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4 Comments

1. Adam D

   http://debtcash.blogspot.com/

   Posted on 21-Nov-09 at 3:01 pm | Permalink
2. Jeanne R

   I don’t think that you would be able to get a mortgage with that amount of debt. And do you really want to be paying for that truck and credit card debt for the next 30 years? As to the equity question, given the current real estate market conditions, I doubt that you would be able to “find something with alot of equity” because if there is any equity, it would belong to the seller not to the buyer (you). Personally, I would sell the truck and pay the difference between what you can get for it and what you owe. Then I would buy a cheap vehicle for cash and start paying off the rest of your debts. Here is a plan that works. If you work the plan, the plan will work for you:
   1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.
   2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
   3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
   To start :
   Debt #1 (highest interest): minimum payment+ extra payment
   Debt #2 (middle interest): minimum payment
   Debt #3(lowest interest): minimum payment
   Debt #1: paid off
   Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
   Debt #3: minimum payment
   Debt #1: paid off
   Debt #2: paid off
   Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
   That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
   4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
   5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
   5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money. Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
   5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

   Posted on 21-Nov-09 at 3:01 pm | Permalink
3. Randall Parker, MBA

   Ok, a few things here:
   1) Did you finish school with a degree? If not, go back. While you are in school, you can get a deferment for the college loans. If you got your degree, I hope you have a good job by now. Do not refinance your student loans, because you probably won’t be able to lower your rate. If you are having temporary financial problems, talk to your lender about a deferment or forbearance. This can help your cash flow for now. Also, check your repayment options. You may be able to get an option that requires a lower payment for now.
   2) You are probably upside down on your truck, which means that you owe more on it than it is worth. This is especially likely if you bought it in the last two years. Check with a credit union to see if you can refinance your debt into a lower interest rate, or spread the payments over a longer term. Be careful, however, that you don’t make the payment schedule longer than the truck’s life expectancy.
   3) If you do have good credit, you may be able to open a new credit line with Chase Bank and transfer the balance from your credit card to a lower-interest rate card. If you can do this, pay as much as possible each month, in order to retire the debt ASAP. Then, add this extra amount to your truck payment each month, until you pay it off.
   4) Avoid acquiring any more debt! If you can’t pay cash, you can’t afford it, and you probably don’t need it.
   Treat money wisely. It takes hours to earn and only seconds to spend. Once spent, it is gone. Don’t waste money, because it has the same effect as wasting time: You never get it back!
   Good luck! The website below may have some value to you, and it will explain how to plan for your first house purchase as well as your future vehicle needs.

   Posted on 21-Nov-09 at 3:01 pm | Permalink
4. MVD34

   I think you are being too optimistic. Have you tried to pre-qualify for a mortgage yet? Unless you have an exceptional income for your age (in which case you wouldn’t have the debt you have), I don’t see how you are going to qualify for a mortgage big enough to shop for a house large enough to be carrying $50k+ in equity.
   In today’s market, qualifying is tough and bidding on homes with moderate amount of equity isn’t really for first timers.
   Best of luck.

   Posted on 21-Nov-09 at 3:01 pm | Permalink

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