What’s YOUR story?

lifestoryOkay, I’ll delurk now and tell my story (which thankfully has a happy ending – I hope it might be a slight inspiration, maybe).

From my late teens I started running up debt. It started with a few hundred here and there on credit cards, plus a couple of loans and the like, but of course it grew over time, and by the time I was in my mid-20’s, I had around £15,000 debt and (thankfully) a very bad credit rating.

I was probably about 25 when I first realized that I had a problem with my finances. At the time, I was aware that I was in debt, but so was everyone else I knew, so it didn’t seem to be a problem. The crunch for me came when banks stopped offering me finance. In retrospect that was one of the best things that happened to me. I couldn’t spend any more on the credit cards, and couldn’t get a loan to “pay off” the debt (I use quotes because as I’m sure we all know, you can’t pay off debt with debt).

I had piles of unopened post literally hidden around the flat (I wasn’t hiding them from anyone other than myself) – I couldn’t sleep and felt sick whenever the phone rang or even when the post came. I only really enjoyed Sundays because post doesn’t come on Sundays! If I’m honest, I did consider suicide, maybe not seriously, but for me, I felt it was always an option… In a funny way, I found it almost helped to have it as an option.

Anyway, of course my bank asked for my cheque guarantee card back, and my credit card companies took away the cards, so the only way I could spend money was cash. I was working for myself at the time, and had situations where I’d drive several hundred miles to visit a client, and have to pray that they’d be able to pay me in cash or I wouldn’t have enough gas for the journey home.

I honestly don’t know what my debt peeked at, but I’d guess at around £20,000. One day (actually, it took more than a day), I sat down in my flat, piled all the unopened post around me, and starting opening. I have to say that was *the* hardest thing I’ve ever done in my life. Opening letter after letter, some going back several years, and sorted them out into piles of different debtors. I think it took most of a weekend to do, and I felt so drained after finished that I took the Monday off work (I was no longer self employed at this time), it’s the only time I’ve ever pulled a “sicky”. I’ll tell you something, I can’t remember a time I’ve cried in my adult life other than that day, and even then, it was mostly with relief once I’d finished opening all the post and realized that although I owed *a lot*, and although I had several court charges against me, it wasn’t actually the end of the world. I think, for the years I spent hiding my head in the sand, most of the problem was that I didn’t know the size of the problem, and I half expected the police to come knocking at my door and locking me away (I didn’t know much about the debt world back then, and I don’t think I realized that debtor’s prisons had been abandoned in the UK a hundred years or so before!).

To be honest, actually paying off the debt really wasn’t that difficult. Sure, it took a long time, but you’ve got to remember that by then I was used to buying everything with cash, so in a funny way, I’d already made the required life-style adjustment. I was lucky that I managed to find some additional freelance work which vastly helped paying off some of the most urgent debt, but it still took me about 7 or 8 years to pay the lot off. During that time I still paid for everything with cash, although by then my bank were offering me a debit card again.

Then, in 1997 I think, I decided that I could finally trust myself with a debit card. *The* first thing I bought with it was a copy of MS Money for my PC, and ever since I’ve been very careful (some might say “obsessive”!) to enter every single penny I spend into it. I find it (or rather, the process) invaluable, I know exactly where my money comes from, and exactly where it goes.

The story almost ends there, but there is one more, short chapter. In 2000, for various reasons which aren’t important here, I found myself in a situation where things were started to stress me out a bit, the funny thing which happened is that I found myself slipping back into “non-post-opening” mode again. For a good 6 months I didn’t open any post. I think it started simply because I had other things to worry about, but I found I very easily got into the habit of not opening post, and the longer I left it, the worse it became. Thankfully I managed to pull myself out of this hole, and although I had a few nasty letters from companies I owed money to, there wasn’t anything too bad there (and, this is the funny thing, this time it wasn’t a financial issue, although I owed money, I had money in the bank – I simply hadn’t paid bills because I hadn’t opened post). It worried me because I could feel the old feelings of “mail fear” coming back, but hopefully now I’ve recognized that this can happen, I’ll be able to stop it happening in the future.

So the current situation is that, with the exception of my mortgage, which I overpay, I don’t owe a penny to anyone. I do use credit cards these days, but I pay the balance off in full every month. I have a separate current account for bills, which I manage to the penny (to the extent that, because I know exactly how much comes out of it every month, I make a payment into it each month, and have exactly zero in it at the end of each month). I also save money monthly into an “annual bills” saving account, which covers large bills I pay annually (insurance, car tax etc). And although I don’t have an emergency fund as such, I overpay on my flexible mortgage which means, if the worst comes to the worst, I can withdraw money from it if I *have* to.

I know what I’m like, and although I’m pretty organized with my finances these days, I *know* I have to be carefully not to slip down the debt slope again! – I know it would be all too easy for me to do.

Needing advice on letter writing

Hi guys, my name is Vicki, i am single, 34 years old, living in Arizona and in bad financial shape.

I am slowly learning how to repair my credit and am living using a budget. On 12/13/15 I moved out of my apartment complex with 2 1/2 months left on my lease.

They said they wouldn’t evict me , but would send me a bill for the balance. The balance including all additional fees, cleaning, Relet is $2,431 and the letter said I had 7 days to pay it or they would file a claim against my performance bond. I don’t know what a performance bond is. Do you? It also says they will report the account negatively on my credit.

I don’t have $2431 to pull out of my ass so it didn’t get paid. That was about 3 weeks ago.

Do you think it would help to write the complex and ask for a payment plan so that they wont report me negatively. I can only afford about $50 – $100 a month. If I try to work out a payment plan, will they still report me negatively? How can I write them something or some agreement that will have them report me positively while I pay them off about $50 – $100 on time every month?

I want to write my apartment complex and request a payment plan to pay off my debt instead of them reporting it to the credit agencies. I can’t find anything in way of a letter for a payment plan, I have tried several search terms. Anyone have any advice?

Here you go:

Dear Apartment Complex Owner,

I realize that I owe for three months rent (Aug. 2005, Sept. 2005 and October 2005). By my account, I owe a total of $1500, which is $500 for each month.

I intend to pay this debt in full, but am unable to pay the full amount at one time. I am writing to request the following:

  1. Please verify the balance.
  2. Please agree to accept my regular payments of $55 a month.
  3. Please agree not to report any negative information to the credit bureaus/reporting agencies as long as I adhere to the payment schedule.

Have them sign it and agree to it.

Do not pay any amount until you receive a written acknowledgement of these terms. If they disagree, ask again.

Once you have it signed and dated IN WRITING, keep that letter and make sure to adhere to it. It becomes written documentation.

If you are ever dragged into court, you have signed, written communication that you both agreed to the payment schedule and amount, and the reporting.

Send it so they have to sign for the letter. Only accept the signature of someone with the authority to sign such an agreement for the apartment complex, not the current Employee of the Month.

I ended up sending them a letter requesting reciepts and a copy of my alleged performance bond. After I recieve their response I will attempt negotiations with them using your letter template.

I have learned that the only way to deal with creditors is to document everything. State your position clearly, try not to be emotional and make them sign for it. If one of them tries to sue you, you only have the documentation and facts to present. You have to make them prove the debt and get the figures in writing.

That way, down the line, if they try to come back and get you to pay a different figure, you have it from them clearly stating that you owe $__________. Document everything. Copy and keep all correspondence relating to the debt, even after it is paid in full and/or settled.

You can call your credit card companies

You can call your credit card companies asked them to change your bill due date. I get paid once a month so when I first took this job I called all of my credit card companies as well as my insurance company, electric, phone etc and asked them to change my payment due dates to fit my pay cycle. They all agreed to do that with no problem.

Thank you again for the suggestion. And yes, the cards HAVE been cut up. Since Last Sept when I had the financial means to committ myself to actually coming up with a strategy.

YOu have been very helpful. I will also look in the files section of this board and see what other helpful hints I can find there.

THANK YOU AGAIN! And the key is to CUT UP the new ones that keep coming in. I also realized that as I have been paying larger amounts toward my cards, they have increased the line of credit and have also lowered th emonthly. THey are so tricky! ALmost as if they see Im am coming down the stretch , making big payments toward the debt.

It is almost criminal these credit card companies. So terrible. But I have every intention on paying back the debt I owe, ever penny of it. And like I said, I was just trying to find a convenient way to schedule the payments.

Thanks again so much. Im assuming this is not such a uncommon issue ?

You have all given me so much hope. I will call them up and tell them to adjust the billing cycle. I do think killing off some of the small ones will make me feel like Im accomplishing something.

I canot tell you I am so glad to have found this blog. I have been so embarrased by all this debt. Yes they are 10 cards. they are 3 big ones I HATE. I hate getting them every month and I know im not supposed to look at the finance charge, but heres an example, one of the big ones :

  • a balance of 6000
  • and the was finance charge is 172!
  • and I gave them a 500 dollar payment
  • I felt I got nothing accomplished

the 3 big ones have balances betwen 4000 and 6000 the rest are between 800 and 2300

I think I will knock off the little guys


And when I pay off my debt (my goal by the end of the year) Ill take you all out for a drink! LOL on my DEBIT card though! I know , its no laughing matter, its really terrible what I got myself into. but thank you so much for being so positive about this, and empowering versus judgmental. You are all so helpful

So Ill stay away from all those debt emails I get that seem so enticing. I also saw MAXED OUT has anyone else?

Dont feel bad about the situation you are in today. Be excited about the situation you will be in a the end of the year. I’m doing the same thing, but well, I don’t understand your problem- I know what bills I have to pay, the minimum is always pretty much the same amount, I made a budget. It doesn’t matter when the actual bills arrive. You know you have to pay $200 to this one, $100 to that one, and you’ll have $900 left for the “target debt”.

You can make multiple payments to the same account

interest ratesYou can make multiple payments to the same account in one month; so pay the first one on time with what you have available; then make another payment when the rest of your money is available.

Some credit card companies will make your payment due date to suit you, just call them and ask.

As far as which to pay first … if you need the incentive of seeing big results; pay the smallest balances off first; if you can be disciplined, pay the most on the account with the largest interest fee. You will save more money paying off the larger interest fee account first.

Have you considered paying on-line every 2 weeks?

I understand where your coming from with high versus low interest rates… I believe you said you have quite a few cc’s, dont concentrate so much on interest rates, but paying off cards…start winning with attacking and eliminating your cards…

Now if you only have two credit cards and lets say one has $10,000 on it with 8.9% and another one was $15,000 with 29% interest, then I’d probably pay the big one. But when people are up to their eyeballs in debt and your paying 10-15 cc’s trying to decide what to pay and when, just start paying off anything you can, then as you pay those off use that extra money towards the little cards towards the bigger cards and you’ll have more money to attack those cards. If you get paid bi-weekly, your going to have to adjust your payment schedule and you can call the cc’s to adjust the payment dates. They will have no problem with that if it helps.

Debt Consolidation just groups all the cards at a lower interest rate for a longer period of time reducing your monthly payment, but there are fees involved and in most cases you pay more money because the length of the loan is longer. Why pay somebody to pay your bills when you have the money to do it yourself and quicker? It just doesn’t make sense.. I had 6 credit cards with high and low balances and your focusing too much on interest rates, your losing money on every card regardless of the rate..The object to paying off small ones is to gain momentum and feel like your winning when paying off debt. It’s also emotional more than just looking at finance charge.

You have $3,000.00 dollars towards each month!!! $25,000 divided by 3K a month is 8+ months, whether you pay the big one or small ones, its all money accruing..And with 10 credit cards start getting rid of those babies!!! Trust me it works. Ive paid off alot of money. It would help you getting the smaller ones paid because your overwhelmed with paying these all at different times of the month. Whats your balances on all these? Maybe looking at each bill we can help you… At times a solution is to opt for fast online payday loans and www.ElcLoans.com is one of the best companies for that.

But if you insist on paying the big one first with higher interest rate, start paying it off then, either way your going to pay them off in a decent time!! With as much money as you have to pay these off, it wont take you long at all…..

A consolidation loan with good terms may work

Well a consolidation loan with good terms may work for you as long as you are going to continue applying every dime you can towards that loan even if the payment is cheaper. But before you do that I would be documneting all your debts and just start applying the extra money to ONE at a time. Dont spend a dime extra above the minimum on anything except the one you are focusing on, you will see that your debt will start disapering very fast.

The biggest problem with debt CONsolidation is the fact that we (yes, me included) do not change our lifestyles. Within a few short years we have run the credit cards back up and still owe the CONsolidation loan. That is why many will suggest cutting those cards first and never use them again.

Thank you both for your replies. I have heard of the strtegy of paying off one at a time and just doing the minimum on the others (I have heard to do the one with highest interest versus the smallest amount, how does one determine?)

Here is the problem I run into with that strategy Though I now have 3000 extra to pay toward this debt (across say 10 cards)the money I have comes in bi weekly, and the bills come in across all times of the month

So once I pay the minimum on the ones that come in the beginning of the month ,cause the MAIN One Im focusing this month is coming in on the 15th. However the “every dime extra” is not all in yet, cause its only the 15th, and If I DONT Pay what I have on it, it will be late and I will get a charge and then my percentage rates had shot through the roof, when I was delinquent (by a few days) because of this “creative” strategy”.

Its more of a money flow thing and scheduling thing. I am very committed to paying, and it is very frustrating cause if anyone ever looked at the debt, and the effort I have made every month to pay it off, (NEVER IGNORING A BILL.)

Do card companies agree to send payments at a specific time a month? It would be VERY helpful actually if they came in ALL at the same time, due at the same time.

Maybe I could request that.

What is bad about Debt Consolidation? Also, what about those ads to Debt Negotiation? Though I believe I called on one of those once and the fact that I DID pay my bills and debt collectors were NOT calling me, seemed to eliminate me from that option.

Again, I thank you for your insight and advice. Please advise on the strtegy of Highest interest rate versus smallest bill (As I have a huge balance on a card with a medium interest rate and a smaller balance with a higher interest rate, but actually the lower interest rate card with bigger balance is “costing” me more..does that make sense?)

They will not lower my rate or my payment

debtsI have MBNA which I seen another posting about they are not working with me at all!!! they will not lower my rate or my payment because they said my budget doesn’t fit it in. So I said you are just pushing me into bankruptcy they don’t seem to care. I have never missed a payment yet!! and they are horrible!!

Horrible yes!!!

You must understand that a bank is business to keep you IN DEBT. Anything that helps you get out of debt – or in control of it – is antithesis to what they are trying to accomplish.

No bank will work with you unless you force them to, like falling behind in payments or doing BK.

Of course, this hurts your credit…which the banks love, as they then can raise your intersest rates to 30% or more.

You must understand as well…that banks sell us on the idea of quick, easy money and that borrowing is the way to get rich. It is NOT.

Did you know that banks have NO debt. So if debt is so good – as the banks tell us – then why are they not in debt? Because, it only helps the banks for you to be in debt. They know that debt is NOT helpful to them is they have any.

Learn and do what the banks do and you will be come rich. Do what they say and you’ll be where you are now.

I would like some insight on Debt consolidation. Over the last 5 years I had accumulated debt(due to MANY family circumstances). I have been very fortunate to have made a career move which has now given me a significant increase in pay. I had a moment of accomplishment and even a glimpse of financial freedom , as I felt as though I could FINALLY pay off these haunting bills I have been (even with lower income) reliably paying every month , typically much more than minimum, but to no avail.

Now that I feel I have the financial means to truly conquer this, I have so many debts across so many cards and the interest rates are just astronomical. I am trying to research an option , preferably a personal loan, where I can pay 1 entity the money back and let THEM make the interest gain. There are so many companies that pop up once I do a search and it is so overwhelming to sort out what is a scam and what is not. Ive tried balance transfers, but find that takes alot of due diligence to keep track of, and with 2 businesses, 3 kids (1 with special needs) I just dont want to default and make an error Is there any reputable option someone here can refer me to?

I have 25k in debt and have 3000 a month now extra dedicated to pay the bills off there has to be an option , as these finance charges are like throwing money in the garbage. I do NOT want to refinance my home. So, just keep paying all your extra money towards your smallest debt..Once that is paid off work on the next smallest one.. Keep going the route. You don’t need anyone to help you out of this, you’ll be done with all this in a year.

You can’t do anything about finance charge until you start paying off the debts…You have a huge shovel with 3K each month, trust me you’ll be fine. If you have some really high interest rates, you may be able to look at transferring those balances to a smaller interest rate card, but with your 3K a month I think you’ll be just fine ok!!! Thats my opinion….

Debt Consolidation

I am sure this has been clarified… can you explain the myths?/facts? that working with such companies can damage your credt score instead of being a +effort to get out of debt. Anyone care to suggest a company to work with that has testimonials to back? Thanks

That’s Right for most of the programs. I have seen some that will accept as low as $7500. You just have to pick the one that is right for you. I had no problem finding one, cause we owed SEARS $10,000 alone. Whatever you do just make sure you are not exchanging unsecured debt for secured debt.

Does anyone know about “The Freedom Point” for debt consolidation? I have 10000. unsecured debt – two of the credit cards are b/w 25-30% APR. Help!

If your planning on doing this I would tell you to go to Career Credit Counselling first. I tried one of those fly by night companies that never paid my debts and kept my money. You can also try talking to the cc companies and work out some sort of deal so that your interest rates will be lowered. Usually if they know your trying then they will work with you more.

I read a really good article a few weeks ago about the pros and cons of ccc’s at bankrate.com titled “Be Careful with Debt Repayment Plans.” I had contacted one of them recently (nccc)to see if they could help me with a debt management plan. They couldn’t, and a lot of money was involved, I was surprised. Here is the link to the article.

I worked for Freedom Point Founder Bernie Dancel for a number of years. It is an alternative to filing for Bankruptcy. They do help you out and do get you back on track, but please be aware is does not happen over night. Here is what they do

First you give them your income and expenses then You give them all of you unsecured debt. Total balances, minimum pymt due. What they then will do is tell you an amount that you will need to pay every month. They will then submit a proposal to each one of your debts – The creditors will then agree on the payment proposed or ask for more money anywhere between 1-25 each dollars a month – Once they have agreed to a certain amount some of the creditors will either reduce the interest rate or eliminate them completely – waive all late fees and over limit fees. This will take place after you have made 3 consecutive payments and should appear on the forth statement.

The key is to continue to keep making pymts on time every month. And since Freedom point does NOT receive your statements- you need to monitor them yourself and once a bill is paid off in full then apply that pymt to the next bill, but also to see if they are giving you the benefits that they agreed to. My mother was in debt to tune of 75K I put her on the program 4 years ago- she paid them all on time every month and Completed the program.

I just became debt free about 2years ago. I feels great. I negotiated with my creditors on my own and came to terms that we both agreed upon and kept on it every month. My goal was to become debt free by the time I was 30. I bet the goal I became debt free at 28.

CC Interest Rate Adjustment Ltr

debit cardsHello All. Does anyone have a sample letter to send to CC companies about lowering the interest rate?

All you have to do is call them on the phone… I never send them letters , I call the customer service number directly.

If you have not been a stellar credit card customer in the past, they may not lower your credit card interest rate. It never hurts to ask.

Here is what I did this weekend, I CALLED my credit card company.

I told them that I have been getting many very attractive balance transfer offers from several other companies but wanted to give them a chance to see what they can do for me before I went through the headache. I did not throw rates at them, any reduction is a good thing.

They lowered my reate from 11.3 to 10.3 not bad for the first call and I will call again in 6 months and do the same thing.
And on top of the rate I had a special rate of 4.99 on some other balances that will go away ( thank goodness) next bill as i will have paid that portion off. Now it is time to rock the rest.

That’s great. It’s on my list of things to do this week.

thats definetly motivating….thanks!

Mortgage loan modification question

Hello everyone,

I have a subprime mortgage loan and am keeping up my my payments. My house was not expensive – I currently owe $110,000 on my mortgage.

Even though the interest rates have been lowered by the Fed, my ARM just adjusted upward. I spoke to my mortgage company, and they suggested I request a loan modification to request a lower interest rate, and provide them with a new financial statement.

My question is this – how can I increase my chances that my loan modification will be approved?

Right now, my FICO score is poor – lower than when I first applied for my mortgage (though I am diligently working on paying off my debts, or at least becoming current). So if they go by the FICO score in their decision, it will cause me problems.

Are there strategies I can employ in applying for loan modification, so that my request for a lowered interest rate would get approved?

Many thanks.

These are my thoughts. I too am going for loan modification. Not because of just wanting a lower rate. Because of possible foreclosure. The banks would rather honor a lower rate than to end up selling your property in the end because of foreclosure and your inability to pay. So I’d say you have everything for you and nothing against you! Good luck!!!

I never thought of it that way. Thanks, and best of luck to you as well!

Thisi s a wonderful thought, good luck and keep us posted, I’m in the same boat! I will be at 16 % in June with a 102,000.00 loan. ha…right…something has got to give.

Credit Score and Relationships

This hit close to heart….. I have a very dear friend whose credit score before the Fico changes was 740. She had late pays, a repo, you name it, due to debt incurred for her divorce. It cost her quite a lot ($10,000.00+) to free herself from her ex, and he has not paid a dime since the divorce over 2 years ago. Anyway, she met and moved in with a man last year. Recently, during his drinking times, the problem has arisen about credit.

He equates credit score with love. She heard repeatedly that she was supposed to have her head on straight, good finances, blah, blah, blah. When the worse finally came to be, she had obtained her score and showed him. The change in him was amazing, to say the least. Me, I would dump him in a heartbeat. If my credit score (which is not good) was chosen over love, then I don’t need him.

It’s interesting you say this lol. I know a guy that was getting in a relationship explaining that it was a business relationship as well, which seems very cold. A relationship should be strictly out of love, trust and so much more…and I agree..but there’s also a fact out there that the number one reason people divorce is due to money. It just puts so much stress on couples, it’s really sad when you think about that. I truly think that couples should talk about finances and whats important to them. This is one subject that I think most people don’t talk about.

My wife had 8 credit cards when we got married,and I had no idea. She didn’t want me to know, but it wouldn’t have changed my mind about our relationship. My wife wanted to pay her debt off and didn’t want me to help in any way and trust me, I tried. She said she had the debt before we were married and it was her responsibility, so I thought that was very classy and I respected her for it. But money can rip couples apart if one’s a saver and one’s a spender… I think it’s important to be on the same page and have the same goals. Just my two cents….