Starting Out And Need Advice

Hello everyone thanks in advance for being available in this group and lending your thoughts and knowledge. No need to recommend the Dave Ramsey’s site, I am already checking it out. My wife and I are in a bit of trouble from some bad habits that I thought were broken.

We have four credit cards with about 40k worth of debt. We have paid our bills mostly on time, but at times had to use credit to pay credit. My wife pay’s the bills religiously, and the use of paying credit cards with our homes equity has really made matters worse. I am just as at much fault as my wife, so please don’t take this as blaming her. I think we are at a point that some bills are not going to get paid as I am taking over the finances and our mortgage is past due until I get paid.

Is paying credit at all cost the right thing to do? I do not believe obtaining more debt to pay credit is at all a sound decision, but really need some advice.

Should I notify the credit companies and other debtors that I will not be able to pay them, or offer a reduced payment?

Card1: 16.9% interest with about 2k used for overdraft protection, so it can get hit at any time.

Card2: 3.9% interest w/ 9k
Card3: 9.5% interest w/ 12k
Card4: 5.9% interest w/ 8k

I am still somewhat young and have about 3k in a 401k and thinking of cashing it to get rid of Card1 and set aside an emergency fund if possible, any thoughts and could this be done?

I believe we are just in the beginning of a serious hurt to come if I don’t turn the ship. I am looking to do things as best as possible since my wife worked so hard to pay everything on time and hoping the CC will be willing to work with me on our debt.

Hi. I think I am in about the same boat as you – except I have a bit more put into my 401K. And no matter what – there is NO WAY I will cash that in to pay my credit cards. I have heard different advice on this front, and will be interested to hear what the rest of the group says about this. I actually more than enough to pay off all my credit cards, but it scares me to death to do it.

Don’t use your 401K. By the time you pay penalties and fees, you’ll get next to nothing and you’ll lose so much.

Something free I suggest is to start watching Suze Orman. Her show’s on CNBC on Saturday nights and although people love her or hate her, she knows her stuff. And her advice is good. Her motto is “People first. Then money. Then things.” It’s helped me stay grounded in this whole mess of debt.

Another really good site I found is called Everyday Cheapskate. I can’t remember what it cost me, but it was somewhere in the neighborhood of $30 for a year. The most powerful tool for subscribers (besides the monthly newsletter) is called the Rapid debt repayment calculator. You enter your debts and interest rates. You can select to pay from highest rate to lowest, your own specific order, or let it order it in time to pay each debt off chronologically.

It breaks down how long in months it will take to get everything paid off, using a couple of methods: one, fixed payments (you keep paying the amounts you are now); two, falling payments (you pay less as the debts get smaller); three, once-monthly payments; and four, twice-monthly payments. It’s really great. It helped me see that I can get my $40,000 in CC debt paid off in four years. It’s possible. No matter how dark things look right now.

These are just places to start. I’m sure you’ll get a slew of more great advice.