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Started By
Message
Help a "$ noob" with credit card/credit score/bankruptcy advice. TIA.
Posted on 12/1/14 at 9:16 am
Posted on 12/1/14 at 9:16 am
The facts:
1.) My credit score recently was 714. I understand that this is good.
2.) I've got a credit card balance of 13,500, which I'm paying the minimum on every month. This past month the payment was $300.
3.) I'm 32, single, never married, have 1 daughter (2.5 years old), rent a home, and have one small car note. Not much else by way of debt.
4.) I am employed with a large sized, worldwide company, am in sales, have a $24,000 base salary + commision. Not making enough money to ever be able to pay off my cc bill, if you ask me.
recently I was talking to people whose opinion I value on money and they said to speak with a lawyer about filing for bankruptcy.
I would like some opinions/thoughts on my situation and am grateful for any good input. Cheers
1.) My credit score recently was 714. I understand that this is good.
2.) I've got a credit card balance of 13,500, which I'm paying the minimum on every month. This past month the payment was $300.
3.) I'm 32, single, never married, have 1 daughter (2.5 years old), rent a home, and have one small car note. Not much else by way of debt.
4.) I am employed with a large sized, worldwide company, am in sales, have a $24,000 base salary + commision. Not making enough money to ever be able to pay off my cc bill, if you ask me.
recently I was talking to people whose opinion I value on money and they said to speak with a lawyer about filing for bankruptcy.
I would like some opinions/thoughts on my situation and am grateful for any good input. Cheers
5
Posted on 12/1/14 at 9:19 am to Honest Tune
quote:
people whose opinion I value on money
quote:
they said to speak with a lawyer about filing for bankruptcy
I don't. That is terrible advice. Apply yourself/take a second job and pay off the credit card(s).
This post was edited on 12/1/14 at 9:21 am
Posted on 12/1/14 at 9:27 am to VABuckeye
Find someone new to get money advice from.
Posted on 12/1/14 at 9:27 am to VABuckeye
That has been the route for me. I do have a second job doing sales on the side for a construction supply business that my friend owns. I just don't have enough time to do both as fully as I believe I can. I'm thinking about going all in with the construction supply sales because it's more of my field of expertise. I Have had moderate success so far in just a few months.
Posted on 12/1/14 at 9:29 am to Honest Tune
quote:
I am employed with a large sized, worldwide company, am in sales, have a $24,000 base salary + commision. Not making enough money to ever be able to pay off my cc bill, if you ask me.
We need a ballpark of what the "+ commission" before we can intelligently advise you - insofar as that is possible.
Posted on 12/1/14 at 9:29 am to Chris4x4gill2
2 no's for talking to a bankruptcy attorney. Any particular reasons why not? Just asking...
Posted on 12/1/14 at 9:37 am to Honest Tune
quote:
speak with a lawyer about filing for bankruptcy
Don't do this. If you had $100K in debt I could see it, but it isn't worth ruining your credit over $13K. Your main problem is your low income, fix that and you can get out of trouble. I realize that having a small child to take care of does limit the kinds of second jobs you can do though.
FWIW when I was in my late 20's I had just over $60K in debt, was paying minimums of well north of a thousand every month, and made not much more than you. Didn't have a kid, which is the only reason I could stay afloat. Ate lots of rice and beans to save money and eventually I did pay everything off on time, despite getting laid off once along the way. The main thing was boosting my salary and funnelling everything into paying it off.
I did it by learning a bunch of new habits, and since I still practice those habits now I've built up a nice retirement nest egg today. But I remember the dread of wondering whether I'd be able to make it each month, that really sucked.
If you haven't already done this, call your credit card issuers and see if you can get a lower rate. With a good payment history they just might, it worked for me. Also play the balance transfer game, with a 714 score you probably qualify for one of those low APR deals for 12 months. Rinse and repeat as needed, just make sure you transfer the balance back out next year to a new card.
Posted on 12/1/14 at 9:41 am to Ace Midnight
Ace Midnight,
I'm glad you chimed in, you're a poster i respect.
It's tiered. You sale 4,000/month you make 40% of that spread out over 4 months. $6,000 = 60% of that over 6 months. $8,000 = 80% over 8 months. You have to sale a lot of what I sale to make coin.
I work for a Janitorial service company in the New Orleans region.
I'm glad you chimed in, you're a poster i respect.
It's tiered. You sale 4,000/month you make 40% of that spread out over 4 months. $6,000 = 60% of that over 6 months. $8,000 = 80% over 8 months. You have to sale a lot of what I sale to make coin.
I work for a Janitorial service company in the New Orleans region.
Posted on 12/1/14 at 9:41 am to Honest Tune
With a score of 714, it's terrible advice (is regardless of score).
You didn't go into a lot of other details, but you don't sound too bad off if the credit card debt is all you have. If you can't make enough to pay off the debts, first option I'd consider is debt consolidation loans. Basically try to lower that interest rate by getting a fixed loan to pay it off and canceling the card. Or downsizing. Apartment vs house. Car, gas, restaurants, Christmas gifts, etc. All places to look before going to bankruptcy.
Otherwise, sounds like an income problem. The +commission is a performance based thing, so figure out which one you can do better in and apply yourself. If you need additional income, find an easier fixed income job on the side.
You didn't go into a lot of other details, but you don't sound too bad off if the credit card debt is all you have. If you can't make enough to pay off the debts, first option I'd consider is debt consolidation loans. Basically try to lower that interest rate by getting a fixed loan to pay it off and canceling the card. Or downsizing. Apartment vs house. Car, gas, restaurants, Christmas gifts, etc. All places to look before going to bankruptcy.
Otherwise, sounds like an income problem. The +commission is a performance based thing, so figure out which one you can do better in and apply yourself. If you need additional income, find an easier fixed income job on the side.
Posted on 12/1/14 at 9:46 am to Honest Tune
Bankruptcy is a blot on your record for the next seven years. Who knows what you might want or need in those 7 years....it's also the "easy" way out. Rather than pay off your relatively small obligation ($13K isn't so big after all), you fail to meet your obligations and pass those expenses on to others. For some of us, it's a moral issue: paying your debts is a matter of honor, pride, and self respect.
I'm not knocking bankruptcy in general. Plenty of people get underwater due to gigantic unavoidable medical bills, unforeseen business reversals (like after 9/11 or the oil spill), and similar major life issues (like a seriously ill or premature child). But your debt sounds like ordinary consumer debt.
You say you're working two gigs, but perhaps you need a third. All money is good money....start hustling. Wait tables, tend bar, detail cars, paint houses...all kinds of work can fit into nights & evenings when you're not doing your "regular" jobs. Meanwhile, keep looking for a higher paying position. Commission sales isn't for everyone.
Also, stop spending money. Write out a monthly budget and stick to it. Brown bag lunches, no takeout, cancel the cable & highspeed internet, get a cheaper cell phone plan. Sell your car & get rid of the note: buy a fuel-efficient used car. None of this stuff is sexy, but it's what responsible adults do.
I'm not knocking bankruptcy in general. Plenty of people get underwater due to gigantic unavoidable medical bills, unforeseen business reversals (like after 9/11 or the oil spill), and similar major life issues (like a seriously ill or premature child). But your debt sounds like ordinary consumer debt.
You say you're working two gigs, but perhaps you need a third. All money is good money....start hustling. Wait tables, tend bar, detail cars, paint houses...all kinds of work can fit into nights & evenings when you're not doing your "regular" jobs. Meanwhile, keep looking for a higher paying position. Commission sales isn't for everyone.
Also, stop spending money. Write out a monthly budget and stick to it. Brown bag lunches, no takeout, cancel the cable & highspeed internet, get a cheaper cell phone plan. Sell your car & get rid of the note: buy a fuel-efficient used car. None of this stuff is sexy, but it's what responsible adults do.
Posted on 12/1/14 at 9:46 am to LSUtigerME
The card is long cancelled. I recently talked to my bank about a loan because I got an email saying I had been pre-approved, but when I discussed it in person I was denied because of my debt - income ratio.
Posted on 12/1/14 at 9:49 am to Honest Tune
quote:
It's tiered. You sale 4,000/month you make 40% of that spread out over 4 months. $6,000 = 60% of that over 6 months. $8,000 = 80% over 8 months. You have to sale a lot of what I sale to make coin.
Still doesn't really tell me what a typical month is for you - you definitely have more of an income than debt problem, though.
Depending on how "small" the small car note is - I would do a Ramsey-style debt snowball on the smaller of the 2 balances - i.e. if the balance on the car is, say, $4,300 - then attack that until it is done, then roll onto the CC and attack it until it is done. I'm not sure if you can do that on $2,000 a month gross - without knowing a little bit more (I don't want to do your taxes or steal your identity, but if that bonus ends up being $10k to $12k in a year - that's one thing. If it's $3k or $4k, that's a horse of a different color - while I don't think you're bankrupt in the latter case, you'll seriously have to think about moving to a higher paying position.)
I'm fairly confident you can be completely out of debt in 20 months or so - but it requires a level of discipline that you are, perhaps, unaccustomed to. Bankruptcy will haunt you into your 40s - so I would say no to that, based on what you've given us.
If the debt was, say, $250k unsecured, plus a house, and you had a failed business - yeah, that sounds like Chapter 7 to me.
Posted on 12/1/14 at 9:52 am to Ace Midnight
Also wanted to suggest--reduce your housing expenses if at all possible. If you don't have a roommate, find one. Can you share housing with a relative or friend? I don't mean mooch: find someone in your life who could use the extra cash & sublet a bedroom & share expenses.
In short, you're trying to live a middle class lifestyle (separate house, car note) on poverty wages.
In short, you're trying to live a middle class lifestyle (separate house, car note) on poverty wages.
Posted on 12/1/14 at 9:52 am to Honest Tune
quote:
2 no's for talking to a bankruptcy attorney
It's a long term blot on your credit history which you appear to have valued.
You'd be shocked at how quickly you can pay down debt by controlling expenditure elsewhere and applying the extra money to the debt.
A 0% interest card is a good suggestion but it sounds like your credit history is fairly limited so I'm not sure if you can get a high enough balance to transfer everything. The Citi Simplicity card has 0% interest for 18 months on balance transfers. Paying $300 a month during that period would knock the debt down $5400. If you could possibly double your current payment you'd have the debt down to under $3000 after 18 months.
Posted on 12/1/14 at 9:53 am to hungryone
I just bought a 2012 ford focus. 26 miles to gallon. Have a 1998 F150 I use for hunting. I live in madisonville and drive to nola for work daily. I am cutting out all eating out, been taking lunch. Thinking about getting a bar tending gig, used to do it in college. I just broke up with my gf, so I'm saving money there. Aside from my car insurance, house rent/utilities, daughters school 170/month, child support 400/month, I really only have this cc looming over me.
Posted on 12/1/14 at 9:59 am to Honest Tune
quote:
I just bought a 2012 ford focus. 26 miles to gallon.
Okay, so you owe quite a bit on it, right?
quote:
Have a 1998 F150 I use for hunting.
Sell it and put the proceeds on the Focus (or the CC, if the balance is lower). If nothing else, you also save the insurance every month.
quote:
I live in madisonville and drive to nola for work daily
You can't be getting a good deal on rent in Madisonville - although I'm not sure Metairie would be a lot cheaper and certainly not safer, you might be able to find something a little closer and save you both time and gasoline.
quote:
daughters school 170/month
Is that your portion or the total bill? You realize that is about 8.5% of your gross income (base, anyway)?
quote:
400
And that's 20% - bankruptcy isn't going to help with any of your fundamental problems. You need a tighter budget (and I know that's easy for me to say) a debt snowball and, probably, a better job.
Cut cable to the bone, cut cellphone to the bone - the recurring expenses are cutting into your ability to reduce your debt. I'm not saying forever, but until you're solvent on a cashflow basis - once you're a little bit to the good on cashflow - barring a major catastrophe, you should be good.
This post was edited on 12/1/14 at 10:01 am
Posted on 12/1/14 at 10:05 am to Ace Midnight
I'm month 2 into this job, and, honestly, don't like it very much. That is my portion of my daughter's tuition. I pay her mother's half and take it out of the child support. I moved to Madisonville in July after 6 years in Nola. It was definitely a personal decision I am not too keen on my current gig, and am anticipating, very soon, moving to the construction supply sales full time. It's a friends business. Primarily out of BR but he is moving his portion to Nola. Just waiting on the warehouse contract to get finalized. Then I can better dictate my schedule for a second job, probably bartending.
Posted on 12/1/14 at 10:07 am to Ace Midnight
I don't have a cable bill. Don't watch tv. My phone bill is less than 100/month. I do spend more than I should on a good time in other places though. Got to make some cuts asap.
Posted on 12/1/14 at 10:08 am to Honest Tune
quote:
moving to the construction supply sales full time.
This looks like a good plan. From where I sit, your total income needs to look something like $4k monthly, gross, to get into the somewhat comfortable range - you'll still have to be tight with recurring expenses, but you can handle everything and save for retirement, comfortably, at that level. You're treading water right now and that is why it is understandable that you would discuss bankruptcy - the fact that it will solve virtually none of your problems, while incurring all the negatives of the proceedings, means you shouldn't do it - find another way.
Posted on 12/1/14 at 10:10 am to Ace Midnight
Yep, what ^^ he said. You can't afford insurance on two vehicles...sell the truck. Surely you have hunting buddies who own trucks and are willing to go with you. If you're paying on a hunting lease or paying to hunt with a club, let it go. Find a cheaper hobby. Spend the hours you'd sit in a deer stand or duck blind earning money instead. In a few years, when you can afford it, you can go back to hunting. (Or find free places to hunt.)
Bankruptcy won't get you out of child support & tuition. Think about it this way: you are a living example to that baby girl. Do you want her to grow up to be a hardworking person who pays her debts? She learns from watching the choices you make. You are charting a roadmap for her to follow on what it means to be an adult. Be a good dad and show her how to handle money by handling yours properly.
Bankruptcy won't get you out of child support & tuition. Think about it this way: you are a living example to that baby girl. Do you want her to grow up to be a hardworking person who pays her debts? She learns from watching the choices you make. You are charting a roadmap for her to follow on what it means to be an adult. Be a good dad and show her how to handle money by handling yours properly.
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