ante. I will need a much lower rate by next month to be able to continue payments. So, after I pay off this month, I still have to work with them again. I once asked about their program with www DOT helpwithmycredit DOT com, but they were going to give me a temporary 9.9%. Thanks, but no thanks.

I made a number of calls yesterday.

The most satisfactory one was with Discover. That was my second highest interest rate card, at 11.24%. I contacted their hardship program, after having earlier sent an email to their customer service. They put me on a 6 month program with interest rates of 3.99%, but I have to have the payments taken directly from my checking account. Also, my account is frozen for the next six months, which doesn't bother me at all. For the first month, the payments will be the same, and I would have to call them every month to lower the payment down to whatever the minimum payment is. Discover also recommended I contact the people at helpwithmycredit

The other calls were a bit more frustrating. I called Bank of America. Between my CC and a line of credit, I owe them over $60,000. After giving a lot of information to a lady in the hardship department, she cut my credit limits and gave me the phone number of a credit counseling service they often work with. In effect, the lady was saying they would work with the credit counselors, but not directly with me. WTF?????

My last call was to Cap One. I have a little over $15k at various interest rates, but it winds up these days usually a little under 4%. I had a question for them about a letter I got raising the default to a variable rate starting at 29.4% unless I close my Cap One account by the 17th. I was just curious as to what my default rate is now. I got a call center in India. The guy I talked to didn't speak English well enough to answer my question. A complete waste of time. So, I will just redeem the few rewards points I have accumulated, pay my next bill (due the 14th) and close my account. It cannot hurt me to close my account, and it cannot help me to leave it open.

It's not just high interest rates that can kill you. Now that I've lowered the interest rates on my Discover, I only have one card with an interest rate over 9%. That is a card with First National Bank of Omaha, with less than $5k and an interest rate of 12%. I will need to get that lowered as well. In the meantime, I've racked up about $135k in unsecured debt, and $130k of that is in the 0-9% range. I also have about $26k left on a car loan with about 2% interest, and then there are the mortgages for my home and for a couple of rentals, all in the 6.5% to 6.7% range. That is called being nibbled to death by ducks.

So, here is my strategy, please tell me if this makes any sense.

First, I will deal with as many lenders as possible in order to try to get my payments down to something I can afford. This will NOT be easy, and it may not even be possible. I can try, at least.

Second, I will try to settle with the lenders who won't with me.

Third, if things get really bad, I'll just have to stop paying almost everything, and try to settle just about everything.

Finally, if worst comes to worst, there is always bankruptcy, probably BK13. My home was refinanced five years ago this month with a balloon payment after 15 years. If I do a BK13, I can have a clean record in time to refinance my home 10 years from now. I know BK13 would be a nightmare, but it would be better than what I've had, spiraling further and further into debt.

NOTE: This looks ugly because I don't have the 20 posts needed for a URL. Sorry. I understand the reasoning, because of the fear of spammers and scammers. So, I work with what strike me as reasonable rules.

[Methuss]

OK now that this discussion is in the proper venue...

In the following text when I say "you" I mean you and your wife. You must work this out together. More than 90% of divorces can be traced to money problems. This money stuff can take your marriage if you don't work through it with her and with compassion.

#1: DO NOT TOUCH your retirement accounts. Besides the fact that you will get whacked with about 40% taxes on any funds you take out (except RothIRAs where you can take out the principal amont you put in) it is incredibly stupid. The US Supreme Court ruled that retirement accounts are totally off-limits to debt collectors, judgments, and even to a bankruptcy court trustee. The only exception are transfers that were an attempt to hide cash from a bankruptcy court. So money here is safe. Don't spend it on creditors.

#2: You need to sit down and do an honest cash flow analysis to see where you stand. You may be able to dig out of this hole by cutting non-essential expenses, shopping more wisely for your daily needs, and reducing discretionary spending. I've had some people who are totally suprised to find that they've been spending $500 or more a month on restaurants (which includes morning coffee and lunches).

#3: Once you know where you stand with your cash flow analysis, it is time to work up a plan. aka "a budget." You start with savings, housing, food, transportation, clothing and essential utilities. You pay those FIRST. In the beginning your savings should be $50 or $100 a month going to a savings account until you have $1000 saved. This is your 1st emergency fund. This is for emergencies ONLY. And I'm not talking about an overdone cell bill because someone ran a thousand text messages. This is for medical co-pays, and if the car breaks down. Housing is mortgage (or rent), property taxes and insurance. Only a fool is current on their Discover card and falling behind on their house payments. Essential utilties does NOT include cable and cell phones. You can live without those.

#4: If your budget shows you have less than $200 left after paying the basics, then you should consider bankruptcy. If this is your direction, get your house current (if it isn't already) and KEEP IT CURRENT or you will loose it in the bankruptcy. Same goes for any vehicles you intend to keep. You also will stop paying unsecured creditors entirely if you are headed to bankruptcy. Save the funds to get your secured properties current, if needed, and to pay the bankruptcy attorney.

#5: If you have more than $200 left after paying the basics, then you have the ability to claw your way out of this. First you get your $1000 emergency fund in place. Then you start hammering out the debts starting with the smallest one first so you get some quick results. You will do better if you feel like you are getting ahead. You WILL get collection calls... a lot. And they may be very hard to deal with sometimes. But the fact is they can't take anything you don't have. Sign up for a non-profit financial class like Dave Ramsey's Financial Peace University (there are others, but this is the one I teach) and you'll learn all you need to handle these debt collection jerks, how to get out of debt, and how to insulate yourself from these problems for the future.

That's where I suggest you start. PM if you have some specific questions or want a copy of Dave Ramsey's $0-base cash flow plan forms.

[BrokeBob]

Wow. Thanks.

I just emailed my wife a copy of this post. Good advice. I've listened to Dave Ramsey's show a few times. The "WE'RE DEBT FREE" shouts used to bother me at first, but now I realize those are meant as an inspiration, and perhaps as a bit of a marketing catchphrase.

My family is large enough that a $1000 emergency fund may not be big enough. One thing that exacerbated our problems was a rapid sucession of emergencies in a period of a few months:

First, our oldest needed braces, phase 2 of a 2-phase plan. That was over $900 up front, plus $155 a month until some time next year. Without my wife and I BOTH having dental insurance, it would've been worse. As it is, we still owe about $3000. There is no way I will stop paying it, partly because the Dr. visits continue for a few years after the payments end, and partly because I already set up money to be taken out of my paycheck for medical reimbursement.

Then, our garage door broke. It cost $675 to fix that.

Then, our dog needed some emergency vet care. $375

During all of this, I had TWO flat tires, a week apart, and in one case I needed a new rim. A few hundred there. I still need to replace my two other tires, which will be about $225 to $250. Better that then having them bust up on the highway. Of course, the weather was horrible both times I had a flat tire. In one case it was sunny but below zero, in the other case it was during a thunderstorm.

Oh, did I mention one of my kids ordered glasses yesterday? That's the second kid with glasses, so far.

As far as starting with the smallest: I saw the 'snowball' strategy on Dave Ramsey's site. Since then, I paid off the rest of a used car loan, and last night I paid off the last $55 of a department store CC. By the end of this month, I plan to pay off two other CCs that both have a remaining balance of under $200.

I'm keeping a notebook of everything. In fact, I'm on my second notebook. It feels really good to write 'PAID OFF!' in my notebook. Yesterday I got the official 'paid in full' notice from the credit union for my car loan. That felt great!

[Methuss]

That's excellent progress.

About the emergency fund. $1000 is just a starter fund. It's your crap-happens repellant to handle the ocassional small ding you haven't planned for. In the Ramsey program it is step one.

Step two is the debt snowball (pay off everything except the house).

Step three is to build up that emergency fund to equal 3 to 6 months of living expenses. With no debt except a house payment this should happen pretty quick. The goal is somewhere between $8000 and $15,000.

Then you tackle the house as step 4.

Retirement savings is step 5. I know this seems weird, but think about it. If you have no debt at all, not even a house payment, and all you are paying for is food, utilities, and taxes, then you have all your income to go to planning your retirement. If you are putting away $1500 a month for retirement you will be quite wealthy when you get there.

College planning comes in at step 6. Again I know this seems weird, but this is the strategy: Not to burden your kids with your retirement. If they have to work a bit for school to keep from having to care for you that is the better choice.

Hope this helps clear it up for you. Oh and don't forget your insurance needs. Those kind of fall in the essential payments category. They are there to transfer risk from you to the big ugly insurance company that stands between you and the event (be that an accident, someone suing you, or -Lord forbid- loss of income due to a death in the family)

[Jkap]

I had the same issues with my wife. You can get a call blocking device that you pug into your phone line and it will block any phone number and all restricted numbers. It costs about $100 and It was a god send for me. Just Google "call blocker". Person to Person is the brand I have I think. I also now have Comcast cable phone service. It also will block restricted (people who hide their caller id number) numbers.

[BrokeBob]

I had the same issues with my wife. You can get a call blocking device that you pug into your phone line and it will block any phone number and all restricted numbers. It costs about $100 and It was a god send for me. Just Google "call blocker". Person to Person is the brand I have I think. I also now have Comcast cable phone service. It also will block restricted (people who hide their caller id number) numbers.

Sounds like an excellent idea. From what little experience I have, I think blocked calls would be good.

[BrokeBob]

That's excellent progress.

About the emergency fund. $1000 is just a starter fund. It's your crap-happens repellant to handle the ocassional small ding you haven't planned for. In the Ramsey program it is step one.

Step two is the debt snowball (pay off everything except the house).

Step three is to build up that emergency fund to equal 3 to 6 months of living expenses. With no debt except a house payment this should happen pretty quick. The goal is somewhere between $8000 and $15,000.

Then you tackle the house as step 4.

Retirement savings is step 5. I know this seems weird, but think about it. If you have no debt at all, not even a house payment, and all you are paying for is food, utilities, and taxes, then you have all your income to go to planning your retirement. If you are putting away $1500 a month for retirement you will be quite wealthy when you get there.

College planning comes in at step 6. Again I know this seems weird, but this is the strategy: Not to burden your kids with your retirement. If they have to work a bit for school to keep from having to care for you that is the better choice.

Hope this helps clear it up for you. Oh and don't forget your insurance needs. Those kind of fall in the essential payments category. They are there to transfer risk from you to the big ugly insurance company that stands between you and the event (be that an accident, someone suing you, or -Lord forbid- loss of income due to a death in the family)

OK, here is where the BIG problem is. I don't have a small amount of debt. My unsecured debt is about $135,000, plus I have a car payment of $831 a month for 32 more months. Not to mention the mortage, etc. For the unsecured debt, my MINIMUM payments are over $2000 a month. I cannot even afford $1000 on them. So, if I stop paying off my unsecured debts, and settle my CCs one by one, at what point do they give up and start suing me? I suppose, depending on who sues, I can either try a Wisconsin Chapter 128, or a BK. [Wisconsin Chapter 128 gives allows the debtor to pay off the entire debt interest and penalty free over 36 months].

One big problem is the size of my debt to Bank of America. I have a 50k+ debt in an LOC, and I have about 12+k in a CC. The thought of trying to settle these seems rather daunting.

There is also another problem. Some of our CCs are connected to other situations. For example, we had a WaMu (now Chase) CC, with about 4% interest, and we have our mortgage with them as well.

Also, we have a CC with USAA, which does the insurance for our home and our rental properties. Not to mention the fact that, with USAA membership being hereditary (I inherited it from my mother, who inherited it from my grandfather, who was a USMC officer in WWII), I don't want to lose the membership for my wife, my kids, their kids, etc. The interest rate is about 5.5% right now.

Finally, my wife has a fairly large balance ( I forget how much, between 10k and 15k) with a low interest Amex card, with me as an authorized user. I have a much lower balance on my Amex card, less than $200 which I will pay off this month. For my work, I am REQUIRED to use my corporate Amex card. Until yesterday, we could use our own CCs, and I often did for the rewards points. If I lose my Amex card, I can be fired. I sometimes travel to Europe for my work. I have read here that Amex blacklists people. I don't know if they would take away my work card if my wife defaulted on a card for which I am an authorized user. I'm not sure I want to take that risk unless absolutely necessary.

Am I correct in assuming it might be a good idea to tread gingerly with these three (Chase, formerly WaMu, USAA and Amex) cards?

[1time2many]

If your unsecured debt is 135k+, and you are having trouble just making 1k of the minimum of 2k ,it is realy time to at least talk to a very good BK lawyer.

This may open up your eyes to the seriousness of how you will be able to continue fighting what is most likley a loosing battle.

One concern I see is ,you mention "rentals"....this may be a deal breaker unless you are not realy attached to them.

There is no sin in BK, and you might find you should have done it sooner as you will be able to recover sooner without that amount of debt dragging you into the abiss.

[BrokeBob]

If your unsecured debt is 135k+, and you are having trouble just making 1k of the minimum of 2k ,it is realy time to at least talk to a very good BK lawyer.

This may open up your eyes to the seriousness of how you will be able to continue fighting what is most likley a loosing battle.

One concern I see is ,you mention "rentals"....this may be a deal breaker unless you are not realy attached to them.

There is no sin in BK, and you might find you should have done it sooner as you will be able to recover sooner without that amount of debt dragging you into the abiss.

I really understand what you mean. I ran up a lot of debt two years ago when our rental property was vacant, and we had to spend a lot of time and thousands of dollars fixing up the place. I knew intellectually that bankruptcy was pretty much inevitable at that time. I just didn't WANT to believe it. So, I got a LOC for about 50k, and now we are AT LEAST another $50k in debt, maybe more. So, we were borrowing money to pay the credit card debt. I was hoping for something big to happen that wouild get us out of the mess. Maybe I would get a promotion and a raise, except the company is scaling back and I took a cut in pay. Maybe I would get a consulting job for less security but more money, but the company that was hiring the consultants laid off about 1/3 of them. Maybe we would start our own business, but the two attempts we made both fell through.

It is really hard for me to get out of this mind set. I'm still trying to think of ways to delay bankruptcy, for at least a few months. Maybe I can find SOME way in the next six months to make a lot more money, but that probably isn't going to happen. In fact, one of our tenants might leave at the end of August. If that happens, unless we already have a new tenant lined up, there is no chance of avoiding bankruptcy. So my chances of avoiding bankruptcy are slim (if the tenant stays) or none (if she leaves).

[Denita]

The most difficult thing about filing bankruptcy is the DECISION to file.

I filed CH 7 9/08 and was disharged 1/09.

I should have filed at least a year earlier, but could not admit to myself that I could not "work my way out of debt" - because I had always been self employed and always been able to work my way out of anything.

Maybe it was too much pride.

It is not defeat - it is a business decision.

I too had rental property. It was not until I was upside down by more than $250k on my home and about $75k on my last remaining rental property (had sold the others) + the unsecured etc etc to the tune of $1M - that I decided it was best to start fresh.

It may or may not be your time. Only you know all the details. But do not get to your last $$ before you file - that much I learned. File when you have enough resources to bounce back more quickly.

[Methuss]

I ran up a lot of debt two years ago when our rental property was vacant, and we had to spend a lot of time and thousands of dollars fixing up the place.

Same mistake I made which led to my own bankruptcy. A stubborn refusal to believe the hard numbers that showed an unsustainable financial situation. Investment properties are not for everyone. And you can't succeed in that arena by using leverage. Investment property has to be cash-bought for below market value or you risk getting your head taken off if you have a major tenant cost (like a unit getting trashed).

It seems you did not make the mis-step I did in that I used a big chunk of my IRA to try and stay afloat (which is why I was so blunt about that issue) and that's a good thing.

I will recommend something slightly differnet. Take the whole thing to an accountant, not a bankruptcy lawyer, first. The bankruptcy lawyer makes his money by filing bankruptcies. He makes nothing if he tells you that you can work out of it. The accountant doesn't care either way. He gets paid for running the evaluation regardless of the outcome. It'll cost you $50 to $100, but it may well be worth it.

The other thing to consider is more personal. Can you handle the stress? Bankruptcy is stressful, but spending years climbing out of a deep financial hole could be more stressful. In a bankruptcy it is simply done. You are detached from the problem and can move on immediately...although it is a return nearly to the beginning of your "financial life."

[BrokeBob]

Interesting suggestion.

As far as the accountant, this is the wrong time of year. Every accountant in the country is booked solid for the next couple of weeks. After that, though, it would be a good idea.

We did take an issue to our accountant in the past, and I don't think he even charged us, because it was such as simple issue. Someone was selling a business, and we asked our accountant. He told us not to offer a penny over the wholesale cost of the inventory. So, that fell through. The business closed a few months later. This was a last gasp attempt to find a sucker to pay $100k for the right to plow money into it.

In a few weeks we should have all the data we need, so we can take it to him. In the meantime, my employer has a program where I can get a free 30 minute phone call with a lawyer, so I can learn a bit about the differences between BK7 and BK13.

You are right about the psychological troubles. At first, we had only a slight negative cash flow, and the tax benifits more than made up for it. We had dreams of just breaking even for a while, then making a small profit, and finally being able to sell off for a big profit and expand our empire. Hard to let that go.

I remember reading an article once. It seems that around 1991 a wealthy friend of Bill and Hillary Clinton went to Hillary and offered her $1000 for her stake in the ill-fated Whitewater property. (From what I can tell, the Clintons were completely scammed by Jim MacDougal). Even though the property was losing money, and even though it could cost her husband a chance at the presidency, Hillary Clinton didn't want to let go of it. She was convinced it would eventually make money, and put Chelsea through college. So, her friend hit her upside the head with the cold, hard facts, and she sold for a big loss. If Bill had lost the election because of continued ties to Whitewater, that eventually would've cost them hundreds of millions of dollars. So, even very smart people sometimes do incredibly stupid things with money. Isaac Newton went bankrupt investing in Dutch tulip bulbs!

[BrokeBob]

Same mistake I made which led to my own bankruptcy. A stubborn refusal to believe the hard numbers that showed an unsustainable financial situation. Investment properties are not for everyone. And you can't succeed in that arena by using leverage. Investment property has to be cash-bought for below market value or you risk getting your head taken off if you have a major tenant cost (like a unit getting trashed).

It seems you did not make the mis-step I did in that I used a big chunk of my IRA to try and stay afloat (which is why I was so blunt about that issue) and that's a good thing.

I didn't mention in earlier posts: I cashed in some stock options, then worth about $7k, to keep the place afloat. A year later, the value of the options had more than doubled! If I had just bitten the bullet ...

I may be an old fool, but I'm not a complete idiot. My back is completely at the wall now. So, I will do what I have to do.

[1time2many]

I may be an old fool, but I'm not a complete idiot. My back is completely at the wall now. So, I will do what I have to do.

[BrokeBob]

There are times I stop and think what sort of life I could be living without all this debt. Things would be a LOT better. For example, my wife would like to go down to part-time work and finish college. With over 100% of our income going to debt, that would be very difficult indeed.

[Methuss]

Despite my years on this board helping people, I went down the debt-free road the hard way myself by over-leveraging my income against real estate. I made one of those classic blunders myself and lost my house, one of my cars, and my rental property in the process.

The big deal is that after that downfall I decided never again am I going to have some lender's thumb on the back of my neck. I make only one exception to borrowing and that is with a mortgage on the first home. No exotics there though. Just 15 year, fixed rate with a minimum of 10% down. Preferably 20% or more.

In my case, my house is now a paid for home. I have no car loans, no credit cards. This leaves me a lot more to save and to goof off with. If I want to get 3rd row seats to see Topol perform Fiddler on the Roof like I did yesterday, I can without wondering if I just used the money for the electricity bill.

There is also a little side benefit to being debt free in the job arena. My employer has no power over me. If my boss was to one day read me the riot act, I can get up and walk out. I don't have to fear loosing my job. The tables have turned and they now are the ones walking on egg shells because I could leave without them being prepared. For me being debt free means a job is as replaceable as the employers think employees are. That alone has taken a huge weight off me and was worth the pain I went through to get to this point.

[BrokeBob]

THAT is what I miss the most. When I was younger, with no debts and no kids, there were several times I left jobs for that reason. Once I forced a transfer, telling them it would be the only way I would return to work on Monday. I got the transfer. With a house, kids, and so much debt, it makes it so hard to do that anymore. It would make me a better employee if I could, ironicly. I got myself into a Mexican standoff at my work. For reasons I would rather not get into, they are very scared to fire me. OTOH, I cannot afford to leave.

[BrokeBob]

My kids have this week off from school. My wife is working swing shift this week, to spend more time with the kids. So, I went home for lunch. When I got home, my wife handed me three checks to mail out. I looked at them, to make sure we weren't paying anything we couldn't afford to pay.

Check number one: Madison Gas and Electric Company. No brainer.

Check number two: GEICO, check for car insurance. No brainer.

Check number three: Pay off low balance (a little over $100) Gap Credit Card IN FULL! So far, I've paid off a used car loan with about $20 left, and two low balance credit cards. Later this month, my last low balance CC (about $150).

That's it for the low-hanging fruit. Now for the mid level fruit. I've gotten a few cards to lower the interest rate. Everything now is to pay off at low interest, or to try to settle. If that doesn't work, then BK.