Help! Too Much Debt!
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Even as consumers have reduced their credit-card spending in recent months, many struggle under mountains of debt. In 2008, Americans household that had credit cards owed an average of $10,691 on them, according to CardWeb.com. More than half carried balances of $7,000 or more. If you feel trapped under your credit-card debt, check out our latest infographic. We walk you through three possible solutions: credit counseling, debt settlement or consolidation and, as a last resort, bankruptcy. Which option may work for you will depend on your individual circumstances and, chances are, you will need to do a lot of research before making a choice. Ultimately, however, the real key to getting out of debt is universal: make sure you never use your credit cards to purchase things you cannot afford.
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14 Comments so far
leave a comment“Change your habits”… that last piece of advice is priceless. Unfortunately I’m not sure this message gets to the right people. I imagine most people who read this blog are financially apt individuals.
I got out from over $13,000 in credit card debt. It took 3 years and 3 jobs to do it, but it was worth it to do it myself. My credit was great, so my rates were never higher than 5.9%, but I bought stuff I didn’t need, and it was my responsibility to take care of it no matter how hard it was.
I feel for people who have had medical expenses or financial problems beyond their control, but none of this is insurmountable.
Go against the grain, stop buying stuff you don’t need, and replacing stuff that is not worn out. Have a zero tolerance rule towards debt and live on a budget.
@Anthony is exactly right. This post is cute and has good information, but you should be able to take care of your debt YOURSELF. Don’t hire one of these rip off groups to “help you”. You got YOURSELF into your mess, so get yourself out.
I HIGHLY recommend listening to Dave Ramsey’s radio show and getting his books. You’ll be amazed at how much common sense you don’t practice. “I’m debt freeeeee!”
Hopefully ill be learning wtf your talking about within the next couple years at U of M
Tom,
Good luck at school. Educate yourself on this the colleges do not teach it. Learn the ins and outs of finance yourself.
What about student loan debt?
The only two debts you must make sure you pay are IRS debts and student loans.
Neither are bankrupt-able and both have the ability to garnish your wages. Don’t think they don’t care because they don’t bother you about the debts much. They know you have to pay them, they can wait and collect plenty of interest and penalties in the meantime.
Indeed, I once saw Mohammed yelling at some guy who had chrome spinning rims on his Escalade but needed food stamps to feed his family. It was pretty intense. You could say he… blew up at the man.
While there is nothing really wrong with this little cartoon, you could also say there is nothing really right with it either. The worse part is the only real solution to too much deblt is the very last frame that is there almost as an after thought. If you don’t change your behavior, you will go through all the pain and work of playing the shell game with with debt (settlement, consolidation, bankruptcy) only to find yourself in the same boat down the road. The reality is, if you want to get out of debt, you have a choice to do two things and if you can do both so much the better: spend less and/or earn more. If you continue doing what you have been doing, then the writing is on the wall. Set a workable budget, live within your means, pay down debt, and then save. It might not be sexy, but it is very effective. Mint helps us do this every week, which is why we like it!
Well at least they don’t have debtors prisons anymore. Well, at least not yet.
3 major types of help available? you forgot 1.
what about “get advice from someone who has been there?”
I am doing it myself. i was 46K+ credit card debt 2 years ago, now i’m at 25K. i called my credit cards to lower the interest rates and i opened a few 0% transfer cards. its important that your credit score is good in order to do this, therefore, do not be late!
i got a freelance job to help me along and i withdrew some retirement money earning a measly 1.5% in order to pay off a 10% credit card. I pay a third of my monthly paycheck to my credit cards and I dont create any new debt.
my out of credit card date is April 2012
i also use mint to keep my monthly budget under control. when i go over budget, i tighten up the purse strings. changing habits is a really big one, but knowing where you are, and negotiating with your creditors is key. i suppose if you cant do it for yourself, you can hire a credit counselor, but your credit report will record this, and you might as well say bye bye to the best interest rates for the next 7 years.
They don’t have debtors prison, but the 2005 bankruptcy laws congress passed are pretty close. Benefits the credit card companies and does nothing for the consumer in debt. Getting a chapter 7 is much harder now, and most people default on their chapter 13… 75% in fact… so you never get debt free and the cycle just repeats itself every two years… sounds like prison to me.
good points everyone.
Couldnt be written any better. Reading this post reminds me of my old room mate! He always kept talking about this. I will forward this article to him. Pretty sure he will have a good read. Thanks for sharing!
The last lines best sum this up. Make sensible choices and don’t buy things you can’t afford! Thanks for this breakdown.