Money Matters
luv4LO
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Help me! Please
I will start off by saying I got myself into a mess, I know it. I have a combined total of $18,000 in cc debt. Its terrible. I am trying to turn things around and pay this off. I figure I have two options, plus cut the darn things up and never look back. I can get a personal loan to pay off the debt and make a one time monthly payment/36 months. Or should I continue to pay the minimums on the smaller interest rate cards and more on the highest rate card? I feel stuck. It's not that I cant afford my payments, its just that I feel I will never get this paid off. I am wonderful at paying other things off, no problem, for example auto loans, student loans, ect. But it seems like when I have an option to 1) add to the compounding debt and 2)select my payment - I never make any headway. Please help! And thank you in advance.
Re: Help me! Please
When you are talking about a personal loan, how high is the interest rate as compared to the interest rate(s) on the credit cards? If the personal loan interest rate is lower overall than the credit cards, taking out the loan seems to be a win-win situation. Especially considering your "money personality" of being more successful paying off debt when it is in a loan format.
I feel you and I've been there! One strategy that worked for me was to use a spreadsheet where the first page was a summary of each card and its current balance. Then each subsequent sheet in the file was each card, where I would almost treat it like a check register. I'd have my starting balance for the month, enter in each transaction as I charged one, and then subtracted when I made a payment.
It's a little psychological trick but, I found that when I knew I was going to have to update my spreadsheet later for my "impulse purchase", I was less likely to make the purchase. Or at least less likely to make it with a credit card. It definitely helped with the evil "balance creep". You know the one. You pay a card off, use it here and there, and a few months later it's like, "What?!? How did this balance already get to $500?"
Something else I do that really helps with budgeting in general and especially helps with planning out my debt pay down. First, make a plan for how you want to pay off the credit cards.
While choosing the ones with a higher interest rate is obviously a good strategy, it can also be really gratifying to pay off the ones with the lowest balances first. For example, if I had a card with a $5,000 balance and a 20% rate along with a card with a $300 balance and a 10% rate, I'd pay off the smaller balance card first just, because it would give me momentum to have one out of the way.
You just need to determine what works out best for yourself.
Once you have your payoff plan formulated, prepare a basic budget. List out the take-home income you receive each month and then make a list of all your bills and expenses. Don't forget all those morning lattes and/or other entertainment/discretionary spending. Subtract your bills/expenses from your take-home pay and viola. That is how much you can knock out your credit card debt each month.
From there, you can figure out how long it will take you to whittle it down. Want to whittle it down faster? Cut some expenses and/or pick up a p/t job, sell things, or anything else for extra cash.
It does take time to knock out a large debt but, if you can at least see progress each month, let that be your motivation. You will get there faster than you know it!
Also, call your credit card companies that have high rates and ask if they will reduce the interest rate. This will get you to your goal faster also.
Yes, let us know the interest rates on each card and also on a personal loan.
With those interest rates, I'd go ahead and see about ther personal loan. In the meantime, call every one of those companies and see if you can close the accounts but continue to make payments.
Based on your interest rates, I would check with your bank to see if you can get a personal loan to pay those all off at a lower interest rate. If you can, then get a loan & pay everything off, forget about them for a while & just work on paying off the loan.
My husband isn't the greatest with money either so he's only allowed to put two things on his cc which is gas & haircuts. I budget for those. This way it helps to show a regular spending & it does get paid off in full. I should state, we are trying to build up his credit.
About your husband... he's married to you. He needs to help, because this does not affect only you. It also affects him and your child. This is the "for worse" part of those vows you guys took.
If you guys aren't on the same page about where your household money goes, that's a huge problem, and it's only going to make breaking these habits more difficult for you. Make a commitment to your family to break the habits. Likewise, he needs to make a commitment to your family to help and not hold this over you.
At the end of the day, your family finances rise and fall together, whether you keep accounts separate or not. Back up and take the 30,000-ft view of your money. It doesn't really matter who earns what.
As for your husband, I differ in my opinion as to your husband needing to help.
My position is that YOU first need to make some serious changes in your spending and prove that you have changed your ways FIRST -- I am all about helping those who are helping themselves and doing all they can - and right now that is not where you are.
I think she does need to make a point to break these habits, but I also think her husband needs to stop holding it over her. It's not constructive. If their family income - as a family - can knock out some of this debt, then I think that's something that needs to happen. If her husband has thousands in savings, it's not at all reasonable for his wife to be paying massive interest on this debt while he's waiting for her to "prove herself" to his satisfaction (whatever that is). Figuring this stuff out together is part of a marriage. Sometimes that means paying debt your spouse accrued before your marriage.
I say this as somebody whose spouse has twice as much student debt as I have, most of which was accrued before we got married. It's not the same as credit card debt, but his loan payments alone are still more than our mortgage payment each month. I knew that he was coming into our marriage with a lot of debt, I married him anyway, and being judgey and resentful about it accomplishes nothing.
OP, nobody is perfect. Swallow your pride and have an honest talk with your husband. Explain to him that you realize that mindless spending is one of your flaws, and it's something you want to change. Ask for his help and support in doing that Come up with a firm plan together to limit your ability to mindlessly spend - ask for his suggestions, cut up the cards with him, develop a household budget, make envelopes for yourself. Get him involved in this, and it will probably improve your financial relationship with him. I do think you need to put forward considerable effort to fix this - after all, you were the one who spent money you didn't have - but I stick to my opinion that your husband shouldn't make you crawl out of the hole all by yourself.
I agree with this. H and I don't combine finances, but we've worked together to pay off CC debt I had using our joint savings. And we decided that when I get my school paid off in a year I will start paying towards his truck so combined the only debt we'll have in about 1.5-2 years is our house. It's all about finding a balance and asking for help when you need it. I would sit down with H and seriously talk to him about needing help, how you'll change in the future to keep this from happening, and then sticking to it. Come up with a plan together and maybe he'll be more open to helping.