Help........have no clue !

[Teamroper]

Okay, I am new to this forum, but have read some of the articles and think that I might be able to get some help here. Looking to get out of probably somewhere around $90k in debt.................and most of it is credit card debt believe it or not. I have read on debt consolidation (read the bad stoires also), read about consumer groups (and some of the scary stories with them)...........so now I am left not knowing which direction to head. Me and my wife together make around $150k of income, but we are not going in any direction,and then with the price of everything going up such as gas and all, we are not able to make any headwind. ANy suggestions on how to get this ball rolling to get us out of the hole! Like I said, I am open for any information!

[Xin Lu]

wow..that's a lot of credit card debt. If you don't mind, could you elaborate a bit on what kind of place you live in and what other payments you have? Are there things you could sell or give up to lessen your debt load? I think you should tackle the credit cards with the highest interest rates first and work your way down. Anyway, you make a decent income with your wife so I think you can pay it off by cutting down on your spending and putting whatever you have towards the debt.

[lucille]

There are some debt assistance groups that are legit through some of the non profit groups in the country. Lutheran Social Services runs them in some places in the midwest. They can help people figure things like this out and work as a mediator to negotiate arrangements with creditors. I would use that as a later resort since I think it shows on your credit.

Depending on where your living your income could be huge by comparison. I would be looking at ditching things that your paying out every month like car payments, expensive housing options, entertainment and that kind of thing.

That is a ton of credit card debt. But looking to fix it is a good thing.

[gtwise]

Are there things you could sell or give up to lessen your debt load?

While this is good advice, it's not the most important factor to consider right now.

You have to ask yourselves: what has caused you to get into this kind of debt in the first place? You will have to cut back on spending, buckle down and put everything you can towards this debt. This might be hard but that is the only way to get out of it. If you keep doing what you've been doing that got you into debt, it doesn't matter if you sell some stuff and pay some of it off with that. You will still end up in debt again.

Selling things to pay off debt is fine but you have to covert your cash-flow into a positive one. There is only two ways to do it. Earning more or spending less, or a combination of both. You can't just sell some stuff in one month but never fix the core of your troubles.

This is quite similar to dieting or being overweight. Being overweight (being in debt) can be fixed two ways. Reduce your food intake (spend less) or increase your energy output by excercise (earn more). If you get a liposuction (sell of some stuff to pay debt obligations it will do a quick fix and make you look ok but you will gain back the pounds in no time again (be back in debt again). If you excercise (earn more) you will build up muscle mass (build up investment capital) and the muscle will burn fat on its own without additional work (the investment will generate dividends/interest without you having to work for more money)

So the bottom line is this: figure out where you're spending your $150k and cut out some things. Eating out? Cut back on it! Leasing a BMW? Better get out of it and get a cheap beater car. Financing a McMansion? Downsize! Have expensive hobbies? Better forget about them!

Some of the above choices might sound too hard, even impossible, but considering you're $90k in credit card debt it's a living proof that you simply can't afford the lifestyle you're living!

[mbhunter]

The good news is that it sounds like you (may) have a lot of fat that you can cut out of your budget. $25k per year maybe? Throw that much toward your debt and you'll be paid off in six years. Unless you life in San Francisco and bought a house two years ago with an interest only ARM or something like that.

Anyway, hard to be more specific without knowing what other constraints are on your budget, except to say spend less and/or earn more, and use that difference to pay down your cards one at a time.

[ThePennyMine]

As others have mentioned, you need to cut down your expenses or increase your income, and put everything you can towards the debt. One of the first blog posts I wrote covers just this. Read it, as well as everything else you can find on here about budgeting and reducing expenses:

http://thepennymine.com/budgeting-basics/

Say for example you spend $5 at Starbucks every day. That adds up to $1825 over a year. As mentioned, if you give more specifics about your current spending and lifestyle, we'll be in a better position to help you.

[happysmileylady]

The first thing you have to do is create a budget and the first step with in that is drawing up a list of your income and ALL of your expenses. That will give you a clear picture of EVERYTHING your money goes to. And you need to know all of that. You not only need to know what you spend on mortgage, car payments, credit cards and so on, but you also need to know what you spend on eating out, hitting a drive thru on your way to work in the morning, buying hobby supplies on impulse etc etc etc.

Once you have all that, you can make up your budget, starting with the absolutly necessary expenses, the necessary but not ABSOLUTLY necessary (for example, you have to have clothes, but you don't have to buy them every week, so you budget a small amount each week to save for when you DO HAVE to buy them...but you HAVE to eat each and every week, so food goes into the budget before your clothing allowance ). Then you budget for the debts at the very end...you pay your debts out of what you can afford to spend on them.

Of that money, you allocate the minimums out of that to all but one card, then you send everything else to that one card and pay it off asap. Then you take all of that and add it to the minimum of the next...and on down the line.

[Teamroper]

Thanks for all the responses. I will give a little more info. I fully understand the eating out, and that is a major thing that we can easily redirect. We live in Texas and have 3 horses (use to have 4 but sold one), used to rodeo (but now havent been to one in 4 months or longer). Cut back the horse feed to once a day as vet said that it would be suffice enough with good hay on the ground this time of the year. Have two children, one of which went to a privat christian school, and now goes to public school............so that saved some money. My wife is by far the bread winner as I am a high school football coach , and the time allowed to get a 2nd job is small, plus now most of the jobs just to get there and get some money by the time you pay for gas............well it is almost a wash. We have looked for things to do over the computer at home, or some type of work to do from the house, but there are more scams out there than I can count and dont know what is good or not. We just have to get the ball rolling, and we are close to having one vehicle paid off and then the ball will really start rolling. It is a mess for sure, and about the time we got the place with land where we currently live we were starting to make some strides, then wham..........it is when the electric bills almost started to double from the increase of energy or whatever reasons they gave to increase the cost, then the gas increase...........then he we were behind further than ever thought about being.

[farley2k]

It is an ugly situation but one you can tackle. The advice so far has been great so follow it rather than finding some scheme on the internet.

I think the biggest step is to honestly look at how much you are spending. Without judgment or embarrassment write down everything you spend for a month. Once you have that firm grasp of what is being spent you can look at what can be tossed out or reduced. Without that understanding of your current expenses you are just shooting randomly at problems and hoping it helps. That does help but it isn't going to really solve things in the long run.

Good luck!

[Linsey Knerl]

I can only speak from personal experience, but I used a combination of budgeting (using the cash envelope system) and a debt consolidation service. I went through CCCS of Atlanta (recommended by Crown Financial ministries) and had great success! Crown also recommends the Mvelopes budgeting software which opened my eyes to all the ways I was wasting money that could have been applied to my debt.

I was able to pay down over $15,000 of credit card debt and $9,000 or personal debt making less than $25,000 a year! Whatever route you choose, stick with it until the end of the program, and stay away from credit cards until you can use them wisely. It may take a few years to break the habit, but you should be able to.

Good luck!