Finacial problems?

Question

I am in a really stressful position in my life right now and need some input on how to deal with it. For the first time in my life I am behind in my credit card payments. It has not gone to collections and I plan on trying to keep it that way. I ended up maxing my card out because I had no job so I was using it for gas for the car, toothpaste, food. I have been out of a job since January and got behind, my minimum payment is now 1,400.! I am employed now and will make enough money to pay it off eventually but until then what do I do? What would the best solution be?

Answer 1

The credit card companies are extremely hard to work with.  I found this out first hand when I had my identity stolen.  I would contact them and see if they will work out a repayment plan with you.  I assume that the interest rate has gone through the roof because of missed or late payments.  See if they will drop the interest rate down and work with you on the minimum payment.  If not, I would suggest checking out one of those companies that helps to lower your monthly payments.  If you google "Credit Counseling" you can get lots of info.  

Good Luck!

Answer 2

Restrict your expenses like moving to a cheaper apartment, cutting cable, cell phones, internet, and magazines to cheaper levels or dropped entirely.

Save on gas by shopping on the way home, but don't buy anything more than gas at high-priced convenience stores.

Look for additional work (not get-rich-quick-with-the-internet scams, but perhaps a weekend job) for a few months to make major headway in reducing your minimum payments and so more of your payments can go toward principal.

Look for savings in interest such as switching to signature loans or cards with lower rates.

Put all your extra payments toward paying off the cards with the highest interest rates.  That will save the most interest.  No matter which one you choose to make extra payments, you will lower your minimum payments, but you will lower them fastest by paying more on the ones that would add back the most interest.

Don't save anything in rainy day or retirement funds.  If the credit cards charge you 18% interest, then you will be hard pressed to beat that by putting your money in a savings account or the stock market.  Also, your rainy day fund will be the extra limit on your credit card and by paying off debt instead of investing it, you are creating that credit limit breathing room for rainy days and reducing risk of financial disaster.

Make a minor adjustment to your W-4 for less taxes taken out if you got a huge tax rebate last year.  That extra money going to the IRS earns no interest but if paid to the credit card companies, will save on your interest costs.

If your car breaks down, fix it.  Even payments on a new motor will be cheaper than payments on a new car.  Buying a new to you used car would still have high payments and some repairs so it is still cheaper to make credit card payments on car repairs than to buy another car.  Plus, every time you upgrade your car, your insurance will increase.