I know you hear this all the time, I have been paying for over 2 years not charging anything and still cant get anywhere. I cut them 2 years ago, and called the companies to ask for a lower rate. They gave me like a year with low interest, and lower payments so my credit reports would not be hurt.
Bottom line, my credit report looks so bad, we can't even refinance our home. I am in so deep that if I had a pill I'd take it! When I called a company to help me all they wanted to do was charge me more money that I don't have. I am not sleeping, and just don't want to leave my home. I own my own business, and I am just asking for your personal help. Please, please help me.
Thank you,
Stephanie
Stephanie,
Thanks for writing (and listening)!
Sorry to hear how much your debt burden is affecting your health. I can certainly understand how you feel. Knowing that you owe money, expensive money (at high rates), can certainly stress-out anyone who wants to make good on their financial commitments.
As you're probably aware, getting out from under this debt will not be an easy one-step solution. It's going to be an ongoing process that will take years of focus, attention, planning, and work.
The broad picture to getting out of debt is three-fold:
1) Get organized financially.
2) Manage your current debts efficiently.
3) Get more money!
Since you own a small business, I have a feeling you're fairly organized. Briefly stated; files, worksheets, list of all the debts and bills.
It's number #2 that's the killer (no pun intended).
You already mentioned that you've tried to call the banks and get them to reduce your rate. You may want to call back and give them one last chance. If the first rep cannot help you, then ask to speak to a supervisor. There's much more about this topic in my next book, "Talk Your Way Out of Credit Card Debt" which is available for pre-order at Amazon.com (shameless plug).
If they don't lower the rate then you need to punish them! You need to spank their bottoms, well, bottom lines.
Apply for new credit. Do it now. Someone will give you a chance. Even if the rate isn't that great, meaning that it's not better than your current cards, get the card anyway and transfer your balance to teach your current banks a lesson. After that it won't be long before the banks start competing for your business.
You can read my article, "Getting better, cheaper credit--right now!" and apply for new credit.
Next, correct any errors that exist on your credit report. You can get a copy of your credit report from Equifax or TransUnion. Dispute anything that you think is not accurate.
The key to all of this is taking action. Start right now! Start calling right now, start applying for new credit right now. It's been my experience that it helps to have the same amount of credit as debt in order to get the banks to offer you good deals.
The best deals, and I mean lowest rate offers, will originate from your existing credit accounts, so get more of them. Don't cut up your cards, because when you do that you're cutting out your options.
You'll need $25,000 of available credit so you can transfer all your existing debt to new cards. Believe me, when those banks that just got paid off realize that they're not making any money from you they'll send a low rate offer pronto!
Just be sure to pay on time! There is no greater sin in the world of credit than being late. As long as you don't pay late and are active in seeking new credit deals, you'll be able to reduce your rates in time.
The last step is getting more money. You have a small business. What do you need to do to make it run better? What do you need to do to sell more?
I love reading books about marketing and motivation. The correct marketing can make all the difference in the world.
Here are a few of my favorites.
1) "There's a Customer Born Every Minute: P.T. Barnum's Secrets to Business Success", by Joe Vitale
2) "Ama Complete Guide to Small Business Advertising", by Joe Vitale
3) "Who Moved My Cheese? An Amazing Way to Deal with Change in Your Work and in Your Life", by Spencer Johnson
4) "Notes from a Friend", by Anthony Robbins
Lastly, in the scheme of what's important, your debt shouldn't make you feel unhealthy. Try to get back to sleeping. Relax. It will all work out. "Everything for the best," as Jhoon Rhee would say.
One last book recommendation to help you feel a little better while you're working on your plan is "Don't Sweat the Small Stuff... and It's All Small Stuff: Simple Ways to Keep the Little Things from Taking over Your Life," by Richard Carlson.
Good luck! I really hope that helps!
Please keep in touch!
Regards,
Scott
About The Author: Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!
Feedback
By austin95mom
06/23/2006
Look up Dave Ramsey on the internet. He is a financial guru. He has a talk show and has written several books. He is awesome. Two of his ideas are get a second job and have a yard sale. His ideas are basic and very easy to follow.
By Jude (Guest Post)
03/25/2005
I joined a credit counseling service. I added up all my credit card debt and realized I would only be able to pay off the minimum balance for the rest of my life. The credit counseling service will give me breathing space and also have me debt-free in 4 years instead of 40! It is not the right alternative for everyone, but if you can't get resolution on your debt, this might be a solution. I did it 10 years ago and was able to buy a house and new car a few years back so it didn't adversely affect my credit rating. Good Luck and let us know how things are.
By rabbithorns
07/01/2004
I'm sorry but having been a single mother with $25,000 debt and an average income of about $9,000 a year, I think getting MORE credit to pay off credit is like handing a bottle rather than a drink to an alcoholic. (No offense Stephanie, I'm not saying you're addicted to spending.)
If you want this thing to be gone and you've exhausted all possibility of paying it off yourself - meaning 1) you can't get low- or no- interest cards while you pay it down, and 2) you can't come up with huge money to help bring it to within reason so you're not drowning, and 3) you don't make enough money to live on (otherwise why would you get yourself in debt for so much money?), or 4) you really can't stop spening more money than you should - I suggest the next best thing to bankruptcy.
If you are saying that you ACTUALLY, REALLY, ABSOLUTELY cannot come up with a lower rate or consolidation or the money to pay your bills, then call each company and ask to make a settlement on your cards. Most call center customer service people will not know what you've asked for. Their supervisors will. You will be asked to call a debt-reduction agency, who will look at your income vs. your debts and determine how much you can pay if anything. Once the report is in, you go back to the credit card company and make an offer on your balance (like "I'll pay you $2000 of the $6000 I owe you and then it's quits"). They will come back with their counteroffer. The offer may be a settlement, or a debt-consolidation and reduction plan for lower interest and lower payments. If you get the settlement, then money you don't pay them is called a forgiven loan and this total has to go on your taxes. You pay income tax on the money you don't pay back. Paying taxes on $10,000 is much easier than paying out $10,000.
When this happened to me and I had not had a job in 10 months and I had 2 children and monthly expenses of about $1800 or so, I got the followinbg offers: $4000 off a balance of $6500, $2000 off another $6500, $3000 off $5000, and I kept ONE card on which I had $3000 so I wouldn't be totally without an emergency card. I was able to pay off a personal loan over 6 months.
You do have to come up with the lump sum payment (I used some accounts and bonds my children had which I paid back within three years.) and then they will cancel your account. Even if you can get one settlement from one company, and then use the other techniques for debt-consolidation and reduction, you will have less of an immediate burden to deal with. Your credit is affected but not screwed as with bankruptcy. My interest rate DID NOT go up on the remaining card which I paid down, and then paid off within the next 9 months.
If you settle, beware the offers of cards after that for companies that ask you to deposit money with them so you can reestablish credit. They are a trap and VERY BAD. If you've kept one card you don't need them anyway (because you are still maintaining good credit habits) and you will start getting real credit card offers again within a year. (Which you shouldn't accept anyway!)
This whole system is dependent on the fact that you have been paying the minimum, at least, every month and on time. I had been trying to pay off some of the debt by sending more than the minimum using our savings. The companies could see I was doing the best I could. The debt-reduction agency couldn't even give a report since I had nothing to pay with at all.
The main thing is to never use your credit cards ever again for anything you can't pay off at the end of the month. Yesterday, I let my husband buy an electronic toy over the internet. He gave me the balance and I immediately wrote a check to the credit card company for it. We won't get that bill for a month, but I want to know now that I have the money, instead of scrambling in 30 days to figure out where I'm going to come up with $200 I FORGOT we already spent!
In nine months, I was completely debt free. I started over and got myself out of the hole debt causes. The feeling of not owing anyone and living a cash life is more valuable than I can say. Your peace of mind is priceless. My boyfriend, who is now my husband, finally gave me his credit cards and his paychecks and I paid off his debt of $8500 in 6 months.
The problem is in not asking for help. As a single mom, I stressed and was killing myself with the fear. When I finally asked for help, I was given it. The woman I spoke to at MBNA was the first one to help and the nicest person. She suggested this process and they gave me the biggest break. It saved my financial life.
You will have to budget your money carefully - spending only on housing, food, transportation, utilities, insurance - and just about nothing else for awhile. You have to decide what you really need - more stuff or more peace of mind.
I wish you all the success in the world. No one should have to live under the burden of believing the credit system is good for them, and that "playing" the system benefits the consumer - EVER. It only benefits banks. PERIOD! Credit can be very useful, but like a knife, it's a tool that can harm as well as help.
Related
0
0
