Anybody been in debt and got out?

SneakerNet said:
Yes, that what I said above "If I can afford to pay $125 per month AND this is most important is to Pay It on TIME!"
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I know but wanted to clarify why should be paid on time.. :wave:
 
Beach girl said:
Michelle Singletary is a financial columnist for the Washington Post. She has two or three columns a week, plus a web chat. She is EXCELLENT for discussing the sort of problems most people have.

Her basic guidelines for saving:

1) set up a "life happens" fund. This should have around $2,000 - $3,000 in it. This money would be to cover stuff like you suddenly need new tires, or the furnace gives out, or you have an unexpected medical or vet cost. Cuz "life happens" to all of us, and if you have the funds, then you don't have to put these minor emergencies on a credit card.

Do I pay off old existing bills at the same time, or do one before the other?

Try to do both at the same time. Even if you only put a small amount into your savings account, say $25 a month, that's better than nothing and gets you into the habit of putting that deposit in just like any other bill. It's the "pay yourself first" principle.


2) Emergency savings. This should be a sum large enough to cover 3 to 6 months of living expenses, should you lose your job or have a serious emergency (your house gets flooded, say, or you have a kitchen fire that does serious damage, that sort of thing). This money should be in a CD or other vehicle that is accessible, but not TOO accessible, because the idea is that this is for SERIOUS emergencies only. Not "gotta have this newest, greatest, PC, pair of shoes, handbag," sort of emergency.

Same question here. Do this at the same time when paying off, or pay off first then do this, or do this and then pay off?

Pay off your bills and get the "life happens" account funded first. As soon as you have $1,000 in "life happens," and your bills are paid off, then start funding the long-term emergency account, as well as putting in enough into "life happens" so you eventually have at least $2,000 in there.




3) Retirement savings, through IRAs, or work-related plans, whatever. Whatever your age, start saving for your retirement as soon as possible.

Hubby has this, but stupidly, he used his to move back to Florida. I never had one.

If at all possible, start now. Again, even $25 a month is better than nothing. You can have a "spousal IRA" if your husband is working.


Then in addition to that, depending on your lifestyle, you might have savings accounts to buy a car, or for family vacations, or to fund your kids' education, that sort of thing.

Luckily, we are working on a saving account, but it gets used once a month when paychecks are short. It was son's with me joint, but he cleaned out all his money already.

I hope it was just his money he took, and not what was rightfully yours.

Then, hurrah! If there's anything left, you can spend it! :lol:
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Slowly but steadily, you can do it. My mom was in debt for a while, after my dad died and she was raising four kids and going to college to get her teaching degree. Family finances were exceptionally tight, and she used to charge our "going back to school" clothes in September on her Sears card, which got paid off usually in December, just in time for spending more money on Christmas!

We learned to live pretty frugally, but she was not able to avoid all debt at all times - it came and went. After she finally got her degree and started teaching, though, everything was paid off and she was never in any debt after that, for anything. Got the house and car paid off, never took out any additional loans, and as I mentioned in another thread, she saved up enough so that eventually, she could spend her final years in a very nice assisted living place. It took discipline to do all that on a teacher's salary.
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Good advice. The part I made bigger I would say...depends on your interest. If the interest is really high and the income is steady I would put every dime towards that.
 
Beowulf said:
There are also tricks to cleaning up your debt. If you send a registered letter to a business you owe money to and ask how much the debt is, and they do not answer within a month, viola! the debt is gone. :giggle:
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Yup. That is great advice.
 
KristinaB said:
The only card debt is 1 Sears card that is hubby's. I think we recently paid off mine. I will have the "school" paid off in October. After that, it's just medical bills only and a cell phone bill. (hubby messed up big time and now we are suffering for it.)

We are slowly getting there, but it has been a struggle.

Beach Girl-
Hubby will check at work tomorrow to see if I can get in on his retirement options somehow. Other than that, MIL suggested that I call the bank to see what they can help with.

And, for that retirement option that he cashed in to move. It was everything we had collectively. We had 5 weeks to pack up, close everything, and move from Missouri to Florida. Easiest way was to withdrawal the retirement. He is taking the maximum allowable amount from his check into his retirement package now. Also, MIL has not told him, but she has 2 accounts that are set aside for our retirement later. We cannot touch either account until we are 62. Each account has quite a bit in, but not over the FDIC coverage. She has also set up accounts for each of my 2 children that they cannot touch until they are 35 and they have a sizable amount in them. The interest from those account is going into her working household account. Once we get our house, then she will allow us to get the interest for our household account just to verify we can pay the yearly taxes on real estate property.
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The cell phone bill, has it been passed off to a debt collection agency yet?
 
TXgolfer said:
Yup. That is great advice.
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It's great advice but more is required.

According to my province's Consumer Protection Act, the consumer has the right to ask for specific documentation from the debt collection agency which are the following:

• account statement date;
• creditor's name;
• initial amount of debt to collect;
• date and amount of each payment allocated to this debt since the claim notice if it is the first account statement or since the last account statement, if applicable;
• balance owing;
• address where the debt to be collected was contracted;
• permit holder's name.

And the consumer has to set a specific time period in which the agency has to send this info. So, let's say 10 business days from the day they received the letter (send it by registered mail so you can check online exactly when they received it). If you continue to receive demands for payments after 10 business days had passed without having received this information, you have the right to take them to small claims court and sue them for harassment.

They don't want to go to court - they only pay 7 to 10 cents on the dollar for the debt. So, say you owed 1000 to your cell phone company, well, they in turn sold that debt to a collection agency for about $100, maximum. Collection agencies are not going to waste that $100 plus more to pay for a lawyer to argue with you in court.

Collection agencies are run by thugs whose most well used tactic for demanding money is to threaten you over the phone. You can put an end to this by sending a separate registered letter asking they contact you in writing only and if they continue to call and harass, that's a violation of your consumer protection rights and you can sue the hell out of them in court.

Consumers have far more rights and negotiating powers than they realize.
 
DeafCaroline said:
It's great advice but more is required.

According to my province's Consumer Protection Act, the consumer has the right to ask for specific documentation from the debt collection agency which are the following:

• account statement date;
• creditor's name;
• initial amount of debt to collect;
• date and amount of each payment allocated to this debt since the claim notice if it is the first account statement or since the last account statement, if applicable;
• balance owing;
• address where the debt to be collected was contracted;
• permit holder's name.

And the consumer has to set a specific time period in which the agency has to send this info. So, let's say 10 business days from the day they received the letter (send it by registered mail so you can check online exactly when they received it). If you continue to receive demands for payments after 10 business days had passed without having received this information, you have the right to take them to small claims court and sue them for harassment.

They don't want to go to court - they only pay 7 to 10 cents on the dollar for the debt. So, say you owed 1000 to your cell phone company, well, they in turn sold that debt to a collection agency for about $100, maximum. Collection agencies are not going to waste that $100 plus more to pay for a lawyer to argue with you in court.

Collection agencies are run by thugs whose most well used tactic for demanding money is to threaten you over the phone. You can put an end to this by sending a separate registered letter asking they contact you in writing only and if they continue to call and harass, that's a violation of your consumer protection rights and you can sue the hell out of them in court.

Consumers have far more rights and negotiating powers than they realize.
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This is a site that I recommended to my friends years ago. He used to be on the radio..May still be (dunno deaf now) They said back then he was very friendly and returned emails quickly.

Benjamin Dover At His Best!
 
BTW I think he may have passed away. But the site is still up and has alot of great info.
 
Secretblend said:
I know but wanted to clarify why should be paid on time.. :wave:
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Well, it's a common knowledge, doesn't matter what the result going to happen, it doesn't matter if it's zero interest or not..not paying on time...you are screwed... LOL
 
DeafCaroline said:
It's great advice but more is required.

According to my province's Consumer Protection Act, the consumer has the right to ask for specific documentation from the debt collection agency which are the following:

• account statement date;
• creditor's name;
• initial amount of debt to collect;
• date and amount of each payment allocated to this debt since the claim notice if it is the first account statement or since the last account statement, if applicable;
• balance owing;
• address where the debt to be collected was contracted;
• permit holder's name.

And the consumer has to set a specific time period in which the agency has to send this info. So, let's say 10 business days from the day they received the letter (send it by registered mail so you can check online exactly when they received it). If you continue to receive demands for payments after 10 business days had passed without having received this information, you have the right to take them to small claims court and sue them for harassment.

They don't want to go to court - they only pay 7 to 10 cents on the dollar for the debt. So, say you owed 1000 to your cell phone company, well, they in turn sold that debt to a collection agency for about $100, maximum. Collection agencies are not going to waste that $100 plus more to pay for a lawyer to argue with you in court.

Collection agencies are run by thugs whose most well used tactic for demanding money is to threaten you over the phone. You can put an end to this by sending a separate registered letter asking they contact you in writing only and if they continue to call and harass, that's a violation of your consumer protection rights and you can sue the hell out of them in court.

Consumers have far more rights and negotiating powers than they realize.
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although with all these fighting... your credit rating will take a hit

am I correct?
 
If a company offers you to make partial payment instead of the whole amount and you go that route, your credit rating takes a hit. It sucks but that is the way it is.
 
DeafCaroline said:
Nope. Your credit rating is not based on fighting. It's based on your financial standing.
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I mean - while creditors are hounding you, they can put a record on you that affects your credit rating. So while you're having legal battle with them, your status still remains as delinquent until judge sides with you.

That's what I'm asking about because of identity theft stories I read. Victims had to go thru hell for several months or even years just to clear their names and while they're doing that... their credit history was shot until they cleared their names.
 
credit ratings and all is full of crap. If you know the legals about it - its easy to skew.

Friend bankrupted THREE TIMES in four years... Bought house after that. He foreclosed but yeah he did.
 
Jiro said:
I mean - while creditors are hounding you, they can put a record on you that affects your credit rating. So while you're having legal battle with them, your status still remains as delinquent until judge sides with you.

That's what I'm asking about.
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They're legally obligated to give proof of debt within 30 days, if they can't they HAVE to remove the record from your report. It's like it never happened.

HOWEVER... If they get around to it, they can get the proof and make sure their stuff is in order and start a new report on your report like it started all over again. Day 1.
 
One thing I read, do not give them even 1 dollar cause as I undertand it, it resets the clock and make it possible for them to try to collect legally for longer time..
 
Jiro said:
I mean - while creditors are hounding you, they can put a record on you that affects your credit rating. So while you're having legal battle with them, your status still remains as delinquent until judge sides with you.

That's what I'm asking about because of identity theft stories I read. Victims had to go thru hell for several months or even years just to clear their names and while they're doing that... their credit history was shot until they cleared their names.
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Lack of knowledge in the ID theft department. Even you can get a new SSN if you can prove ID theft.

A friend of my was an ID theft victim (Bank of America) twice in one year 2010-2011. He also shortsold his house as of May 2011. He can buy another house right now - his credit is solid.
 
Do you know of anyone with a credit score of 850?
 
Jiro said:
I mean - while creditors are hounding you, they can put a record on you that affects your credit rating. So while you're having legal battle with them, your status still remains as delinquent until judge sides with you.

That's what I'm asking about.
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And all it takes to improve your credit rating is to either pay the debt or have it dismissed. It's not like my credit gets ruined because of some debt collection agents.

Credit rating is based on your performance financially. It's dependent on statistics and facts.

Credit rating departments know that by default, when one is in arrears, creditors will demand payment.

So, you credit rating is not dependent on what creditors put out about you, they observe how you spend your money and what debts you've incurred.
 
DeafCaroline said:
And all it takes to improve your credit rating is to either pay the debt or have it dismissed. It's not like my credit gets ruined because of some debt collection agents.

Credit rating is based on your performance financially. It's dependent on statistics and facts.

Credit rating departments know that by default, when one is in arrears, creditors will demand payment.

So, you credit rating is not dependent on what creditors put out about you, they observe how you spend your money and what debts you've incurred.
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Yup.

And its actually better for your credit score to have 30% debt to credit ratio.
 
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