Man, this is embarassing to write about, but hopefully someone will have some advice here. Basically, my wife and I are looking at $30G in credit card debt.
I wish I could say that we built this up on living the good life, but the sad fact is that we didn't. When times got tough (my wife spending 18 months unemployed, my business falling through during that time, the birth of our child, the downsizing of my wife's next job and five more months of unemployment, and finally me losing my job two months ago), we went through our savings and started breaking the cardinal rule of credit cards -- We used them to buy groceries, gas and pay bills.
Once we got in deep, the interest rates started to climb, until they finally reached 29.99 percent. Now, we've gotten 52 days behind on one account and 35 days behind on another, both companies are calling a demanding collections. The cards have been shut down and both are saying we don't have enough income to settle.
What can we do? Can we lose our house (the mortgage payments are up to date)? Help, please. Anyone.
Posted by Sopwith (Member # 4640) on :
P.S. I do have a job interview next week, and I'm keeping up the search. We don't want to duck our debts, we just need some breathing room to get back underway.
Posted by katharina (Member # 827) on :
I don't have a suggestion, but I feel for you, Sopwith. You're in a hard situation.
Posted by El JT de Spang (Member # 7742) on :
Call a debt counselor. Go over your finances with a fine tooth comb, to figure out exactly how much money you need to live on and how much you can devote to paying down debt. The conventional wisdom in your case is to transfer the balance of the debt to the lowest interest card(s). This may not be an option with that amount of debt; I really don't know.
If you racked up the debt during an extended bad spell, and it's not a permanent spending habit you might consider a debt consolidation loan. Another tip is that collection agencies will work with you. There job is to get the money, not bankrupt you. Explain to them that you want to pay down the debt, and try to set up a payment schedule.
Posted by Lyrhawn (Member # 7039) on :
I have a couple suggestions, just based on what family members of mine have done...
First, if you haven't already done so you can try calling the credit card people and explaining your situation. Often times if you ask, they really will lower your interest rate down to something more reasonable. My mom actually just did this the other day. She missed one payment by a day and they tripled her rate to 35%, so she called, explained, and they lowered it back down to 18%.
You can also try and work out some sort of deal with them. I know that parents of kids who run up big debts on credit cards sometimes call the companies and they work out deals so that the parents only have to pay like 60 cents on the dollar of the debt. It might make a large enough dent to help you out.
Another suggestion is to refinance your house and pay off the debt entirely. I don't know if that's an option, but it could save you a headache.
Posted by Jim-Me (Member # 6426) on :
We tried debt counseling and made great headway, but, unfortunately for us, we hit all the nasty stuff (divorce, layoff, etc.) *after* rolling up the unsecured debt so when we couldn't make *those* payments we were really hosed.
Basically there's debt counseling, apply for bankrupcy, or offer non-bankrupcy setllements. Ben Dover (yes, that's his real name) wrote a book called Life After Debt that is pretty much the standard for dealing with this... but it's been around a while so it might not be the most up to date info.
I'm pretty sure the only people who can take your house are the lienholders.
Good luck, man. I feel ya' big time, here.
Posted by Noemon (Member # 1115) on :
That's rough, Sopwith; I feel for you. Have you looked into the possibility of bankruptcy? I know that they've recently changed the laws in ways that are favorable to the lenders, so you'd still likely be paying off the debt, but you'd be doing it on more managable terms.
A prospective tenant of mine had some fairly massive credit card debt, and her credit card companies offered to write off half of the debt. I have no idea how she managed to get them to do that, and I'm not in a position to ask her now, but it might be something to explore.
Posted by katharina (Member # 827) on :
I wouldn't refinance the house - if you can't pay your credit cards, collectors cannot take your house. If you can't pay the second mortgage, the bank can.
Posted by Stephan (Member # 7549) on :
Well, you already have your house, so your credit rating might not be your top priority. The most they can really do to you in collections is give you bad credit. Since you are already in the hole, ignore the collections agencies, keep sending in as much as you can, and once your situation is in good shape again with a job and all start paying them what they want.
Posted by dkw (Member # 3264) on :
See if there is a credit/debt program either through or endosed by your state government. A credit counselor can help you negotiate lower interest and reasonable payments, but there are also scams calling themselves credit counseling. Or talk to your bank -- some of them have a personal finance manager on staff whose services are free to bank customers. That person can either help you or refer you to someone who can.
Posted by aspectre (Member # 2222) on :
Careful, careful, CAREFUL 99% of the "debt counseling" services out there are pure and complete and total frauds that have no purpose for existence other than to rip off their customers.
Posted by Nell Gwyn (Member # 8291) on :
Sopwith, that's almost exactly where I was six months ago, only in my case it was closer to $20K. However, I'm a single non-home-owning grad student, so it's even more embarrassing. And all my credit cards were maxed out as well as overdue.
I ended up going with a debt management program, which negotiates with the credit card companies to lower your interest rates and monthly payments. I did a lot of research online before deciding on this company - if you decide to go this route, I'd definitely talk to several companies before deciding, because some of the others I talked to charge a "voluntary contribution" fee of $50/month, and some companies are complete scams (as aspectre noted). The one I chose charges $3 per account per month, which to me was a lot more reasonable. Basically, I pay the debt management company one payment each month for all the credit cards, which they then distribute to the credit cards. I think most plans have it so you'd be completely paid off within 60 months, and you're allowed to pay more than the regular payment amount if you're able to, which is what I plan to do when I get my finances in order.
I didn't learn about this until afterwards, but you can also do the negotiating with the credit card companies yourself and skip the middleman. Personally, even if I had been aware of this option beforehand, I don't think I would have wanted to do that - I was terrified of talking to the credit card people, so it was vastly preferable to let someone else do that for me. Plus all the phone calls from collections people were driving me mad - some days I'd seriously get twenty calls.
And as I think has already been mentioned, as a homeowner you could get a debt consolidation loan, but I have no idea of the details of that sort of thing.
(((Sopwith & family))) It sucks. It really does. But be glad that you're taking control of it, and eventually it'll get better.
Posted by MightyCow (Member # 9253) on :
I would recommend trying to avoid bankruptcy if at all possible. Living in debt is bad, but imagine living without being able to get credit for the next 7 years.
As several people have mentioned, call the credit card companies. They really do want to work with you. They would rather help you to pay your debt, than have you declare bankruptcy and they don't get anything. They can probably help you to lower the interest rate, and then lower the monthly payments, or possibly even lower the amount you owe.
Another thing to avoid: 2nd mortgage, particularly the interest only kind. They are happy to have you pay interest forever and never get out of debt, or to take your house if you can't pay. Having bad credit because of late payment on credit card bills is better than losing your house.
Credit counseling, you need to figure out how to better budget and keep from racking up more debt. A friend of mine had over 40k in debt built up, and with a counselor's help and a lot of budgeting and hard work, he got it paid off in 3 years. Now he's debt free, 8 years later.
Good luck.
Posted by sweetbaboo (Member # 8845) on :
I really like Dave Ramsey's Total Money Make-Over. He suggests selling everything (besides your house) that you can, literally everything to have cash to spare to get things paid down to managable amounts.
I also like the book The Four Laws of Debt Free Prosperity by Blaine Harris. It's an easy to read book that steps you through financial management without all the wordy jargon of other books I've read.
We're in the middle of following Dave Ramsey's program in combination with the principles from the Four Laws book right now and it is working for us. Good luck.
Posted by Elizabeth (Member # 5218) on :
Sopwith,
While the credit card people may say they cannot settle, that is total b.s. You are at the point in debt he** when they actually harrass you the hardest. We have been through this for years, and are still trying to climb out of trouble. However, my husband has done a huge amount of research, and has handled everything himself. We ended up getting a RE-mortgage, to pay off the debt, but even after that, he negotiates to the end.
Search online. there are many, many laws to protect you, and a debt counselor will not often have your best interest at heart. They have THEIR interest at heart. (or, just interest, you know, the money kind)
Posted by Lyrhawn (Member # 7039) on :
I should clarify, when I said refinancing, I was NOT talking about taking out a second mortage, that isn't what refinancing it. It's taking out a second loan, which pays off the first one, and gives you the leftover cash value you've paid into your home.
It's often done when interest rates go down. You don't necessarily have to get full value for the house, if you don't want to reset the mortgage, but if you have value in your house, and your mortgage IS up to date, and you CAN afford to pay the bill, you might want to consider this option. It could get you out of debt entirely, and consolidate your debt into a single payment.
These are sometimes called consolidation loans too, but it is NOT a second mortgage. Though, if you DO do this, be very careful, there are a LOT of fraudulent mortage companies sprouting up all over the place. Trust only a long established mortgage company, and read all the fine print. And be wary of the interest only people too.
Posted by katharina (Member # 827) on :
quote:It's taking out a second loan, which pays off the first one, and gives you the leftover cash value you've paid into your home.
This is a second mortgage - that's what a second mortgage is. Using the house as collateral for a loan - without the house as collateral, you can't get that loan.
What that means is that if you ever cannot pay that second loan, they can take your house. Whatever the companies call it, it is debt secured by collatoral, as opposed to credit cards, which are unsecured debt. Very, very rarely do you ever want to swap unsecured debt for secured. Right now, no one can take your house. If you get a second loan using the house as collateral, then they can.
Posted by Lyrhawn (Member # 7039) on :
I have always been under the impression that getting a second mortage meant that you have TWO mortgages, and TWO payments between TWO different banks.
Also, regardless, if you have a mortgage, and you default on the loan, the bank can still take the house.
Posted by katharina (Member # 827) on :
A mortgage is when you use a property as collateral to secure a loan. A second mortgage is when there are two liens against the house, and the second lien is subordinate to the first.
One of the insidious ways that banks make piles of money off of people instead of people making money off their property is by repackaging second mortgages as home equity loans. If it requires the house as collateral, it's a mortgage. Posted by Lyrhawn (Member # 7039) on :
Alright. He already has a mortgage. Refinancing is when you use a second mortgage to pay off the first one. It's not two loans, it's a single loan.
Besides, if the original loan uses the house as collateral, which all home mortgages do, then he already has a mortgage in which the house could be taken by the bank if he defaults, so how is this any different than a refinancing?
Posted by Sopwith (Member # 4640) on :
Well, we did look into a home equity/debt consolidation loan last year, but were flatly turned down by our bank. We've also decided NOT to go the refinance route because our mortgage is at a fixed 6.25 rate. With our credit rating in a shambles, interest rates edging up and some predatory practices in the mortgage market, we're going to stick with what we've got. We've got seven years of equity built up on a twenty-year loan, plus the house is worth about 35G more than the amount of the original loan.
But sheesh, with this credit card situation, we've been through the mill. We've paid and paid, but made no headway. It's like once we hit a certain amount, the interest rate skyrocketed (it was still way before hitting the maxed-out levels). At one point, the interest (at 29.99 percent) was higher than the minimum payments. We always paid more, sometimes just $100, sometimes $200 or $300 more. But it just never put a dent in it.
And then, something would happen. We had no fallback money since we were sending it all to the credit card companies. Then a car would need new tires or have the clutch go out, or our heat pump broke, or the dog developed glaucoma. No cash reserves, boom -- the big expense had to go to the credit card.
We finally cut up the cards about a year ago, but they just had hit that critical mass and we couldn't make headway. We've literally sent thousands of dollars in payments, and trimmed hundreds off of the amount.
I feel like a criminal, I feel like a sucker, I feel like I've jeopardized my future, my wife's and my daughter's. And we wanted to work on having another child later this year...
Thanks for the advice so far, and please keep it coming. And most of all, thanks for letting me know that we aren't all alone out here on debtor's island.
Posted by King of Men (Member # 6684) on :
The traditional solution would be to sell a child into slavery; it may be just as well for your children that Bush will only be in power for two more years. But for non-hypothetical advice, can you perhaps rent out part of your house to raise money? Or are there maybe parents that could help you out a little? It is a rare parent who will take 30% interest (Yikes! 750 a month? Can I have done that calculation right? That's half my income!) from a child.
Posted by aspectre (Member # 2222) on :
Cumulative Payments: $58,224.88 Total Interest Paid: $28,224.88
Note: The monthly loan payment was calculated at 59 payments of $970.42 plus a final payment of $970.10
Then compared it to a prime interest plus one percent home equity loan of 8.75% (which is as low as you are going to get from a legitimate*company) and got
Monthly Loan Payment:$619.12 Number of Payments: 60
Cumulative Payments: $37,146.97 Total Interest Paid: $7,146.97
Note: The monthly loan payment was calculated at 59 payments of $619.12 plus a final payment of $618.89
Which means that you can save $970.42minus$619.12 or $351.40 per month in payments if you have enough equity in your home and otherwise can qualify for a loan.
* Again, careful careful CAREFUL : There are LOTS of companies out there which engage in predatory lending, with clauses of eg a single 1day-late payment triggering an immediate balloon repayment of the entire loan, or similar nastiness. If you are not extremely careful, you can be stuck with a debt of nearly the entire amount of whatever your primary mortgage holder is owed after sale of your home. Due to dirty dealings between lending companies and many?most state legislatures, home foreclosure sales tend to be advertised in obscure newspapers somewhere within the state. And after the lightly-attended "courthouse steps" auction, you can end up owing a LARGE percentage of your original mortgage loan for a long timeafter you've lost your home.
[ May 03, 2006, 06:18 PM: Message edited by: aspectre ]
Posted by King of Men (Member # 6684) on :
Oh, and btw, 'the dog developed glaucoma'. Is it perhaps possible that you could down-prioritise pets for the duration? The last thing you need is an expense that is, sorry, a luxury.
Posted by Lyrhawn (Member # 7039) on :
Shameful! Pets are members of the family.
Posted by King of Men (Member # 6684) on :
Fine, fine, perhaps it's possible to give the dog up for adoption? There is such a thing as a priority, and I'm sorry, but treating animals as though they were human is a luxury. It's not as though I suggested that the dog could be useful in saving on groceries.
Posted by Dagonee (Member # 5818) on :
quote:Besides, if the original loan uses the house as collateral, which all home mortgages do, then he already has a mortgage in which the house could be taken by the bank if he defaults, so how is this any different than a refinancing?
If you refinance and pay off the credit card debt, you simply end up converting unsecured debt with secured debt. The problem being that it increases the amount of money that must be paid to avoid foreclosure, and it gives them more pennies on the dollar in a bankruptcy settlement.
They're much better off if you don't go into bankruptcy, so they should be willing to work with you if you can demonstrate the ability to trim it back with a new job.
30% is ridiculous, but I don't know what you can do about it except bankruptcy. You'd need to talk to a lawyer, and it would have serious effects on you, but it might better. (Emphasize "might" - I have no idea.) The alternative is to get a history of making the payments for several months and a well-planned out budget that will make it worth someone's while to let you transfer the balance.
KoM's calculation is correct, which explains why you're having such a hard time. The good news is that every payment will increase the effectiveness of the remaining payments. The bad news is that it will take a while to be noticeable.
I'm sorry you're going through this.
Posted by aspectre (Member # 2222) on :
"Shameful! Pets are members of the family."
Not in the sense of getting your human family kicked out onto the street for the sake of a pet's lifestyle.
Sorry, Sopwith, I was researching between my first and second responses. Then posted before seeing your intervening reply. You may hafta put your house on the market and start fresh, ie begin renting. Cuz your current $750 per month in interest alone is killing your financial recovery. Heck if you could rent and put away that $750 per month into savings, that would be $45thousand in 5years as down payment on a new house, even without interest. Which no lender is gonna turn down.
[ May 03, 2006, 06:09 PM: Message edited by: aspectre ]
Posted by King of Men (Member # 6684) on :
And - I assume you have done this already, but it never hurts to check the obvious - you have changed your buying and eating habits, right? Rice, potatoes, veggies, milk (or water); drop meat, ice-cream, eating out, sodas; turn every penny until it screams, and put it towards the debt if you possibly can. Don't go to movies; read a book instead. Cancel your cable subscription if you have one. Get DVDs from the library. Play chess.
Posted by MandyM (Member # 8375) on :
I second reading anything by Dave Ramsey or taking his Financial Peace University class. They are offered all over the country and you can find out more at his very informative (but very disorganized) website. He is AMAZING and taking his class has completely changed our lives. We started this year with about $10K in debt (from the same job issues as you have described) not including car payments and we will have that paid off by the end of this year even though we have very little income. We are still broke and we still have debt but we have hope since we can see a light at the end of the tunnel. We also had some tax issues and we used a reputable accountant off his site to help us fix it.
His strategy to budgeting and paying off debt just makes sense. Even if you think you are good with your money, there are things you can learn from him. The class also teaches how to bargain shop and invest for college and retirement. It meets you wherever you are; if you have money or you don't; if you are in debt or not.
Just from the class, I will advise that you NOT take out a loan to get out of debt, even if you could get one. Also just pay what you can right now. Get your phone number changed so they can't call and harass you. Pay your necessities like the house, the cars, food, clothing, childcare and bills first and send the minimum payments on the cards with whatever you have left. Don't worry about your credit score. You don't need to have any more credit right now anyway. Even if you are going to start using credit again, you won't do it in the next two years and that is all the credit history they really care about anyway. Besides, if you do Dave's plan, you will never need credit again anyway, so what do you care.
Dave's Baby Steps 1 and 2: 1. Get $1000 in a savings account for emergencies (we are almost there after just a few months!) He calls this Murphy Repelent and ensures that you stop having emergencies that cost you money and make you charge more on your credit cards.
2. Then start the Debt Snowball. Pay the minimum payments on as many cards as you can afford to. Have a garage sale. Sell some stuff on ebay or Craig's List. Apply all that money to the LOWEST credit card balance. When that card is at zero, cancel it and attack the next lowest with all the money you were applying to that last one. It builds up and by the time you are paying off the last one, it is with huge payments. Trust me, it's working!
3. Put 3-6 months of living expenses in the bank for the next emergency. It would not have kept you out of 18 months of trouble certainly but it would have helped. This looks like a long way off for us but everything else he has said is working so it will happen for us eventually.
I know I sound like a commercial for this guy but like I said, he is amazing! It is completely worth the $90 we paid to take the class. The week after the bargaining lesson, my husband saved over $100 on new tires and got $120 back from our bank in overcharged fees! Good luck to you and God bless!
Posted by David G (Member # 8872) on :
If increasing the debt secured by your house by $30,000 still leaves you with a loan to value ratio of 80% or less (in other words, if after increasing your mortgage by $30,000, the mortgage divided by the value of the house is under .80), then I recommend refinancing your mortgage and cashing out $30,000 to pay off the credit card debt.
Your interest rate will be under 7% (if your credit is still good). The interest you pay will be tax deductible. And amortized over 30 years (if you get a 30-year fixed loan), it will only cost you an additional $200 per month to service the extra $30,000 in mortgage payments. After taxes, that is only about $140 per month.
If the loan to value ratio is above 80%, it still would work, but interest rates will increase.
You will have closing costs to refinance (which you can roll into your new loan), but this is far preferable to your current financial situation with outrageous interest rates and very high monthly payments. This is also preferable to bankruptcy.
Posted by Earendil18 (Member # 3180) on :
I 2nd the Dave Ramsey Total Money Makeover. He also has a radio show.
Posted by MandyM (Member # 8375) on :
Also if this is just credit card debt, I advise not to touch the house if you can keep from it. You are in with a good interest rate and you are building equity and after a few years you could sell the house and have more to use to pay the rest of the debt off while still having enough for a down payment on a new house.
Also, with credit counseling, look for free or nearly free to avoid rip-offs.
Posted by aspectre (Member # 2222) on :
"This is also preferable to bankruptcy.
Only maybe. (Haven't looked at the new federal legislation closely enough, but) I think that even now depending on your state laws, bankruptcy may enable you to get (at least some) relief on interest payments, with (closer to) the full amount of payments being directly subtracted from your debts. Seven years of bankruptcy-level credit ain't all that bad when compared to 5years of not having credit because you can't afford more debt than ya already have.
[ May 03, 2006, 06:11 PM: Message edited by: aspectre ]
Posted by Sopwith (Member # 4640) on :
On the pet issue, his glaucoma only affected one eye. We had to decide to simply have a shot into the eye that killed the orb and prevented it from terrible swelling. The expense was about $150 and it was something we felt we had to do. It was the least expensive option.
Right now, we have no intentions of attempting to get any sort of credit for the next seven to ten years. Our credit score is a shambles already, and the wreckage that can be done to it, honestly, isn't even punitive.
The reason that paying off the debt is even still on the table is that this was money we borrowed and agreed to pay back. To not pay it back, would, in effect, be stealing. I may be a debtor, but not a thief.
Posted by jeniwren (Member # 2002) on :
Sopwith, I don't have any advice beyond advising you to get several professional opinions before making any drastic decisions. You should call your credit card companies and politely but firmly negotiate better rates for your cards. Here's a link with ideas on how to have that conversation (yes, I know it's Oprah, but I like the practicality of her debt diet) http://www.oprah.com/money/debtdiet/steps/debtdiet_steps_03_b.jhtml
Beyond that, don't despair. Truly. You're doing the right thing by acknowledging you have a problem and are trying to get help. Do you know what a huge success that alone is? Imagine that you were still telling yourself everything was fine, no problem, and still going along without encouragement or help, maybe even hiding the bills so you just don't have to think about it. You're well on your way to fixing it, and that's big. And you're not alone...there are tons of very good resources out there for people in your situation. Be encouraged. You're doing the absolute right thing. You're a good husband and dad.
((Sopwith and family))
Posted by Kwea (Member # 2199) on :
I do know that more people lose their homes on refinancing to pull equity out than do defaulting on the original mortgage....by a considerable amount.
It is one of the things I learned selling mortgages up north, even though I didn't do it for long. Posted by erosomniac (Member # 6834) on :
quote:You're a good husband and dad.
*nod* The fact that you're willing to admit you made a mistake and are working to fix it puts you MILES ahead of so many people. I really respect you for this.
Posted by David G (Member # 8872) on :
quote:Originally posted by aspectre: Seven years of bankruptcy-level credit ain't all that bad when compared to 5years of not having credit because you can't afford more debt than ya already have.
My recommendation for refinancing the mortgage was subject to an important factor: The loan to value ratio on the house not exceeding 80% after increasing the mortgage by $30,000. If this is the case, then why would Sopwith's credit be negatively impacted by the refinancing?
After the refinancing, Sopwith would have all credit cards paid off (presumably leaving him with $30,000 in available credit on credit cards), and he would replace a huge monthly payment to service the credit cards with an increase in the mortgage of just $200 per month. I would guess that the minimum monthly payment on $30,000 in credit card debt at 30% interest could exceed $1,000 per month by a wide margin.
Is saving yourself $200 per month (about $140 per month after taxes) worth suffering a bankruptcy for?
Posted by Katarain (Member # 6659) on :
Declaring bankruptcy doesn't make you into a thief. If you can manage Dave Ramsey's program then you should do that, but if you're honestly to the point where you can't climb out of this hole on your own, then that is what bankruptcy is for. It's not like you were out there buying luxury items--you were buying FOOD and other necessities. People fall on hard times--happens all the time.
There are two chapters you can file for bankruptcy. Chapter 7 is when you have no disposable income, and they sell all of your non-exempt assets to pay your debts. Your creditors usually don't get anywhere near what they're actually owed, and the trustee gets a nice portion of the money. Many people do a Chapter 7-no asset case. That means that all of your possessions, house, etc. are exempt. You get to keep them, and the creditors and trustee get nothing. Exemptions vary from state to state. Since you probably have more equity in your house than your exemption, then you should be able to reaffirm your house loan, and continue paying it as usual.
Your case sounds more like a Chapter 13, though. That's when they figure out your income and expenses, and how much disposable income you have. You have to have at least $100 in disposable income every month to be able to file chapter 13. Then, you pay that amount (whatever your disposable income is) every month for the next 5 years. (It used to be 3 years, but I'm pretty sure it is 5 now.) The money is split up between your creditors, the trustee, and your lawyer. After that, your debt is completely discharged. You owe nothing else.
The thing about bankruptcy is if your credit is already in deplorable condition from not paying your bills at all or on time, then bankruptcy can actually raise your credit score. It shows that you're taking responsible action to clear up your debt. Most people can get excellent credit ratings and low-interest rates after only 2 years. (Sometimes less.) You just have to slowly improve your credit rating, often by getting a secured credit card and paying off the balance every month, or by getting another small loan and paying it off every month. Buying a house with a good interest rate is absolutely doable by the second year, and often earlier. Since you already have a house, you don't have to worry about that.
What you don't want is your credit rating to continue to fall because you can't make your minimum payments. If you can't work out deals with the credit card companies, and you can't make your payments, then bankruptcy just might be a good option. What you have to know is that sometimes even when you work out a deal with a credit card company, what they can put on your credit report can still bring your score significantly down. Also, when you work out deals with a debt counseling agency that is making your credit card payments for you, there is no guarantee that the credit card company will agree to the lower payment. You need to get it in writing from each credit card. I've heard many horror stories where a person faithfully makes their payments to the agency and either the agency mismanages the money and pays the credit card payments late, or the credit cards continue to report you as late because you're paying less than the minimum.
And remember, declaring bankruptcy does NOT prevent you from paying your debts in full after the fact. But it is a legal way to stop interest from piling up and to make it possible for you to make your payments. In the future, you can always pay those bills when it is possible--but on their own, those credit card companies and collection agencies will NOT wait. Once one of your balances for one account is over $10,000, you probably will be sued for it. And you'll probably lose. And having a judgement on your credit rating and perhaps even having your wages garnished or your bank account unexpectedly emptied is not fun. And it DOES happen.
People who spend and spend and plan on bankruptcy from the beginning are thieves. Other people who find themselves in situations where they have to file are not.
Posted by Irregardless (Member # 8529) on :
Sopwith, I sympathize. My wife & I have a similar level of CC debt, at similar interest rates, and for similar reasons. Right now we are right on the edge of being able to pay bills -- but one car repair or other unexpected expense, and everything's blown.
Posted by Dagonee (Member # 5818) on :
More on bankruptcy not making you a thief:
When a commercial establishment lends money, you can be sure that they know the commercial laws under which that loan will be interpreted. They know about the bankruptcy laws, and know that there is essentially an implied clause in the contract that brings in all the bankruptcy rules by reference.
I think it would be immoral to use the bankruptcy laws to avoid making payments that otherwise could be made, even if one technically qualifies for it. It would also be immoral to intend to invoke that clause when borrowing the money, or to intend to implement some obscure code section to avoid payment that the other party isn't aware of. But if the payments can't be made, then you are essentially invoking a clause in the contract that the other party knew was there.
*and just in case someone out there is confused, I'm making a moral argument based on the up-front reliance expectations of the commercial lending entity. When both parties are lay-persons, I think the moral arguments change.
Posted by Troubadour (Member # 83) on :
From what I've seen, the bankruptcy laws in the US seem to be similar to here in Australia. If so, here's my hard-earned 2 cents:
1) There are non-profit companies out there to help you through this. Not the debt-consolidation companies. I actually saw a zen-buddist harley-riding bikie financial counselour who offered his services through our local department of justice. He was recommended to us by the Salvation Army.
2) Over here there are basically three options: a) Informal Debt Consolitdation b) Formal Debt Agreement c) Bankruptcy
From what I've been reading here, it seems like the options are fairly similar.
Now out of those, I would really only consider (a) or (c) - B is basically where you perform an 'act of bankruptcy' and reach a formal arrangement to pay a certain percentage of what you owe over a certain amount of time. Here it's administered by a government agency called ITSA - Insolvency and Trustee Service Australia.
The problem with this is that for all practical purposes you're still bankrupt - you still have the 7 year credit problem, along with the 3 year period of actual insolvency. Plus you have to pay money during that time.
So basically it's all the problems of a bankruptcy plus still paying money.
If you choose to enter an informal arrangement with your creditors then you can still have a credit problem, still have unweildy repayments - and they can force you into bankruptcy pretty much anytime they choose.
With bankruptcy you have (at least, over here you do) 3 years of actual insolvency. In Australia, this means that:
You can't leave the country without permission (not hard to get)
You must pay a portion of your salary to ITSA (at $50K per annum gross Salary, it's about $140 a month for the first year, then nothing after that.)
Certain items of property may be sold
Any extra money your might come into gets given to the trustee
But after those three years, you are free of any other obligation to your creditors.
You also have 7 years of bad credit.
On the plus side - no more debt, you get to laugh at the 'pre-approved' credit card offers you'll still get from the companies that you owed money to, and you'll learn how to live without a credit card - remember, you can still get a VISA debit card - which works exactly the same way, except with money you now actually have.
Now as to losing your house - it really depends on how much it's worth and how much trouble it would be for them to take it off you and auction it. I owned plenty of gear, but no property. I lost absolutely nothing, so I can't attest to how a property owner would go, but again my zen-buddist financial counselor (who was right on every single count for both myself and the friends I've since referred him to) said that in many cases it's just too much trouble to take the house. It just depends on your individal case.
So, that's pretty much it. I don't know the laws in the US, but everything I've read here and on other forums seems to indicate that many of the laws are quite close, but only a non-profit and caring counselor can give you truly accurate info. I favour bankruptcy myself - it gave me a new lease on life after decades of crushing debt. I feel like life has gotten infinitely better for me. Fortunately my partner is solvent, so we can use her credit cards when necessary, but it's had virtually no negative impact on my life.
Hmmmm.... this wasn't meant to be a bankruptcy-coming-out-post, but there you go.
Posted by Katarain (Member # 6659) on :
Well, there are a few differences. For example, if I understand insolvency correctly, you're not insolvent after declaring bankruptcy. You can still get credit if companies want to give it to you, you can leave the country, you can win the lottery or receive an inheritance (as long as you didn't know you would be getting it before filing) and keep all the money (either after the discharge or after filing), you only pay a monthly fee if you filed chapter 13, and you only sell non-exempt assets in chapter 7.
Since you came out, so will I. We filed a few months ago. I held out for over a year (almost 2), hoping that I would be able to get extra income and start paying the debts off. But they didn't want to wait, and I got served with papers for a suit for the largest debt--which at the time was over 3 grand above the original debt because of interest, charges, etc. Ours was a result of medical bills and underemployment. I don't feel like a thief at all. But it is a LAST resort sort of option. And I have no doubt that my credit score will be going up.
Posted by erosomniac (Member # 6834) on :
quote:On the plus side - no more debt, you get to laugh at the 'pre-approved' credit card offers you'll still get from the companies that you owed money to, and you'll learn how to live without a credit card - remember, you can still get a VISA debit card - which works exactly the same way, except with money you now actually have.
Oddly, bankruptcy victims are prime targets for credit card companies.
Posted by Katarain (Member # 6659) on :
Well, it's not so odd when you realize that you can't declare bankruptcy again for many years. (6-10--I'm not sure exactly how long.) They know that if these new customers don't pay their debt, they can take all sorts of action to get the money--bankruptcy simply isn't an option again.
Posted by Kwea (Member # 2199) on :
One of the best arguments against refinancing is that life doesn't always wait for everything to work out.
If you refinance, it opens all that credit up again, and most people end up using it. Sometimes for emergencies, like what happened with Sopwith the first time, sometimes not, but either way the result is the same......they now have more debt AND a higher mortgage amount.\
THAT is how people lose their houses, more often than not.
Posted by Katarain (Member # 6659) on :
Yeah. It makes no sense to convert unsecured credit to secured credit. No sense at all. The weird thing is, if I had owned a house, that's probably exactly what I would have done. I'm glad I didn't.
Posted by erosomniac (Member # 6834) on :
quote:Well, it's not so odd when you realize that you can't declare bankruptcy again for many years. (6-10--I'm not sure exactly how long.) They know that if these new customers don't pay their debt, they can take all sorts of action to get the money--bankruptcy simply isn't an option again.
Still odd when you consider that the second an account goes to collections, the bank is losing a truckload of money - hence why most are willing to offer you settlements of as low as 50% of the total debt.
Posted by Kwea (Member # 2199) on :
Katarin, it DOES make sense for some people some of the time. My point is that a lot of people automatically assume this is a good way to go, but unless a lot of things have changed for the better recently it usually isn't.
Say I had been out of work for a long time, and had accrued a lot of bills. I then find a great paying job...but my bills have accumilated to the point that I can't pay all of them, or ever a reasonable portion of them, even with my newfound salary.
If I was reasonably responsible, and had a house with a lot of equity, it MIGHT make sense for me to refinance. Not to the max allowed, but enough to get back on my feet.
But that only works if I am POSITIVE, beyond any doubt, that I can meet all my bills and not continue to accrue new debt. If I continue spending at the same level I will probably lose my house as well as default on the rest of the bills. If I lose that new job, I am humped, and not in a good way.
Refinancing can be a wonderful tool, but for a lot of people it is not a good option.
Posted by Katarain (Member # 6659) on :
I can agree with that just fine. It makes a little bit of sense for some people.. Posted by Sopwith (Member # 4640) on :
Please don't take my earlier statement as that all bankruptcy is basically theft. It isn't, if entered into ethically, and it is a chance at restarting one's life.
However, I do know of cases where folks have run up a ton of bills with the full knowledge that they would then declare bankruptcy. My sister in law did this and basically walked away from any idea of obligations.
I just can't stomach that or just simply ignoring the problem and saying, well you can screw up my credit, but hey, that was unsecured debt... your loss. I can't do that, but sheesh, basically 30 percent interest??? How in the crap do they expect anyone to repay a debt?
The fact is, I don't believe they do. Over $800 a month in interest alone, even at $1,000 in payment would trim the principal only the smallest of amounts. And if I made just the minimums? I'd lose ground. Heck, last month, finance charges pushed it over the limit. And I got charged a fee for that!
This is debt slavery. How can it even be legal? Our state once had a legal interest limit of 21%. What happened to that? Now, I can't even find info on what the legal maximum is.
Sorry, just so incredibly frustrated.
Posted by Katarain (Member # 6659) on :
Yeah, I can understand that frustration. I never ever made a charge on my credit cards over their limits, but I got charged with over-the-limit fees because of the late fees and interest that they charged.
Also, most credit card companies won't offer to make any deals with you until you're 60 days overdue. You might find that they offer you more options as you keep on talking to them.
The same is not true of collection agencies. I wouldn't even deal with them.
Anyway, get everything in writing. I got a nice deal over the phone that said that I had a year to pay whatever I wanted with no more interest piling up. I didn't get it in writing, and it was as if it had never happened.
Posted by jeniwren (Member # 2002) on :
Sopwith, call your credit card company where you were charged that fee. They should remove it.
Do you get offers for low interest cards? Transfer balances, that sort of thing?
Posted by Sopwith (Member # 4640) on :
We're at that ragged edge of the 60 days past due right now. Credit demolished enough to where another balance transfer isn't going to happen.
If it moves to a collection agency, can the collection agency still claim interest on it?
Posted by Lyrhawn (Member # 7039) on :
Have you been going to the same bank or credit union for a long time?
Maybe it'd be possible to get a loan from them, for a much, much smaller interest rate to pay off the credit card debt. If they even gave you enough to kill off a fourth of the debt, that's a ton of money saved every month in interest payments.
Posted by Sopwith (Member # 4640) on :
Lyr, we tried. Basically the "I'm so newly graduated that I'm still wearing the suit my Mom got me" loan weenie took a look and laughed us out of the bank. I believe he said something along the lines of "We won't be able to help you and don't bother asking again for two years. What made you think we would give you a loan?"
And we'd been banking with this place for 10+ years. (Wachovia, btw. They also hold one of the credit cards, through MBNA).
Posted by Katarain (Member # 6659) on :
Yes. The collection agency will continue to add interest.
There are a couple of things that can happen. A collection agency might be hired by the original creditor to try to collect the debt from you, or the collection agency can buy the debt (sometimes for pennies on the dollar) and try to collect the debt from you at a profit.
Usually, if they fail to collect the debt, they'll sell it to another agency, then that agency will start contacting you. It goes around and around and around. But once you have enough of a debt racked up on one account, there is a possibility of being sued.
First thing you do when you get a new company contacting you is asking them in writing to verify that the debt is yours. (You don't want them to try to collect a debt that isn't yours or that they didn't buy.) There is a lot online about all this...
I hope that you'll be able to get some sort of loan with a manageable payment, so that you can avoid years of not being able to answer the phone without caller ID or bankruptcy. Or that you're able to pay it down with one of the methods suggested by other posters.
Posted by Katarain (Member # 6659) on :
Oh no... You have an MBNA card?
I'm really sorry. Chances are that they WILL sue you. They'll start with an "arbitration" using their lawyers (probably Wolfpoff & Abramson) that has questionable legal standing according to the "research" I did. (research=google searches) Basically, if they added the arbitration clause to your contract after you go the card, it shouldn't be binding, but it is. (I'm not sure about that, I'm no lawyer..) Anyway, after that, an "independent" arbitration firm decides against you. Then the firm/bank/whatever will sue you to get a judge to enforce the arbitration ruling. You can try to fight it in court, saying that you never agreed to arbitration, but you'd need a good lawyer.
This has happened to many people by MBNA. They're quite well known for it.
I found that out online, and then that's exactly what happened to me.
So I feel for you.... MBNA is evil.
Google "MBNA arbitration" for the buzz online... One article that's interesting: http://www.atla.org/homepage/mbna.aspx Posted by Lyrhawn (Member # 7039) on :
quote:Originally posted by Stephan: Well, you already have your house, so your credit rating might not be your top priority. The most they can really do to you in collections is give you bad credit. Since you are already in the hole, ignore the collections agencies, keep sending in as much as you can, and once your situation is in good shape again with a job and all start paying them what they want.
After a certain amount of time passes, giving you bad credit will turn into, as the recent posts have shown, suing you, and then they WILL begin to garnish your wages, it's happened to a few friends of mine who were much less responsible than you with their cards, and whose parents refused to bail them out.
Banktrupcy in the end might be the best choice, though I hope it doesn't come to that.
Posted by Sopwith (Member # 4640) on :
The other card is with Chase. MBNA has been the nice ones, so far...
Posted by Katarain (Member # 6659) on :
I put off bankruptcy until I was being sued--they basically took the choice away from me. I couldn't risk my very meager wages being garnished.
And maybe MBNA is being nice so far, but don't count on it continuing. You're just a number to them--a potential source for money. If your account becomes deliquent enough, they will go after you--unless your balance is too low to bother with, but I've heard cases where they went after relatively low balances.
Posted by The Rabbit (Member # 671) on :
Sopwith, You might want to consider a Chapter 13 bankruptcy. This type of bankruptcy isn't walking away from your debts. Through this type of bankruptcy proceeding you will be required to pay most or even all of your debts, but with much better terms than are offered by your current creditors.
The truth of the matter is that these credit card companies have taken advantage of your misfortune by raising their interest rates to an unreasonable level. Whether its through bankrupcy or loan refinancing or debt consoladation or what ever, you have to find a way to get that interest down. While I think its admirable that you feel an obligation to pay your debts, you shouldn't feel an obligation to pay such high interest rates. If the only way out of these interest rates is a Chapter 13 bankrupcy, do it. You will still be paying off your debts, just under more reasonable terms.
Posted by Kwea (Member # 2199) on :
Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
Check it out to be sure, but no collection agency I have ever heard from (and unfortunatly I have heard from more than one) managed to do that, and if they were allowed to I am sure they would have tried.
Posted by Kwea (Member # 2199) on :
Well, upon further research, a new legal judgment recently changed all of that, and some states now allow interest to continue to accrue even if the debt has been "charged-off".
It depends on the original terms and state law. Posted by MightyCow (Member # 9253) on :
I would consider two things to be the most important.
1) Keep the house at all costs. You have a lot of money invested into it, and it's your house. Don't jeopardize that for the sake of possibly lowered monthly bills.
2) You've already asked here for help, ask a professional. You sound like you have the ability to get rid of this debt if you act now, and get good advice for your specific case.
Best wishes.
Posted by Katarain (Member # 6659) on :
In a chapter 13, your house really should be safe. They don't sell your assets for 13.
Posted by Troubadour (Member # 83) on :
I understand the need to be responsible for your debt, but keep in mind that bankruptcy was written into law for a reason - to give relief to people who cannot continue under the burden of untenable debt.
It sounds like that's where you are now.
It's not a an easy option to take - as you know the repercussions are serious and long-lasting.
The question is - even after getting back on your feet, how long will it take to clear this debt?
Do you have enough equity in your house that you could sell, clear your debt and rent for a while, while you saved for a new place? If not, would you be better declaring bankruptcy, freeing yourself from all your debt and renting for the period of your insolvency, saving like mad for a few years until you can afford to put down a really big deposit on a new place?
As I said, bankruptcy is there for a reason. Ignore the stigma and the artifical ethical environment perpetuated by the rotten scum who are charging you 30% interest and look at it logically. Write down the pros and cons of every option - ignore what you see as your responsibility to some companies who would take you to the cleaners without blinking and think of your responsibility to yourself and your family.
You only get one life. If debt is making you forever miserable, then you owe it to yourself to look at all the options.
Posted by Katarain (Member # 6659) on :
There's really no need for him to rent after bankruptcy. He can keep his house. He doesn't include his house debt with the bankruptcy. He has to disclose it, of course, but he can reaffirm the debt with his mortgage company and continue to pay as usual.
If he declares bankruptcy (chapter 13), it would make very little sense for him to also give up his house and throw money away on a rental. It's unlikely he'd get as good a deal as he has now after bankruptcy--and bankruptcy shouldn't affect his current mortgage if he reaffirms the debt.
Posted by Dagonee (Member # 5818) on :
quote:Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
When you buy a debt, you buy the interest stream attached to it. Most loan agreements allow the creditor to do assign the debt without the debtor's permission.
I don't know if collection agencies can continue charging interest or not, but, if they can't, then they didn't buy the debt.
Posted by Belle (Member # 2314) on :
My mother filed bankruptcy with the divorce and all, and she kept her car. Just like katarain is saying, she reaffirmed that debt with the finance company the car loan was through, continued to pay the note and now owns the car free and clear.
I think at this point, you really should consult with a bankruptcy attorney. I respect you and honor you for not wanting to write off your debts, but everyone here is right - the bankruptcy laws are there to protect people like you who have just gotten in a situation they can no longer get out of by themselves.
Posted by Kwea (Member # 2199) on :
quote:Originally posted by Dagonee:
quote:Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
When you buy a debt, you buy the interest stream attached to it. Most loan agreements allow the creditor to do assign the debt without the debtor's permission.
I don't know if collection agencies can continue charging interest or not, but, if they can't, then they didn't buy the debt.
A lot of that I cleared up in the next post....it is very location sensitive, as are a lot of laws. Some states are more friendly to the collection agencies than to debtors.
There have been some recent court decisions regarding this that have changed a lot of what had been true for me when I went through my tough times. Posted by Tatiana (Member # 6776) on :
It's astonishing how many people this happens to. And the reason is the predatory policies and practices of credit card companies, as well as our willingness to go into debt, at times of income downturns.
The one thing I think I can add to the excellent things that people have said before me is this.
Never buy luxuries on credit.
That's the most important principle of personal finances. What counts as a luxury versus true need is something you have to ask yourself and consider honestly before you make each purchase. And it depends on how much you make, and how in debt you are.
Debt is crushing! It smothers the soul! It is horrible! I feel for you. This is a bad situation.
Posted by Tatiana (Member # 6776) on :
Sopwith, here are a bunch of articles on wisely managing finances and debt, that I have found to be a great resource. They're written for Latter Day Saints, but everything they say is very wise and practical for everyone, and I believe they could be applied equally by people of any or no church.
If you still are looking for a better job, there is the church job links page, which is a compilation of a lot of different job listing places online. There are other job helps too. Again, it's all aimed toward members of the church, so you will have to translate some.
The most important thing that reading those articles does, I think, besides give a lot of good ideas, is put heart in you for the struggle, and give you hope that things can and will get better. That is invaluable!
Good luck with this! I'm so glad you posted to hatrack about it. Posted by Belle (Member # 2314) on :
quote:Never buy luxuries on credit.
That is a principle that we've tried very, very hard to uphold and to teach our children. It's hard, with today's society because it seems like everyone is doing it and it looks so easy. Just buy the furniture you want today and you don't have to pay for it for a whole year! So easy to get sucked in and then you do pay the price. (Note, I am not talking about Sopwith's situation here, just talking about how Wes and I got into credit trouble early in our marriage.)
We fought hard to get out of the debt, and vowed never to buy luxuries on credit again. So far, we've held to that. In fact today we don't even own a credit card, we use our debit card for everything. If we can't buy it outright we wait and save until we can.
And it's hard. The materialist monster inside me really, really wants a new tv and new entertainment center. I tell myself that we planned on buying a new entertainment center to fit our new, large great room when we moved into our house and held off because we went over on our construction costs (doesn't everybody?) and decided not to spend the money on it then. That was eight years ago. Part of me says, I've waited eight years I deserve it now. Part of me says the great room would look so much nicer with new furniture.
But then the other part says what's vital about a tv? What about it can we not live without? We have to wait until we have enough cash on hand to buy it all outright. Most of the time that placates the spoiled little girl inside me who stamps her foot and says "I want it now!" Most of the time. Posted by Tatiana (Member # 6776) on :
Yes! Belle, also I get a whole lot more enjoyment out of things that I've bought outright. The bad thing about buying on credit is that the thing you bought, whatever it may have been, has lost its glow long before you have finished writing those checks. It's just a part of your life, your background, and yet still you pay and pay.
Since I've decided always to save up and pay cash for stuff, I have found that sometimes by the time I have the money, I don't even want the thing anymore. Then I have a bunch of money that's not earmarked, that I can spend on anything at all I want. It's very nice that way.
The hard part about luxuries and necessities is deciding which is which. At first I think, of course, broadband internet is a necessity, but then I realize that I can actually manage on dial-up if I can't afford broadband. Then when I think about it I realize I can go to the public library to get online, for that matter. So everything goes like that. There are stairsteps of expense in each category.
One way to train yourself to save more and spend less is to vow to jump one step down in every major area of your life.
For instance, if you eat out a lot at fancy restaurants, you could go to less expensive restaurants, or if you already only go to the less expensive restaurants, you could eat out only at fast food places. Or if you already do that, you can eat at home and not eat out, or if you already eat at home, you could choose the cheapest food that still gives adequate nutrition, like eating beans and rice and no meat.
For transportation if you drive a nice car and get a new one every 5 years, you can jump down a step and keep your car 10 years, or get a five-year-old used car every 5 years. If you already drive a 20 year old used car, you could try to get by on public transportation instead of keeping a car, which is expensive in insurance and gas and maintenance. Or you could ride a bike, if that's possible in your community.
For utilities, you can conserve water by not watering your lawn, or by taking quicker showers. For electricity you can decide not to run air conditioning, and just open up and use fans.
For entertainment you can rent movies instead of going to the theater, or drop your tv cable and just read more. If you already don't watch tv but you buy your books, you could start using the library instead.
For every area of your life, there are stairsteps of spending. When we get a raise and begin to make more money, it's so easy to jump upward on those staircases. However, when we lose our jobs or have to take lower paying jobs, and when we get hit with unexpected financial burdens, it seems so much harder to jump back down those stairsteps to a humbler level. But it's quite possible and very doable. We just have to train ourselves again to accept those things.
I know this is not much help to Sopwith, in his current situation, but the stairstep idea has been a great one for me. The great thing about all these ideas is that they teach us to be in control of our money, instead of letting our money control us. They teach us how to be free.
Posted by erosomniac (Member # 6834) on :
quote:And it's hard. The materialist monster inside me really, really wants a new tv and new entertainment center. I tell myself that we planned on buying a new entertainment center to fit our new, large great room when we moved into our house and held off because we went over on our construction costs (doesn't everybody?) and decided not to spend the money on it then. That was eight years ago. Part of me says, I've waited eight years I deserve it now. Part of me says the great room would look so much nicer with new furniture.
This is the discussion I have in my head every time I go into a store, period. Ultimately, I leave without most of the things I want - and it's a good thing, too, or I'd be well into six figure debt, as would most of us, I think.
Posted by Puppy (Member # 6721) on :
My wife and I intentionally freak ourselves out about our relatively-manageable level of debt, and work like crazy to pay it off, just because if we don't, we know we'll risk getting ourselves deeper and deeper until we really are in trouble ...
Besides, paying off a debt is very much like giving yourself a raise, and everyone loves raises
Sop, I wish I had some vast knowledge and experience to give you, but I'm barely getting into this whole debt-management game myself. I'm sorry about your situation, and I hope you find a way out.
Posted by Dagonee (Member # 5818) on :
One of the essential tools to financial management is a regular examination of overall net worth. Few people actually calculate this number, but it's crucial if one wants to buy a house or must fund one's own retirement.
It's really the single most important metric related to finances, although it's by no means a complete picture. In general, it should be increasing, not decreasing, each month.
There are a few traps associated with it:
1.) The biggest is forgetting that it is only a metric, not an end in itself. Tracking net worth is not about trying to get as much as one can, but rather simply being able to evaluate the financial impact of any given decision. Too many people are utterly incapable of doing this with their financial record keeping. Therefore, they can't decide if expenditure X is worth more to them than those opportunities precluded by not saving that money.
2.) Next comes in forgetting that there are times when net worth should decrease. For example, my net worth decreased significantly by going to law school. I will never, unless I am incredibly lucky, make up that difference. I don't care - I'm far happier now than I've ever been. But, the reason I could go to law school and drop out of the earnings game for three years is that I kept rigorous track of my finances, including net worth, for 9 years prior.
3.) Including consumables in one's net worth. By consumable, I mean things that you intend to keep until retail value is zero. "If it's on your ass it's not an asset." Sure, you could sell most of the things in your house for some cash, but you'd have to buy some of it again. House, cash, securities, and other investments are assets. Not clothes, not your car (usually - a collector car might be), not your stereo equipment.
I've used net worth in a technical sense - the sum total of the financial worth of ones assets minus ones debts. I do not believe and am not saying that ones value is related to ones net worth.
Posted by Kwea (Member # 2199) on :
To link into some things said there....there comes a time where you SHOULD spend the money on yourself. Not when you can't meet your other financial obligations, of course, but I can't tell you how many times my mom wanted something but didn't buy it because she was worried about debt..and wished later in life that she had.
Not a lot of times, and to be honest my parents are far better off than I hope to be, at least in part because of them being frugal earlier in life.
I remember my mom discussing finances (in general) with me after I got married, and she told me that she would probably never bought the cottage they own now if the decision had been completely up to her...and the boat my dad brought home on mother day (BAD! BAD! BAD! idea guys!) was a great deal, but not what she wanted or needed; yet the cottage is worth a lot more than they paid for it, and our favorite family memories revolve around the cottage in the summers and that boat. They are where they are in life now because of those chances they took, and because they knew that memories are priceless commodities.
There were times starting out where the whole family ate peanut butter sandwiches for dinner, because that was the only thing they had left in the house. Seeing where my parents came from to where they are today just proves that with some good choices anyone can improve their life.
THAT lesson has been priceless. Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Dagonee: I do not believe and am not saying that ones value is related to ones net worth.
For a second there I thought I was worthless and peniless.
Posted by Tatiana (Member # 6776) on :
Posted by Kwea (Member # 2199) on :
Perhaps one of the two....and you DO pay for internet access, so . . .
Posted by Sopwith, again (Member # 9457) on :
Okay, sorry I haven't updated in a bit. Things have gotten sorta... worse.
First, the good news: I did get a job as a senior customer consultant with a copier/shipping company. Not bad, should make a bit more pay than the last job. Got the offer on a Tuesday, we went out to eat to celebrate.
The next morning, I call my wife at work to talk and she informs me that she's in the process of cleaning out her desk. The owners of the software company came in an announced they were downsizing. They halved their workforce.
Well, things looked mighty bright for a night or so. But, the baby is healthy, the sun keeps on rising and dial-up is cheaper than the cable modem we had.
Baby steps, one right after another. We'll make it.
Posted by Kwea (Member # 2199) on :
Sorry, man, I hope it all works out. As you said, most of the really important stuff still is good. Posted by Nell Gwyn (Member # 8291) on :
(((Sopwiths)))
I'm sorry. Maybe your wife can find a new job elsewhere, with a coordinating schedule so you won't have to pay for childcare?
Posted by Sopwith, again (Member # 9457) on :
Well, the good news is that she got a call attempting to recruit her for senior QA work with a major bank. There's a chance she could get and start the new job in a couple of weeks.
On a high note, Babydot is just about to start walking. If we're lucky, we'll both be home to see her first steps.
Tough times, but good times.
Also, I've started listening to the Dave Ramsey radio show. I highly recommend him and his down-to-earth advice.
Posted by Dagonee (Member # 5818) on :
I'm sorry, Sopwith. Good luck to you and your family, especially on the new job. I'm sorry you're having so much thrown at you at once, but happy that you're still in a place to experience family joy.
Posted by jeniwren (Member # 2002) on :
Congratulations on your new job, Sopwith. And I'll be holding some good thoughts for your wife picking up a new, better job in the near future.
Good for you in keeping your thoughts positive, looking on the bright side. Big hugs coming your way!
Posted by Belle (Member # 2314) on :
Every time I've lost a job due to downsizing or company transferring ownership, I've wound up in a better paying position. Every single time. I hope your wife finds the same type of success.
Best of luck to you both. (((Sopwith and family)))
Posted by Sopwith, again (Member # 9457) on :
Love and appreciate every one of y'all.
Posted by Wendybird (Member # 84) on :
I also suggest Dave Ramsey. Check out his website, read his book Total Money Makeover. We are busy rebuilding our emergency fund after having to remove my wisdom teeth. His principles work. Call the CC companies yourself and negotiate. Explain that your only alternative is bankruptcy and you really want to pay them and ask them to work with you. They would rather get some money than none. Avoid bankruptcy at all costs. We've been down that road and it does not improve your credit rating. Having a bankruptcy automatically "qualifies" you for higher interest rates when you do need to obtain credit. I can't wait until ours is off our record. Its been 8 years and we have 2 more years to go. (BTW Chap. 7 stays on for 10 years) Our case was similar. We had a debt counselor tell us there was no way we could possibly pay the debt and to file. We had to live on our CC and pay a lot of Stephen's medical bills with them. Its a tough situation.
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It sucks. It really does. But be glad that you're taking control of it, and eventually it'll get better.
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