Today, I want to share a post with you:
I am 26 years old and have gathered about $12,000 in CC debt over the past 6 years. It really was under control until last year when I had to move out of town (cost of living low) to Chicago(cost of living very high) along with going to a post undergrad school that didn’t let me work a lot of hours.
Up until this past summer I have kept up with most bills, however times are getting tougher and tougher, and I’ve fallen behind big time. Here’s my rundown:
Chase Card – $2,700 balance ($2,500 limit) 28%
Citi Card – $3,300 balance ($2,900 limit) 29%
Best Buy – $2,250 balance ($2,300 limit) Various Rates
Wells Fargo – $3,550 balance ($3,500 limit) 18%
The problem recently is that my interest rates have jumped so high, that it put me over my limits, which led to late fees on certain cards while I tried to pay others off, and as of right now, all I can really afford is minimum payments which put me right underneath my balance, but fees put me back over and then I get charged over the limit fees again. Right now I am about 2 months behind on Citi and one month on Chase. I have enough to make the chase payment (to get me back to my balance) but then nothing for Citi.
Anyone have any suggestions on what to do? I don’t have a car and I rent an apartment. Is there any kind of credit union I could turn to in order to consolidate my balances under a lower rate (anything under 20%) without any collateral? My fico is about 690.
These don’t include my student loans, which I am also behind on now too. I just don’t know what to do!
Notice at the beginning she says: “It really was under control until…” This one of the biggest lies we tell ourselves. What you need to realize is: you are never in control of your debt. As long as you have debt, you are a slave. Your time isn’t your own. Your money isn’t your own. Your life isn’t your own.
You have probably heard of Tax Freedom Day. This year it fell on April 12. This is the day that, theoretically, you will have earned enough money to pay your income tax for the year. The rest of the year, theoretically, your money is your own.
When is your Debt Freedom Day? How many months or years will you have to work until you don’t have to send a check to Chase, Best Buy or Wells Fargo?
When she initially incurred these debts, she was making $2,000 a month. She had to pay rent, utilities, buy groceries and pay transportation. Her minimum monthly payments come to about $600. At the time of this post, she was earning less money, paying more for living expenses, had fallen a couple of months behind in payments, and was looking for another loan to bail her out of her situation. That’s another common lie: If I can take out a loan to get caught up, everything will be okay.
Take a look at the federal debt and you’ll see that borrowing more money isn’t the answer to getting out of debt.
So, what is the answer? Well, there are several. But by far the most important and first step you need to take is to STOP DIGGING!!!
At some point we have to become responsible adults and live within our means… and hopefully reach the point where we begin to live below our means and start saving money for our future.
After you stop digging, you will need to create a budget (or spending plan) that is realistic. You need to spend less and save more. That may be easier said than done on what you earn, so you may need to earn more too. That may mean selling some things you don’t really need, getting a second job, or doing some freelance work on the side.
It may seem overwhelming at first, but if you take it step-by-step, it really is manageable. You will probably be surprised at how quickly you can start to turn things around once you know what you need to do.