We have a friend that told us just the other day that her and her husband are drowning in credit card debt. He earns a good living and they are both super cool people. But she said they pay $2500 - $3000 a month in credit card payments and have over $100,000 in balances. I honestly couldn%26#039;t believe it.
My first suggestion was to consider bankruptcy, but she was 100% against it. I also heard about debt consolidation clinics. But they advise you NOT to pay your debts for months at a time, then negotiate a lower settlement so that the credit card companies can avoid writing you off as a loss. But this ROYALLY screws up your credit as you can imagine!
This situation got me and my wife thinking, as we have our fair share of credit card debt as well. So besides refinancing your house for the 5th time in 5 years, borrowing money from Aunt Edna, or making minimum payments for 60 years, what is the best way to get out of credit card debt???
Best advice to someone with $100k in revolving credit card debt?
Stop using the card altogether. Stop buying unnecessary things. Sell everything you don%26#039;t need. Take proceeds and pay off debt. Budget yourself frugally.
You can also contact the credit card companies directly to negotiate a lower fixed fee. If you are always on time with payments, lenders have a vested interest in keeping you solvent. The more you are able to pay and not declare bankruptcy, the better off they are. My experience with Amex was good on that front since I have had a card for 10+ years and told them I was thinking of transferring balances to a 0% APR promotion, so they lowered the rate for me.
Best advice to someone with $100k in revolving credit card debt?
Umm, with that debt load, they will not be able to get another mortgage right now, anyway.
They need to rip up the credit cards and get to Consumer Credit Counseling. Now. Right now. Their problem is too big to solve with advice that friends got on Yahoo Answers.
Best advice to someone with $100k in revolving credit card debt?
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Best advice to someone with $100k in revolving credit card debt?
OMG!
best thing to do is mortgage house and pay off all cards. destroy all cards. house mortgage would be a much lower interest rate, something like 6% as opposed to 18%.
they should consider selling the house and repaying debt. move into a cheaper house.
Best advice to someone with $100k in revolving credit card debt?
My first question would be how much money these people earn.
Credit cards are good for emergencies or even every day purchases if you pay the balance at the end of the month. All too often people use credit cards for the wrong concept though. They buy things they do not need with money they do not have.
The first thing I would suggest is making a realistic plan and also a budget. Cut cost anywhere you can. Make a plan to get out of debt in X amount of time, and stop using the credit cards.
If their credit is still in good standing, they could also open up some new cards that would offer 0% introductory rates on balance transfers. They could then cancel any of the cards they transfered the balances off of.
My advice is always to focus on getting a specific debt paid. For example, instead of sending several credit cards slightly more than the minimum payment, focus on paying one credit card off. Pay the minimum payment on the rest of your cards and give everything you can afford to one specific credit card until you get it paid off.
Watching the balance go down on at least one debt will do a lot for morale and make you feel like you are accomplishing something instead of just trying to keep your head above water.
Best advice to someone with $100k in revolving credit card debt?
Stop spending. Take away all credit cards, lines of credit etc.
I personally. Make a budget, see where you can cut back. Like firing the cleaning people, eating out, walking to work with gas prices so high. Then put debt in order by highest finance rate. Budget a monthly amount to be paid to your debt. Meet minimum payments on all cards and then pay the highest finance charge off first. Have amounts automatically set up to withdraw from your checking account so there is no last minute folds on paying the full amount. Good Luck.
Best advice to someone with $100k in revolving credit card debt?
I might suggest they first STOP buying things that are not essential - big problem trying to separate wants from needs, I know - and a big problem when you%26#039;re trying to keep up with the Jones, cliche but true. But if it is NOT NEEDED - DON%26quot;T BUY IT. Maybe you%26#039;ll have to wear clothes for more than a few months, or maybe your car has to last a little longer.
Then I might suggest they sell off some of the luxuries - I know a guy who has six cars for he and his wife and are in debt similar to what you describe. Dude, sell 3 or 4 of those vehicles.
Here is something I found in some of my information about this that might help.
First, with a pencil, make a list of all the expenditures you expect to make over the next year. List each expenditure in priority order with the most important listed first and the least important last. Get out your charge card and bank statements for the last three to six months, and try to determine where you spend your money. Remember to include expenditures that may only occur quarterly or annually, such as insurance payments, taxes, and educational expenses. Also, don閳ユ獩 forget to include savings for retirement.
Next, list all sources of income. Compute the total for all income you expect to receive over the next year. Subtract total expenditures from total income. Chances are you will end up with a negative number. If income is larger than expenditures, you may have overlooked or underestimated some items.
The next step is to try to get your income to exceed your outgo. To do this, ask yourself the following questions:
閳?Can I increase my income by asking for a raise or seeking a higher paying job?
閳?What unneeded or extra items can I sell, such as an extra car?
閳?How much money could I raise in a garage sale?
For most people, the quickest way to get results is to reduce spending. When determining how best to do this, understand two points.
First, no expenditure is fixed. Yes, your mortgage payment is the same every month. But sometimes there are things you can do to lower the cost of your expenditures. For example, you can sell your current home and move into a less expensive one, or sell your car and get a cheaper one. Find ways to downsize costs.
Second, you don閳ユ獩 need everything. Most of the money we spend is to satisfy our wants. This applies even to basics such as housing, food, and clothing. Look around your home. Count your pairs of shoes and articles of clothing. Organize them into two piles. Pile A is for items you have used at least once during the last year; pile B is for items you have not used in the last year. You may be surprised how much bigger pile B is than pile A. The amount of clothing you own is your own business, but it is one way to illustrate how we spend money on our wants. It is perfectly OK to spend money on wants, but spending too much can create financial problems. I know a woman who asks her children three questions before buying them anything: 閳ユ窔s this a want or a need? What閳ユ獨 the worst thing that can happen if we buy it or don閳ユ獩 buy it? If we leave without buying it, will we still want or need it in a week or two?閳?
Now, with an eraser, start trimming your expenditures. Begin with the lowest priority expenditure at the bottom of your list. Ask three questions of every expense. Can I eliminate this? If not, can I reduce it? If not, can I postpone it? Remember that only a few expenditures are strictly needs. Some, like food and clothing, include both wants and needs, but most, and hopefully those with the lowest priority, are exclusively wants.
Anyone confronting financial challenges is likely to find this exercise helpful. Many expenditures can be reduced or eliminated during this exercise. Many individuals and families that have completed this exercise find that by reducing their expenditures they reap an added bonus閳ユ攤y paying down their debts, they have simplified their lives. Completing this process can help you eliminate much of the financial clutter, and often much of the material clutter, that has trapped you.
Another step in getting out of debt is to stop creating new debt. How do you do this? Every time you make a credit card purchase, log it in your check register just as you do your checks and debit transactions. Leave the space blank where the check number goes. Keep the balance in your check register current. When you reach a zero balance, stop spending until you receive income. When the credit card statement arrives, write one check, paying off the recent charges, and place that check閳ユ獨 number next to each credit card purchase that you have recorded in your check register.
You also need to make a list of all your debts. For this exercise you will need a piece of paper divided into three columns: column 1: name of the lender; column 2: amount of the monthly payment; column 3: each debt閳ユ獨 Annual Percentage Rate (APR). Make the minimum payment the lender will accept on all debts except the one with the highest APR. Make as large a payment as possible on the debt charging the highest interest rate. Once that debt has been paid in full, add the amount of that payment to the payment of the debt with the next highest APR.
It is important to know that lenders do not want to see anyone file bankruptcy, so be sure to contact each creditor, explain your situation, and see how they can help. If lenders are not willing to work with you, explore options with a credit counseling organization (such a visit is required by federal law in the United States).
Will you still need to file bankruptcy? This is not a decision to be made lightly. It will affect your entire family and your future. Carefully explore all your options for reducing and eliminating debt
Best advice to someone with $100k in revolving credit card debt?
The first step is not to use your credit cards.
Pay the minimum amount for each card and place the extra money if you have it in paying off the credit cards with the highest interest rates.
Some credit card companies send out mailings about so called cheap or free transfer of balances. Look at this very carefully to determine the duration of the free time and charge, if any, for transferring the money. Use with CAUTION since you do not want to just have another card and then run up additional charges for the old cards that now have a new or reduced balance.
Once you pay off the balance of a card do not cancel the card. Tear it up and do not use it since a major factor in you credit score is the calculation of the money that you have available to borrow as compared to the amount actually used.
Save the new credit card offers and then contact your present credit card companies and ask for an interest rate reduction. frequently you will get it. You can even try to get better offers without the new ones at hand on the bases that you are a good customer but threatening to take your business elsewhere is a better bargaining chip.
Under ordinary circumstances the interest rates are so high that for all practical purposes they never will be paid off unless you receive a monetary windfall or a large inheritance.
The solution to the problems that you have and that of your friends is discipline. Follow the steps above and others that appear sensible to you that you may receive from other answers.
Good luck and please let me know how you do.
Best advice to someone with $100k in revolving credit card debt?
it seems like a bad situation,
but do whatever is nessicary to wipe out that debt,
if you have savings use that, or any mutual funds,
because your probably paying more intrest in debt than you are in your savings account.,also, if you can afford to,
pay double the minnimum payment as it will save you money,
if you decide to consolidate debt, get a personal loan and pay everything off. this will avoid the credit wrecking problem most consolidation companies will cause.
Best advice to someone with $100k in revolving credit card debt?
First of all if they can afford that much in monthly payments than they can afford to eliminate there debt and still be current with all there bills. It is not rocket science it is very simple actually you do not need to pay someone to do something you can do on your own. You just need to take the time to calculate your bills and what the min. payments are.
Write down all of your credit cards even your mortgage if you want or your car note. Depending how you want to pay them off by largest to smallest or vice versa. Personally I would do it from smallest to largest. Let us say you have 10 credit cards:
#1 balance: $200 (min. payment $15) you send $ 40
#2 balance: $300 (min. payment $20) you send $ 45
#3 balance: $400 (min. payment $25) you send $ 50
#4 balance: $500 (min. payment $30) you send $ 55
#5 balance: $600 (min. payment $35) you send $ 60
#6 balance: $700 (min. payment $40) you send $ 65
#7 balance: $800 (min. payment $45) you send $ 70
#8 balance: $900 (min. payment $50) you send $75
#9 balance: $1000 (min. payment $70) you send $125
#10 balance: $2000 (min. payment $80) you send $150
You have all of your balances written down now send the minimum on all of the credit cards except for the first one so from 2-10 you have $300 dollars left over #1 balance is $200 you pay that one off and you still have $115 left send it to #2 balance it is $300 you send $135 your balance is now $165 the following month you send that off plus the #1 balance min. payment and move to the #3 balance which is $400 here you send them the $15(#1 balance min.)+$20(#2 balance min.)+$300+$25(#3 balance min.)= $360.
You follow this until you pay off your debt and remember the balances that you pay off send that min. payment along with what you are already sending to the next balance that you are paying off. You pay them off quicker like this, and you are already used to living without it so you will not miss it! At the end of this you will have $710 dollars left every month you can continue by then eliminating your mortg. or your car note it is the same concept.
I wasted so much money trying to get myself out of debt paying someone to do something that I could do on my own. I tried these debt consolidation programs and consumer credit people and came out disappointed. I finally sat down with my husband and realized that it would cost us more to get into a program instead of doing it myself.
Best advice to someone with $100k in revolving credit card debt?
quit using them and downsize your life sytle == can not understand why people just don%26#039;t understand you have to learn to live with your means -- not everyone needs a cell phone or their own car == if a family of four with two teenages would look at what their kids %26quot;needs and not wants%26quot; be surprised of how much money would be freed up -- out of debt and sleeping good at night!!!
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