Living on Credit Cards

Updated on May 05, 2009
M.L. asks from Altair, TX
66 answers

Financially we are quite a mess, and at odds as to what to do! So please, any advice would be helpful.

Our credit score is excellent, we manage to pay things on time, because we keep borrowing from our credit cards. We are over 115,000 in debt, and that does NOT include the large mortgage. We are an average family, we don't make a lot of $, we bought a home too expensive, and had debt going into it, but now it's way worse. We are not upside down, just have more going out then whats coming in.

We'd like to keep good credit, because we'll need new cars eventually. We don't have a clue how bankruptcy hurts/helps. We wanted to avoid that, but not sure we can. We can't get re-qualified for a loan, and we don't meet the Obama plan because we're not delinquent. So do we get delinquent and bang up our credit in hopes to get a modification (no guarantee) or if we're gonna bang up credit anyway, just wipe it out?! Our try to sell our home and take a huge loss, move to something cheap, and still have debt and whiddle it down, but save our credit score?

We feel so alone, are their people out there that have this much debt?

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M.C.

answers from Chicago on

I have seen a family on Oprah just like you,and she advised them to sell the house.She was practically yelling at them (not in a mean way) " You can't afford the house so get rid of it,even if you lose money!"
I remember that show,very much.
Like someone else said,get rid of everything that is not needed and ads up in the meantime.
Good luck to you.....

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S.A.

answers from Chicago on

First of all you are way beyond the ability of this forum in my opinion. You need professional help.

I would try going on-line to am 560. They have a bunch of financial guys on there that make a whole bunch of sense. I listen to them all the time. They can probably direct you to someone that can help.

Secondly, (and I hope I don't come across as being critical) but have you cut all unnecessary expenses? I can understand how you got into a house you could not afford. My hubby and I did that because

1.) when you go to look at new construction they don't tell you that EVERYTHING in your house will be an upgrade and cost you.

2.) Many in this country have absolutely no education when it comes to mortgages, loans, interest rates and many, many, many people fell for the whole interest only loans, ARMS and so forth....because they wanted something now they couldn't afford and they didn't realize or think about what the that kind of loan would mean in the future.

But my question is have you cut ALL unnecessary expenses????? Most of my neighbors wonder how my husband and I make it in our neighborhood with one income and not a very big one at that. Well I'll tell you how.

It isn't easy and it's frustrating at times, but it is what we HAD to do. We aren't willing to lose all we have worked for. We really are against me working and letting someone else raise our kids if I can stay home...so this is what we did. Most people in this country can't do it because they know nothing about sacrafice or telling themselves no, but this is it.

You might be doing all of these things and I commend you and then I don't know what to say, but maybe it will help you.

*We don't pay for cell phones. They aren't necessary to survive...and we certainly would never get our kids cell phones. They should be supervised at all times by my eyes, not a phone.
....directly related to that, we have basic phone service. Nothing fancy and as cheap as we could get it. Our only splurge is internet just in case my hubby does get laid off and needs to find a job...but we could use the library if we had to.

*We cut out tv. We don't have cable or satellite. No tv. We have a tv, but no programming. We rent a movie from Redbox once a week. There are many benefits outside of saving money of not having tv. Our kids don't know what to want for Christmas...they don't bug us for stuff. They don't see all the garbage that's even on commercials. And we get plenty of things done around the house because we don't spend an hour, two hours, or three hours everyday sitting on our duffs watching useless programming.

*We do most of our shopping at Aldi. We take a certain amount of money and we spend just that. You can get more than double and triple the groceries at Aldi as you can at even Woodmans. We spend $150 every two weeks and get almost everything we need. We could spend less, but our budget permits us to spend that much and we buy things that we like as well as what we need. We find the food to be very good...sometimes the produce is not so great, but even Jewell has terrible produce at times. Take $20 cash to Aldi one day and do an experiment...see what you can get. I'll bet you can get enough food to feed your family for a week. Try it, I dare you. Now if you shop Aldi, way to go!!

*We only buy clothes on clearance or during special times of year like Black Friday. I get many of my girls clothes (6 and 4 years old) at Walmart, Target (clearance), Chidren's Place sales and even Village Discount which is a thrift shop. It's hard to find the nice stuff at the thrift shops that you use to find because everyone is going there now, but it's worth a shot to stop by once in awhile to see what you can find.

*We buy only the cheapest brands for most things that we have found to be worthwhile....Walmart diapers and wipes, Suave shampoos and hairspray, store brand products or just about everything...batteries, pain killers, toilet paper (Costco has great toilet paper for cheap)

*We don't eat out very much at all. Once every two weeks we eat in the food court of Costco when we go to get our fruit and fruit juices. It costs us about $10 for us to eat. That's it. We don't eat out much beyond that at all. It is too expensive. I can cook at home much cheaper. I also make my daughter's lunch. We do not buy lunch from school.

*I don't turn on lights during the day. I keep the heat at 68. I open the windows if at all possible.

*We gladly accept hand-me-downs and share ours with other family members.

*We don't spend money on activities for the girls...like sports, dance, or art. They aren't going to be traumatized or turn out to be less intelligent if they didn't get to participate in sports. It's fun, but it's not necessary and it's expensive. I keep an eye on the library to take them to do their crafts, see the characters they bring in, do the activities there. I also get the McHenry County Wildlife brochure about free outdoor activities they sponser. I then look at lowes.com each month to see what free building project they are having. We built a birdhouse this month and then painted it when we got home. We bake and cook together. I also find stuff on clearance stupid cheap at Walmart, JoAnnes, and Michaels for us to do. I subscribed to FamilyFun magazine for $2 through our American Express card and got tons of ideas for things to do with the girls.

*We avoid putting more on our cards than we can pay off each month. I mean literally we will avoid it at all costs. We rarely carry a balance. If we don't have the cash, then we don't need it.

You might really consider cutting up all the cards. Sounds like you were living beyond your means. Maybe buying things you didn't need....you just wanted them.

I mean honestly, what do we need:

Food
Some clothing (we don't need name brand...we want name brand to fit in, to keep up with the Joneses...)
A roof over our heads
A car to drive....we drive our cars into the dirt. My last car was a 1989 T-bird with 164,000 miles on it. My husband's car is a 1999 Honda with almost that many miles. We did buy a van four years ago, but we saved a little each month for over five years to put toward another car so we wouldn't have to finance very much.
Heat....but you don't need to set the thermostat very warm...wear sweaters, sweat shirts, socks in the house.
Water....keep the showers short
Electricity....turn off the lights, unplug things you aren't using
Gas for your car....walk if you can, ride a bike, don't take unnecessary trips places, make lists and get all errands done in one day

Now that's just some of the stuff that my family does...I learned them from my parents who had to live on military pay (and most military personel qualify for aid...so that tells you something about the people serving our country). Sometimes we get in over our heads for whatever reason, but we can overcome.

My grandfather lived through the Depression...the real one. He told me how his family lost their home and they lived in a garage that the converted into a house. He ate bisquits w/lard everyday. That was all he had to eat everyday for over a year. They had to wash up at the spigot outside...they hauled in buckets of water in winter to heat on the little tiny stove they had...they lived in Pennsylvania.

We can do whatever we set our minds to do. You can get through this if you and your hubby decide to make the best of it. You have to decide do we want to save the house? Are we willing to tell ourselves no? Do we have the backbone to be happy despite not being able to buy things? Do we have the character to decide to be happy though we will have to struggle for several years to get out of this? Are we survivers? Are we strong? Are we going to teach our kids to be survivers?

Your situation is tough. You will need lots of help from a professional. You will need lots of support from those around you. I don't know if you have ever survived hardships before. I don't know if you have ever had to struggle though something before. If you have then you know what it will take. If you haven't then, you will need to resolve yourself to grit your teeth, baredown, and make it work.

You and your hubby have to decide what you are capable of and what you want out of life. Get professional advice about the finances...and get more than one opinion. Then decide what you want to do from there.

I hope all that rambling helped and I will put you in my prayers. Good luck!!!

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K.B.

answers from Chicago on

It's hard with kids to keep on top of your finances. We let things go and were living well above our means and the credit card debt was piling up. We looked at EVERY expense and made drastic cuts...said goodbye to cable (ouch!), our organic food delivery, bought used cars with cash, and shop at resales for the kid's clothing, refinanced our mortgage to a lower rate,...and we are wearing out our own clothes before we purchase new, not just to update the styles. It's tough, but the contentment of knowing you aren't living a lie is quite satisfying with time.

Matt Bell just released a new book called "Money Strategies for Tough Times" and we got it yesterday from Amazon. It's very relevant with up to date financial advice updated for the current state of the union. It reads quickly, and I've found each chapter is independent enough to use as a reference for specific topics (our current crisis is medical bills and I found the information very grounding). He's very good about listing all the options and what some of the pitfalls are for each solution.

Our wants are VERY different from our needs and it's good to make sure you use the right language for everything you spend money on. Spend some time with a child of the depression and you will have a new perspective on what we truly need. Seriously...our generation has things really screwed up and if we don't get a grip and make changes our children will suffer.

PS if you have a serious cronic case of needing to keep up with the Jones, you need to move to a neighborhood where you CAN keep up with your neighbors.

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E.S.

answers from Chicago on

The "responsible" way to do things first... I would first sit down and see what expenses you can get rid of...no eating out, no going out, no lessons for the kids, no cable, no internet, no land line/or cell phone. Get rid of the car with a payment and buy one for $1000, etc. See if it is feasible to sell your house right now and downsize without doing a "short sale" (meaning you have enough "equity" to price your home competitively where it will sell and you will lose what "equity" you had but you don't have a short sale on your credit. Then call every credit card company and tell them you are considering bankruptcy but would like to work it out and ask them for zero interest until the bill is paid. Then look at your income vs. what bills you have left (house, utilities, gas, credit cards, food) and see if it is realistic to pay these bills each month without getting new credit to pay them.
If it isn't realistic, you need to speak with a bankruptcy attorney. Depending on your situation, you may be required to file for Ch. 13 protection where you pay everyone back a negotiated amount, or you may qualify for Ch. 7 protection where your debts are wiped out.
I can tell you a few things about credit as a lender.. a short sale is viewed as a foreclosure. No one tells you this, most realtors think it's the best thing since sliced bread, until everyone finds out they can't buy a new home. So as far as hurting your credit, if you are going this route you might as well file for bankruptcy.
You can get credit after bankruptcy, but just at a higher rate. Instead of 1.9% financing on a car you would be at 22% financing. Sounds ridiculous, but it's probably still less expensive than paying all the minimums on your credit cards. You can't try to keep your good credit rating just so you can get a new car in the future because here's the reality, if you have this much debt you can't afford a new car. Not even at 0% financing. That thinking will get you nowhere!
You can purchase a home 2 years after your bankruptcy discharge. It's helpful if you re-establish credit at the higher rates afterwards (it's like paying dues). If you also short sale your home, there is a 3 year waiting period.
A bankruptcy will damage your credit, no doubt about it. How much depends on how bad your credit was when you filed. If your credit score was an 800 (which I'm seriously doubting with that much debt) then it may only go down to 650. If your credit score started at 650, it can go down to 500. It will take time to build it back up as it should. It stays on your credit for 10 years, not 7 years as everyone thinks.
The other thing I would suggest is to really look into refinancing your mortgage before you do anything else. You said you don't qualify, but i'm not sure why? Obama's plan calls for a streamline refinance (meaning no income no credit qualifying) if you have a freddie or fannie mortgage. If you had an FHA VA or USDA mortgage you can pretty much already do this. I am sending out around 30 refinance packages a week under these programs. Unless you had one of those crazy stated or no doc loans to begin with, you should be able to refinance?
I would definitely say you do not want to get behind on your mortgage just to try to qualify for a modification. Any company that tells you that is lying. It won't get you anywhere. A true modification is going to look at your whole situation to see what type of payment you can afford...they may make your term longer, knock a little off, etc., it is designed to help people on the verge of foreclosure. However, if you have that much debt, and if realistically you can't afford more than a $200 mortgage payment and your actual payment is $2000, they aren't going to work with you anyway. You can try to modify your loan through your bankruptcy, but if you get rid of all that debt you should be able to afford your house..
Sorry this reply is scrambled and all over the board, it's 3am and I'm still working and need to sleep!
You can PM me if you want any more info...

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B.A.

answers from Chicago on

Decide first of all what is most important to you credit score or living a life.

Sit down, plan to sit down with your husband for about 4-5 hours to discuss and bring out all finances. This includes any secret purchases, all bills, all incidental purchases.

Figure out how many hours each of you work outside the home and who can take on a little more in the way of work.

Call all debtors and ask for an interest rate reduction to a level that would bring minimums down to where you could pay everything every month with absolutely no charging/borrowing.

Cut all spending that is not needed, even if we think we have done this we have not. There is always something we can cut unless you are living in an apartment and walking to work and only eating required calories to function. Also don't rework your budget so you are not eating unhealthfully as all this does is create medical bills. Get rid of coffee purchases of any kind, don't buy any soda, no chips, no processed food. Get out the crockpot and toss together meals, shop on freecycle and reusit sites that don't require money.

Don't spend money on a credit consolidation, financial planner...you don't have it. Go to the library to check out any of the books listed above.

Don't get sucked into homebased sales businesses for extra cash as you usually have to put out cash and don't see a great if any return for a while.

If you have cell and landlines give up one or the other. If you have internet...go to the library to use it let it go until you are out of the woods. Get rid of cable, you can get several channels through broadcast TV and you don't have time to sit anyway. If you do need entertainment the library checks out DVD's. Give the furnas a break now and take it back and dress everyone warm. No air conditioner when it gets warm. Use baking soda, amonia, vinegar and other natural things for your cleaning. A grocery list when you visit the store try a website called hillbilly housewife if you have problems making a budget. 365 crockpot is a website, just use store brand ingredients.

Try to get out from under the home that is weighing your financial well being down and get something that fits your family. It will have a cheaper mortgage, heating and cooling bill and general upkeep should not be as much.

If after the sitdown and implementation of your ins and outs of money for 4 weeks. IF things don't seem like you can realistically get to a point of paying your bills every month comfortably then bankruptcy is your answer.

I don't want to bring this up but also construct a plan that will also include one or both of you losing a job. How long will it take you in this house, living this life to become homeless...it is so much easier to call the cable company today and cut cable, cell phones, and not have that cup of coffee when you put yourself living out of a car or not even having one to live in.

Also as far as cars go do you drive two car payments or one or none...time to see if you can drive something less and not have to worry about repossession.

This will take work, sacrifice and building a trust that you and your husband are on the same page.

Good luck and hopefully you can work this out.

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D.P.

answers from Chicago on

Mommy L... I don't think you've fully accepted your current situation much less what you will really need to do to work to get out of it because of your "we'll need new cars eventually" statement. Take responsibility for your actions and stop spending more than you make. It's that simple.

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P.M.

answers from Chicago on

Good for you for wanting to change things and knowing your debt so many people don't. I am a personal finance addict I am always reading anything I can get my hands on that has to do with personal finance issues. And from everything I've read your last option selling the house at a loss even seeing if you can get a short sell if you need to and then widdling down your debt is the recommendation. If you can preserve your credit do it! That will make all the difference in the world. Just start downsizing your life until you can afford it and get that debt under control. Good for you for taking charge of this situation!!!!!

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M.C.

answers from Chicago on

For the housing plan, you can qualify for refinancing without being delinquent. You should contact your lender to find out if you qualify to obtain better financing.

The first step is to completely stop using your credit cards so that your balance does not keep growing. Start paying cash for everything (or check card).

Then, you need to come up with a plan to pay down your debt. You will need to carefully examine all of your cash outflows and determine what you can cut out. There is almost always something that you are spending money on that you can do without. Carefully track your spending for a month and figure out where all of your money is going.

I serve in a ministry at Community Christian Church that helps people with the issues you are describing. If you are interested in one-on-one free counseling, please send me a message.

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T.C.

answers from Chicago on

Hi,
I wanted to congratulate you on having the courage to post this question. I know there are many in your situation. First off I would recommend what others have done, make a list of everything you spend for an entire month (a week if you need to move faster) to figure out where all your money is going. Then start cutting until your expenses are less than your income each month. This may mean cutting out the gym, satellite tv/cable, going to either a landline or cell phone not both, no eating out, etc... I know it sounds harsh, but its reality for you now and it can be done and you can live a quality life this way.

Once you do this, lock up your credit cards and contact contact them to get your rates reduced. Then start with the card you have the lowest balance and pay a little extra (more than minimum) to that one each month. Eventually you'll pay it off. Then take the money you were paying towards that card, and add it to your monthly payment on the card with the next lowest balance. Keep doing this and you'll have them paid off in good time. No need to join one of those "counseling services" and pay them a fee as well.

Look into refinancing your home, or sell it if you can feasibly do so without a short sale and get into something more within your means. There are some great cheap homes out there now. You may take a loss on your home, but you should get a good deal on your new one.

I recommend books by Dave Ramsey or Suze Orman as well. You can get them at the library. Dave Ramsey also has a radio show where you can call in or email and he'll answer your questions for free.

I know this can work. My husband and I went through this process and as of last year were debt free (except for house). Then, unfortunately this January I was laid off. Because we're debt free we'll be able to keep our home and be just fine even though we can't afford the "extras" like gym memberships or eating out a lot. We still have date night and have fun, we're just more creative now. :) Good luck!!

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B.M.

answers from Chicago on

My heart goes out to you and your family Mommy! You have received some great advice and it should help you. I don't have any financial advice, but I wanted to share with you info regarding a free event my group is hosting. You can find a lot of info about it on the Step by Step website - http://www.stepbysteppta.com/ but here is a brief summary.
The presentation is called "Resetting the Expectations within your Family" and will be given by Bonnie Artman.

"Dramatic changes in the family finances can have a devastating effect -- Whether it is the current economic turmoil or other unexpected losses of longed-for dreams – disillusionment…uncertain times provide an opportunity to explore what’s really important.

· Learn solutions that transform family problems into family growth

· Claim (or re-claim) your strengths and renew family communication

· Find tools to resolve conflict with significant others faster" (This is a great topic no matter what your financial situation is!)

The presentation is at Heritage Lakes School in Carol Stream (near County Farm and Army Trail.)

I'm sure you are under a tremendous amount of stress and hopefully you are finding ways to deal with it. I think this presentation could help you with this.

Best of luck!

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T.K.

answers from Chicago on

I have read a majority of the responses, and I am glad to hear all of the great "down and dirty" ideas to get your finances under control. I think it all comes down to sacrifice (and talking to people or reading books on the Depression is very humbling). What I didn't really see a focus on (and I wanted to highlight) was the use of cash - USING CASH ONLY (or at the very least, writing out old fashioned checks)- on all transactions. I did this two years ago when I had my first baby and wanted to cut back on expenses. And secondly, MANUALLY BALANCING YOUR CHECKBOOKS (I have always done this, but I hear most people do not do this these days). It is amazing how much we spend (and don't pay attention to the NECESSARY things) when we put things on cards (credit cards, debit cards, etc.) If you physically, pull out five dollars or physically write a check when paying for items, you truly get a better idea of spending, money, value, budget & savings. And, if you balance your checkbook every month, this gives you a chance to review your spending choices again to see if these were, in fact, worthwhile.

I also agree with selling your house since it sounds like you are living well beyond your means. Used cars are just fine, too.

I would also cut out all unnecessary expenses as everyone has mentioned.

I hope this advice has been helpful to you, and good luck.

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S.A.

answers from Chicago on

Hi,

Sorry to hear about the difficult situation. If it were me, I would go with your latter solution: sell your home, move to something smaller, with a smaller mortgage and lower taxes and chip away at your debt while keeping your good credit rating. You will sleep much easier at night knowing you can pay for what you purchase, and not have this financial mess looming over you all the time. Good luck!

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J.C.

answers from Chicago on

Have you called your credit card companies to get on a payment plan? I suggest sitting down with a friend or family member who has been financially stable/responsible & laying everything out. Go to the book store & find a book with good strategies that you can live up to, this is going to take major committment on your end but you can do it. Bankruptcy is not a good idea, its just an easy way out. But you may not be able to be relieved of your debt because you havent been "hurt" by the economic crisis just made bad decisions. I have been a loan officer for many years, but most of all I have helped families get on the right track to financial stability. If you would like ideas send me a personal message. Best of luck

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A.M.

answers from Chicago on

Nothing good comes with declaring bankruptcy. Your interest rates on loans go up, you may not be able to get loans and in general your costs of borrowing goes up. It seems that you need to work out a plan to lower your costs and start paying off the credit cards.

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T.C.

answers from Chicago on

You need Dave Ramsey's total money make over. It has saved me and my husband. We did not have the debt you have, but it has showed us what is important. He is very faith based and opens your eyes to things you need and things you want. But it is hard work and a lot of change, so you have to be willing to do that. We started in January, and have paid of over $3000. We have about 5K left to go, but we will have it gone by November if not sooner. It has gotten my husband invovled in the financial end of our marriage, so the pressure is not all on me, and we talk honestly about money and where it is going. We have been married almost 10 years and now feel like we are a team in all aspects of our marriage.
Good luck!!!!

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D.N.

answers from Chicago on

I don't have much advise to give you, just suggestions. There are good credit counseling companies, but so many scammers as well. Get rid of whatever you can, walk more, eat at home, take your lunch, etc. One option is visiting your bank and see if they provide any kind of 1-time free financial counseling. Bankruptcy may end up being the option. There was an article inthe paper a few weeks ago and today most judges prefer to have people restructure debt rather than wipe it out. This helps you keep your car, home, etc. If you do have equity, you may want to sell. At least this way you don't end up losing. Also an article stated that most people modifying their loans are not delinquent. It wouldn't hurt to talk to a bank. You could make that your first step.

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B.D.

answers from Chicago on

Dear Mommy,

The other moms have great ideas. I just wanted to also tell you to look on The Suze Orman website she is a great finacial adviser and has different things on her website to help out. In now a days with the econmy try not to use your credit card, because they can up your rates and lower your available credit limit even if you pay them on time. I have heard people in far worse situations than you. You can get out of this but it is not going to happen over night. Figure out what you spend on what and cut back. Can you shop at Aldi's in stead. Don't order out and get rid of all the extras that are not necessary.
Good Luck,
B.

J.S.

answers from Chicago on

Google "Free Bankruptcy Advice" and see what pops up. There are plenty of legitimate sites that can help you figure this out. Check out Suze Orman for financial planning advice.

But, what you need to do before you do anything else is create a budget. Get all your monthly bills, look at all your receipts. How is your money being spent? You need to look at everything and cut out all unnecessary spending. It's going to be tough for a long time, but you'll get through it.

Good luck.

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M.M.

answers from Chicago on

Remember to be grateful for your health and all the other things you do have. Your ego may get some bruises, yet whatever you go through and however you get out of this (and you will)--you will be fine. Take some time to talk with professionals who can look at your situation and advise you accordingly. It won't hurt to have a consultation with a bankruptcy lawyer just to see where you might stand.

I have been through financial stress and no longer have a good credit score. It will all work out

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C.K.

answers from Chicago on

Dave Ramsey has a Money Makeover book that I think will be really helpful for you. You can find it in the library. This also a good place to start : http://www.crown.org/ForChurch/Solutions/MMCoaching/MMCoa...

I am in the same boat. We have commercial loans that need to be paid, also mortgage and credit card debts. And my number even bigger than yours. It hurts us badly in this economic condition. But I personally believe that file for bankruptcy is not really a good option. Since we might just treat the symptom, not the source. It will happen again if we don't have a better understanding about money management. Not to mention it will hurt our credit reputation for a long time. But if that is the only option, we can always start anew.

Now we just try to earn as much as we can, spend as little as we can, cut anything that is not necessary, and pay our bills faithfully. We make little goals, so it will be more realistic and seems doable. Pay the credit card a little more than minimum payment everytime we can and try not to make more debt. Use cash whenever possible. Sometimes we need to make sacrifices for a while, to have a better life later.

I hope you'll find the best way out from this situation. I understand your concern and feel your burden. But from your story, I know you can do it ! Just keep your spirit up :)

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K.E.

answers from Chicago on

We were in a similar situation a few years ago, although we were renting a home. Our first home we had bought, but ended up moving for a different reason after just one year. We still had a good chunk on credit cards. I had heard about Dave Ramsey from someone a long time ago and never paid much attention. we were tired of living pay check to paycheck so I finally checked out his book from the library. Just reading his book/workbook will help you feel that you aren't alone and it is possible to get through it. We used a lot of his methods in the past 2 years and snowballed our debt. We have just a small amount left to pay off and are working on getting that done within the next few months. I have always been one who felt really good about being able to pay my bills on time and I've always taken pride in doing so. I just wanted to get things under control. He just has a lot of good, basic concepts to follow, and it makes a lot of sense and gives you some confidence that it can be done. Good luck in everything.

S.J.

answers from St. Louis on

First and foremost - please realize you are NOT alone - many people have debt just like yours, or even worse.

To fix this, it is going to take a real lifestyle change, and you and your entire family have to be ready for that and really stick to it.

Please look into Dave Ramsey for help - he is absolutely wonderful and helps people like you every day. Read his books, email him, listen to his show, whatever you can do. And best of luck to you and yours.

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L.H.

answers from Chicago on

Just want to remind you that no matter what anyone tells you bankruptcy remains on your credit for 7-10 years. I say this because lawyers tell u that ur credit can improve but it will take lots of time.I can say this because I filed 12 years ago and it took me untill 4 yrs. ago to start establishing credit again. Whatever u do may b right 4 u just wanted 2 let u know the real of it..Good Luck!!!I wish you the best....

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C.G.

answers from Chicago on

My suggestion is that you go to the Suze Orman website. Maybe you have heard of her, financial advisor, she has a TV show. She is speaks in layman terms and is very helpful.
Good luck.

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J.S.

answers from Chicago on

Hi
My name is J.. I am a licensed financial professional. I read about your situation (which is very common and MANY of them are worse) and would like to speak with you. My company specialized in helping middle income families get out of debt and save for retirement - using the same or less money per month. We have been in business over 30 years and follow the same concepts as Suzi Orman (if you are familiar with her). Please give me a call at ###-###-#### and we can chat further.
Best regards,
J.

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B.S.

answers from Chicago on

I feel similarly... my thoughts and prayers are with you and your family. Thanks for asking these questions.
xo

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L.M.

answers from Chicago on

You may look in to re-financing your home and reinvesting you equtity. This way you could reduce your morgage.

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H.S.

answers from Rockford on

You are SO not alone, and I'd be happy to help you any way I can. So many, many people are in the same situation, especially now with the way things are, job lay-offs, pay cuts, housing values being down and people’s savings and security cut 60% with the stock market madness in the last year. Really, it’s so confusing right now, what to do, that it’s a wonder any of us are still able to put food on the table!

At this point after about 4 years we've made huge progress paying down our debt through consistent effort. Our credit was not great when we started, so you’ve got an advantage that many people don’t have!

What helped us was to add up exactly what we had in debt, what the minimum payments were, and the balance of each debt, and rank them by the smallest balance to the largest one. Some people rank them by percentage rates, but psychologically I needed to see some progress and feel like we were accomplishing something.

Figure out what your bills are each month and what your income is. Add up EVERYTHING...birthday presents, mother's day presents, dentist visits, car insurance, auto license stickers, haircuts, etc. I found it helpful to go through previous month's statements on our credit cards and checkbook to gather this information and figure out how much extra money you have (or if you're like us, how much you're short each month).

Many people will try and cut expenses, downsize, cut back on extras etc, but I took a different approach. I knew, just like a diet, if I felt deprived of things, I would not stick with it. Plus having to downsize, get rid of things we enjoyed and loved, would damage our self confidence, self worth, etc.

MOST PEOPLE CAN AVOID BANKRUPTCY WITH ONLY A FEW HUNDRED EXTRA DOLLARS A MONTH!

What we did was think bigger...we set our minds to figuring out how to make an extra $1,000 a month we needed to live the life-style we enjoyed, allow me to continue to stay home with our kids, AND make progress paying down debt.

I started with ebay...looking around the house for what I could get rid of. Kid's outgrown clothes/toys, maternity clothing, etc. and everything I earned from ebay went to pay off our smallest balance. I continued that but eventually found ebay was a lot of time and work because I ran out of things to sell and started hitting garage sales smaller profit margin). So I started a Network Marketing business and put my paycheck(s) from my business to pay down our debt.

It's actaully fun now, we've got some breathing room in our budget and my reasons for doing the business are now changing. We're creating a lifestyle where selling our time for money is no longer our mindset, but we're creating additional streams of residual income coming in to cover our monthly expenses. I would like to get a new car because the one we have is 8 years old and starting to need a lot of "attention" so I'm in the process of establishing an internet marketing business that is currently bringing in $1200 a month and will more than cover our car payment, insurance, and other bills. (This is in addition to the network marketing income I receive.)

It's a whole new mindset and not one of, how can I squeeze that payment into our budget, but how can I expand our income to give ourselves what we want.

So much focus is put “the recession” right now. I encourage you to create the a mind shift and refuse to be a part of it. God already gave you everything you need inside of you to be successful...you can get out of debt, save your credit score, and get out from under the pressure you are under. You don't have to be a victim to this, it could be the best thing that has ever happened to you. It was for us.

I have a free audio that I can send you on the "5 Most Important Things to Know BEFORE Joining ANY Network Marketing Company." This audio is not specific to any company, and will help you know how to choose a company that will be a good fit for you, and if starting a business to increase your income would be an option for you.

Another great resource for choosing a company is the www.DSA.org which is the "watch dog" of the industry and has some great resources and is a great place to check to see if the company you're looking at is a member. Also the DSA has another website called www.directsellers411.com you could check out.

Good luck to you...and think big! Think possibility! Think life-changing! There are so many things you can do: Internet Marketing, Affiliate Marketing, become a virtual assistant, share your talents and interests with others...do a video diary of yourselves and the financial journey you are on...etc. etc. etc. It's not necessary to cut your expenses and live like a pauper to get out of debt!

Good luck!

H.

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J.

answers from Chicago on

I don't now if anyone knows what the credit market is going to be like for the next few years, but you'll have a lot of company if you go the bankruptcy route. I have heard that you can get credit cards and other loans after bankruptcy - you will just pay more.

I agree with the advice to talk to someone who is good with finances and knowledgeable, but not one of those scam credit counseling companies. And definitely don't use home equity to pay down credit cards.

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A.W.

answers from Chicago on

I don't really have any advice that differs from what other people have suggested, but I do want you to know that you're not alone and that there is a light at the end of the tunnel. Our family is also in debt (like most we know, especially if you're college educated, since these days it's almost a given that college grads will have student loan debt), but it's not as bad as it used to be since we've found ways to pay down our debt. One thing that will make you feel better, if you haven't done it already, is sitting down with your SO and making a list of necessary expenses and monthly payments; it actually makes you feel better to at least know what you're up against so that you can make a "battle plan." If you have student loans, you could ask for a deferment (where you don't have to make a payment for a year); we did this for my student loans when we couldn't afford to make the payments. Also, you could call your credit card companies, explain your financial situation, and ask to set up a payment plan that you can afford. They will probably work with you if they know that you're seriously considering filing for bankruptcy, since they're going to have a better chance of getting paid if they work with you than if you file for bankruptcy (I don't know if the new bankruptcy laws have changed things, but I know that traditionally credit card companies didn't get paid if a client declared bankruptcy). Look at all your options: is your home large enough for you to rent a room out? Could your husband and/or you find a second job to help pay down your debt? Can you cut grocery expenses by doing things like baking your own bread (we bought a bread machine for $60, and it quickly paid for itself in what we were saving by not buying bread from the store)? Make a list of any possible things your family can do to cut expenses and pay down your debt. Good luck and hang in there!

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S.O.

answers from Chicago on

I would first try to sell your house. I know it is hard but sometimes we make mistakes and fixing it can be hard and take time. Stop using the credit cards except for emergency like medical bills etc.. get rid of the cell phones!!!! If you feel you need a cell phone go with a pay as you go plan.Virgin Mobile is only $20.00 every 3 months. Of course only use it for emergency. Cut out cable if you haven't already. We have not had cable for years now. There's plenty of shows on regular TV.Shop at Aldi's, Meijer's, WalMart etc.. Make rice and pasta dishes. They are alot cheap. Use coupons! Make a list of all your bills and keep track of where you spend your money. A good way to do this is save all your receipts and at the end of the month sit down and write out a list of what you spent and where.
From the sounds of it you are spending beyond your means and need to figure out how to cut back. Cutting back is hard to do but you will be amazed at how much you can cut back. My down fall is taking my 2 daughters to Starbucks!!

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G.H.

answers from Chicago on

Are you kidding? There are people with debt in the millions. 115k is not that bad. You have to cancel those credit cards before you go to far to come back. Don't get another 1 for any reason. Pay down your bills or condense the credit cards after mortgage and food are taken care of for the month. Drop out of all the extra things. Workout clubs, shopping at malls, eating out at restaurants, no carryout food, shop at cheaper grocery stores (Aldi, Food 4 Less, Valli Produce, etc). You can get out of this if you make cuts. I have a friend, Tammy Green, that refinances homes. I've never heard of a refi that she couldn't do and payoff those credit cards. Her # is ###-###-####. Tell her you spoke to Jeanne and G. on Mamaspace.

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T.B.

answers from Chicago on

I did not read all the responses as there was so many. I did see some people talk about Dave Ramsey. At Immanuel Church in Gurnee they run his 13 week program. I beleive the next one starts in May or June. Also on Thursday April 23rd there will be a "Town Hall Meeting" by Dave Ramsey telivised at Immanuel Church starting at 7:00. Free to all.

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C.T.

answers from Chicago on

My advise would be to keep paying your debts and contact a credit counselor. My husband was probably $65-70K in debt from his previous marriage and just wasn't making a dent in his balances so this is what we did. He used Christian Credit Counselors. What they do is ask you for all of your credit card info and they contact the creditor and negotiate 0% or much lower interest rates, then they figure out how much you can afford to pay per month & for my husband the amount was $900 and with the lowered rates they figured it would be paid off in 36-40 months. We now only have about a year to go. One word of advise, if you were to go this route is to make sure you have one credit card that you don't carry a balance on to use in case of emergency. It does affect your credit score so if one of your names isn't on every card you have then only do it for 1 person that way one of you will maintain a good score. It may be inevitable to have to do both.
I see you have 2 children and you've mentioned that you live above your means and the reason you want to maintain good credit is so you can buy new cars. Really? Maybe this is where your problem is. If you can't afford a brand new car, you don't buy a brand new car. Buy a car you can pay for and do not lease. Maybe buy 1 car that is new and one used car that you can pay cash for.
Cut out the stuff you don't need in your life, get on a budget and only spend what you have.
Please don't let your house and bills go. That has a horrible effect on the economy and every individual who pays taxes. You can get out of this the right way which I would suggest you do. Seek help and get on a budget today, don't put it off till it's too late and you have fewer and more harmful choices!!!!
Good luck!

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L.M.

answers from Chicago on

I know you have a TON of responses here, but if I could just put in another plug for Dave Ramsey. It can and will change your life!

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P.F.

answers from Chicago on

I only have two pieces of advice:

1. Call the credit card companies. They can and WILL lower your interest rate if it means keeping your business and guaranteeing they will be paid. I have not done this so I don't know the key words to use but I know it can be done.

2. Pay off the cards with the highest interest rates first.

Good luck!

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M.K.

answers from Chicago on

That's a really tough question and you should consult a licensed financial planner. In the past, keeping a good credit score could open many doors. However, in this economy, it's getting tougher and tougher to be considered a good risk by a bank for major loans or even refinancing -- even with a great credit score.

Late payments (a payment beyond 30 days late) and delinquencies (payments 90 days late or beyond) will quickly chip away at your good credit standing and will stay on your credit report for 7 years. Rebuilding a strong credit score takes a LOT longer than ruining it. In general, the more you can do to protect your good credit standing, the better.

I know little about bankruptcy, other than no reputable credit card company will even consider extending a line of credit to you for at least 7 years, when the bankruptcy is no longer active on your credit report. Forget about any loans for cars, or anything else, for at least 7 years. Your credit score will be at the absolute bottom of the scale when you declare bankruptcy.

HOWEVER...if you really are in a state in which you aren't able to feed your family or make your mortgage payment without using credit cards, you have much more serious problems than maintaining your good credit score. This is why you really need to get advice from a licensed financial planner. NOT a credit consolidation company, or anything like that. Please seek educated advice from an expect in the field -- even if it costs a couple hundred dollars, he or she can discover ways to help you survive in a "best case scenario."

PS...I would take another look at your credit score, from all three credit bureaus. I'm a bit surprised that your credit score would be considered "good" with the debt load you mentioned. Typically, high debt load, in ratio to income, will knock your credit score down considerably...even with a perfect payment history.

Best of luck to you and your family.

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K.S.

answers from Chicago on

I think you are "upside down" if you have more going out than you do coming in. I'd talk to a financial counselor. Bankruptcy might be the only way to go?

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S.O.

answers from Champaign on

You are not alone. This is a hard time for everyone. It sounds like you're trying to do the right things, so don't stop. Call the pros. Go to your bank, call your CC companies, tell them you are trying to get out of this mess, see if they will lower rates, etc.

Are you trying to sell your house? That sounds like the best option for you.

I've seen books and websites recommended. Be careful spending money to save it. Books can be borrowed from the library.

Last of all, budget and penny pinch. Drop everything, extra phones, TV (movies can be borrowed from the library too), eating out/easy meals, entertainment. Turn the thermostat down (or up), and put on a sweater. Lights off, etc.

Good for you for asking for help and keeping up your credit!!! We need more responsible people right now.

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M.J.

answers from Chicago on

I would suggest that you make a complete list of what you owe and what you spend each week/month. make calls to all of your creditors. just like they suggest on tv. ask for a lower interest rate on credit cards or see if you can transfer to a 0% percent card(some offer that when you do a balance transfer) start looking at what you can change..even in a small way. you have to take your steps now, before things get worse. Don't panic. Just face it in a logical manner...step, by step.

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V.G.

answers from Chicago on

Hi There,

I am working for copamy that has the mission of Debt eliminacial and financial freedom for the Mid Market America. Generally speaking Bankruptcy should be last resort. It takes lot of tme to reesatblish after you do that and is a smooth sail either. There are various things that can be done- Debt consolidation, Loan modification and budgeting. We have a unique tool called as Financial Needs Analysis, that provides you teh overall financial picture - Strength and waeknesses. You can do that evaluation for yourself and based on the suggestion you can choose to implement part of it from any company that you like. We can help you in that regard if you need help.

Our company focus is financial education and how to change certain things for better. Since you are part of Mamasource I can provide you that anlaysis free of cost - I will need at least 1/2 -45 mins to collect data and another 1/2 hr later to provide you with analysis.

Whatever you choose to do I wish you a speedy rebound!

Regards
V.

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K.B.

answers from Chicago on

Check out www.daveramsey.com .

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M.K.

answers from Chicago on

I HIGHLY recommend Dave Ramsey and his Financial Peach University. If you go to his website you can find classes in your area. It is les than $100 for thirteen weeks and you get a workbook, audio cds of all the lessons and class to attend with support from others in similar situations. The class really helps keep you on track. This plan had definite CLEAR CUT steps to follow.

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D.V.

answers from Chicago on

A friend of mine owns www.Budgetinabinder.com a place that helps people just like you are describing. Go on her website and see if she would be a fit.

She is a lovely person and it just might be the help you guys need. She was in the same situation, got herself out, and then decided to market the concept.

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T.G.

answers from Rockford on

I can sympathize because we have/are in a similar situation. If you don't owe anything on your cars, that is great. Just try to keep them running as long as possible. You could consider selling one. This is an option we looked at but it was just not very feasible for us due to how much my husband travels for work. The kids and I would be stuck at home all the time and then all our family time on the weekends would have to be spent running all those errands that I can get done during the week. Definitely look at selling your house. I wouldn't suggest using home equity to pay down debt. It is tax deductible then but if you get behind on the payments, you could lose your house. A few years ago we took out a home equity line of credit to pay off our debt. They let us borrow more than the house was worth. While it allowed us to stay out of the red, five years later we still owe slightly more than our house is worth and we have seriously outgrown the house. We need to move but it will probably be a few years before that is possible. In the last year our financial boat has really started to take on water. In July we had very good credit. But we had a lot of debt and we were always having to use a credit card to pay this bill or that bill. We pretty much got to the point where we had to stop using the cards because they were way to close to the limits. We had to choose between paying the cards and paying for living expenses. Just a couple missed payments sent our credit score tumbling into the weak range. I don't think we could even get another card if we wanted to at this point. We did got to Family Credit Management and they were able to work out a plan with all our cards to get the rates lowered and everything paid off in a year. We would be allowed to keep an emergency card and our credit would take a slight ding but would then start to get better as on-time payments were made. But we did not sign on to do it because the counselor was afraid that our income still wouldn't be able to keep up with the payments and we would end up defaulting and that would leave us wide open for the creditor to start demanding sky high payments and interest. She didn't tell us that we couldn't but told us that we ought to at least consider bankrupcy. We are still debating, though we have worked out agreements with our credit cards to lower our payments for a while. Family Credit Managment is a really nice organization and actually recommended to us by our church. I would highly recommend them. I think their website is www.familycredit.org

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M.H.

answers from Chicago on

A friend of mine was living on Credit cards and has recently filed bankruptcy. I do not know waht her exact numbers were, but I know that she was paying her mortage with the credit cards. I am not sure what to tell you except get rid of anything you don't need.. IE, Extra phone, cable, internet etc.. You need a roof over your head, heat, electric, and food. Cut out everything else.

Good luck.

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C.M.

answers from Chicago on

Hi Mommy L-

This is a tough situation to be in and my heart goes out to you and your family. All that I can tell you is what I would do given your situation. It is good that you are open to any alternatives. I guess my main concern with doing things the way you are doing is what if you or your husband lose your job? In that scenario a bad problem would only become worse. Yes, bankruptcy is an option but you will absolutely ruin your credit for several years and probably have trouble getting ANY kind of loan for a very long time.
Do you have a Roth IRA that you can tap for some money to help stay afloat for the time being? After 5 years I believe that you can withdraw contributions from your Roth without the 10% penalty.

If your savings is exhausted and all you can do to stay afloat is continue to incur credit card debt which is NOT tax deductible and usually comes with super high interest rates then I would try to sell the house and move into something more affordable. This is a pretty tough real estate market so you'll probably have to take a loss on the house but I think you need to get the finance area of your life back in check. I'm sure it's not good for your health living with that kind of stress every day. I hope things get better you.

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V.R.

answers from Chicago on

Hi Mommy L, first let me start off saying sorry to hear about your situation, secondly bankruptcy is not a bad idea, i felt the same way before i knew about bankruptcy, but once i file bankruptcy i felt great and re-establish my credit so do what you have to do for your babies. Whatever works for you and your family

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C.L.

answers from Chicago on

Your not the only one out there these days. :(
My family is also in debt. We've started the process of chapter 7. It will erase all non-secured debt (credit cards) But our lawyer told us that after 5 months from the final court date we can start to improve our credit (we were great, until the economy started slowing down and my husbands business (his own) felt the effects) .
We have a modest little house, but w/3 kids the debt just started to build.
Think of it as a clean slate.
If you do get a lawyer, make sure he's not charging you thousands of dollars to file for chapter 7. It shouldn't cost you thousands.
C. (sahm to 3 kids)

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V.C.

answers from Chicago on

As awfull as it is you need to file bankruptcy, you will never get out of credit card debt even if you sent double payments, it is a vicious cycle. My rental property is about to go into forclosure and my lawyer said if they come after me I will have to file also, I too have fantastic credit but that does not pay the bills. I'm sorry to hear you are in such a terrible situation. Good Luck
V.

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L.B.

answers from Chicago on

Are you sure that you don't qualify for the Obama plan. I believe that even if you are not delinquent, but your debt to income ratio is really high they will let you refi and you have to go to credit counseling. I believe that they are helping people in order of need,like first the people that are in trouble of losing their house. Maybe you should call your mortgage company and make sure. Good Luck. We are also struggling with credit card debt.

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M.H.

answers from Chicago on

You are not alone. I applaud you for your courage to reach out. We are in a nearly identical situation. I would imagine a lot of people are. Can't afford to live in the house that you are in. Can't afford to take the huge hit and move. Running our own businesses has meant a lot of risk. There have been rewards on many levels, but not enough financially. Talking about it is a first step towards solutions. I wish you good luck.

SMILE On!

ML

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R.M.

answers from Chicago on

If I were you I'd try to sell the house and see what you can get for it. You can move into a smaller house and possibly pay off some of that debt with anything you make on the house.

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T.H.

answers from Bloomington on

I know where you are at for the longest time my husband and I lived paycheck to paycheck often hoping to make ends meet that month but I am here to tell you...IT DOESN'T HAVE TO BE THAT WAY!!!
We took Dave Ramsey's Financial Peace University and it has changed our lives!! That would be my suggestion to you. Find a class in your area. Often times they are offered through churches and other orginizations. You can go online to www.daveramsey.com and find a class offered near you. There is a tuition/enrollment fee but many places offer discounts or a waiver if needed. I just suggest looking into it. Many times they even provide free child care durring the class so you can attend without that extra expence!!!
Good luck!

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L.S.

answers from Chicago on

Bless you for making the decision to improve your financial situation! I agree with much of the advice you have gotten so far...AVOID BANKRUPTCY at all costs! Someone mentioned the Good Sense Ministry run out of Willowcreek and it is excellent and many of the churches in the city offer Good Sense workshops. I would check with Park Community Church and/or Moody if you are downtown. Park is non-denominational Christian and friendly to visitors. I'm sure Moody would be as well. Also, Matt Bell has been involved with Good Sense for many years and he has two books (paperback, very reasonable) that could be very helpful to you. The first came out about a year ago and is called 'Money. Purpose. Joy.' and deals with how to approach budgeting, reduce debt, etc. The second is called 'Money Strategies for Tough Times' and it just came out on Wednesday. They're available on Amazon. I haven't read the second book as it just came out (getting a copy on Monday) but I highly recommend the first one. I'm very low tech but if there's a way for you to respond to me directly, I'd be happy to get the books for you. Keep the faith...you are NOT alone and you absolutely CAN dig out. It will take time and sacrifice but it's worth it...it may feel like a quick fix but don't forget that bankruptcy will stick with you for years and years and years and will FORCE sacrifice. Better to take control. Good luck!!

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H.C.

answers from Chicago on

I became an independent beauty consultant with Mary Kay back in December to help my family with a similar situation. It has been a tremendous help as far as providing us with extra income to help pay down our debt. There are so many great things about having your own Mary Kay business, but the main thing is the flexibility. You can put in as much or as little time and effort as you like. Since you are a working mom, you may only want to do it part time for now. But I would consider myself a full-time consultant, and I'm only working a maximum of 4-6 hours a week outside of my home. If it something you'd like to learn more about, visit my website: www.marykay.com/hcrews. You will find info about the business opportunity on there as well as my contact info, if you want to speak with me more about it in person. Good luck, and remember that you do have the power to make things better.

Take care,

H. Crews

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S.W.

answers from Chicago on

WOW!! I am sorry to hear your mess. I honestly wouldnt know where to begin- I may start with only buying what is needed- we often get wants mixed with needs. perhaps you can have a garage sale and make some extra $ there. I would also recommend if you have cars you owe money on sell and buy a used car with no payments. from what I learned you start by paying bills that you owe the least $ on so that you can feel some sense of accomplishments. you really need a budget plan and stick with it- most of us do. I truley feel these financial difficulties many of us are going through is just a reminder of what is truley important. Good Luck and God bless!

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S.F.

answers from Chicago on

Hi, Mommy L,

Been there! Done all those bad mortgage moves: ARM, stated income, etc. Last summer I sold my home, did well enough to pay off all credit card debt and move to a new life where I do not spend more than I have. This was the second time I sold the house to pay off credit card debt. I was successful both times because I knew it was my only asset and I exploited it, intending to sell for good when the kids were gone (now they are, at 19 and 23). I urge you to SELL THE HOUSE before compromising your credit rating and absolutely before considering bankruptcy. Either will do worse damage to your credit than you can imagine! New cars will be a dream!
You must get out from under this mortgage, even if it is really difficult, because it's the only flexibility you can access. I know it's hard to list and move, but you MUST pay down those credit cards and getting a lump sum from selling the house is the only way to do so. Start over house-wise -- rent if you must, especially if it's a choice between using any profit for a new down payment or putting it toward paying off credit cards. I suspect you can't afford to pay off the cards and also buy again, so you will have to pay the cards and simultaneously get your spending under control. It's the only way to stay afloat credit-wise and into the future, where you may be able to buy a condo or even a house again.

Finally -- I hope you both keep your jobs!!! Or this mess will never end! I know it is harsh to say give up your home, but it is an albatross you can't afford and will poison your lives if you don't get rid of it and live in something you can afford *after* paying off those cards! Then cut 'em up and never charge again!
Good luck,
Mama S.

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T.R.

answers from Chicago on

You are not alone. I know many people, including myself who have used credit cards to get by. And that is fine if its temporary. If your using them like extra income that is where it becomes a proble.
First you need to really get a handle on what your income is monthly and what is going out in expenses. Only than can you start to prioritize.
Once you know where the bulk of your expenses are you can start to make decisions. If you have a small shortage than cut back on small items to make up the difference. If your shortage is large like in the $1,000's than its time to contact your mortgage company and try to negotiate. What is your interest rate on your mortgage? If its high you could qualify for some help to get a lower rate there by lowering your payment. If you have suffered due to a financial hardship you could also qualify for some help with your mortgage.
The real key here is to know what it is you are working with before you start negotiating.
I hope this helps.

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K.P.

answers from Chicago on

You might be able to do a loan modification where the bank will modify your loan to lower the monthly payment. If you have some type of hardship, like a job loss or something you might be able to do a short sale ( where the bank allows you sell your house for less than you owe on it and take the loss) . I am a realtor in Plainfiel, if you would like to explore your options...email me at [email protected]____.com are currently helping many people with similar situations.

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J.K.

answers from Chicago on

I read all the responses and have to say that Ellen gave you fantastic advice -- a paid professional could have charged you several hundred dollars for that advice!!! I can only add this one thing -- a lot of people don't realize that one aspect of the "Obama" re-fi plans is that they change mortgages which typically were non-recourse loans into ones that are recourse loans. If a loan is non-recourse and you default on it, the bank can seize your house, but nothing more. So, you could be forclosed upon, but if the sale price of the home is less than the balance owed on the mortgage, the bank takes the loss, not you. Under a recourse loan, if you give the house back to the bank but there is still a deficit, the bank can come after you for the difference. This has the potential to turn out very badly. I am not a loan or real estate professional however, so I may not know all the details about this, however, please be sure to find out whether or not your current loan is non-recourse, and if you do refinance, please find out if this status is changing. If it is changing, I would suggest getting some outside advice about whether this is really a good move for your family. I have been studying the economy and the financial markets now for a few years as I have been building a home investment business. It is my personal opinion that the economy is getting worse, not better, and that any improvement is a minimum of 2 years away, if not more than that. When you are making your plan, you should consider alternatives which take the possibility of job losses or income reductions into account. For example, if you come up with a plan that allows you to just barely make ends meet with the money that is coming in currently, what happens if you or your husband loses a job?

Also, while lots of people had great ideas for saving money, I noticed that no one suggested finding ways to bring more money in to the family. Is anyone able to pick up extra work? I know you have young children and it is hard to work. But, I know people that watch other people's kids in their home during the day (informal day care), or do babysitting, or do little jobs in the evenings and weekends when their husband is home. Of course, if you have to pay for child care while you work it isn't worth it. Lastly, while yesterday was tax day, it might be worth having a tax professional look at your return and see if there are any missed savings there. Good luck!

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M.M.

answers from Chicago on

As difficult as this may be to hear, its my opinion that you need to scale everything back which may very well could include your home. I'm sure that it must be your largest monthly expense (mortgage, insurance, maintenance etc). You need to stop the hemorrhaging of cash, stabilize and begin to build a financial safety net. It will be very difficult and humbling yet will reveal your true priorities in life.

On a larger note, I really believe that this recession will teach our generation a hard lesson but one that will stick with us. We must live within our means in order to be safe and secure.

I wish you much luck and commend you for your honesty and asking for direction and guidance. You are on the right path. Stay strong!

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L.R.

answers from Chicago on

I second all of what Teri K said and if you'd like more advice contact Willow Creek Community Church's Good Sense ministry that periodically has sessions on budgeting and how to get out of debt. You do not need to be a member. They're in South Barrington at Algonquin & 59.

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J.S.

answers from Chicago on

Hi~
I'm not sure how much help this will be, but I'll give my professional input anyways. I've seen many, many people in your position, and even worse. I'm a home loan modification specialist/manager for my company. My first & main suggestion is do NOT intentionally miss a mortgage payment. Many loan modification companies tell you that if you skip a payment they can get you a loan modification. Even with no missed payments, you can possibly still be qualified for a loan modification. Bankruptcy will definitely have a negative effect on your credit, but it will help you wipe everything out & get a fresh new start. Sometimes that is more beneficial for you rather than trying to go another route that can still mess up your credit...At least with bankruptcy you will get a full fresh new start.
If you want any help and/or advice on the modification process, feel free to me & I will offer you some free advice as to how everything works.
Good luck & I hope this helps a bit!!
J.

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B.G.

answers from Chicago on

check out crown financial ministries...

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S.K.

answers from Chicago on

I can totally relate. My husband and I both work full-time and have great careers. However, I came into our marriage with 80 grand in student loans, we got married in Hawaii, bought two cars and a townhome, and had two children with two unpaid maternity leaves in less than 3 years. Including our mortage we are 350 grand in debt. We also pay our bills on time, but I use the 0 % cards for a year and transfer the debt to another 0 % card the next year. So far all of our debt excluding our mortage is set to be paid off in 7 years, but I hate living pay check to pay check with no savings and always in fear of the unexpected payments that come up (medical bills for the NICU for a second son, for example). All I can tell you is to make a plan so that you can pay off your debt (excluding mortgage) within a 7 to 10 year time frame. I was able to consolidate all credit card debt into a 7 year Discover loan with a fixed rate. We saved money this year by trading in one of our cars for a leased car that has a lower monthly payment. We also save money by using Peapod for groceries. I make sure that I don't spend more than $75 per week and avoid impulse buying. We also use Costco once a month for items we go through a lot of like Diapers, wipes, orange juice, chicken, ground beef, oat meal, soda, detergent. We try to only eat out once a week and pack lunches for work. We each have a budget of $100 for spending money per month, but tend to go over it. I think I'm going to start having us both spend cash instead of credit to help with this problem. I really think there are a lot of young families in our same boat. It's also tough out there because of the real estate market. We have lost all equity in our home and then some. We are hoping to move into a new development where they will buy our town house and sell it (at a very low price) if we build with them. They offer 50 grand in options that you can put toward a down payment, if like most of us you have lost all equity and have nothing for a down payment from the sale of your home. Hopefully, you feel better knowing there are others out there with financial woes. Hang in there, make a plan to pay off debt and be glad that you and your husband are gainfully employed and have a roof over your heads!

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