How do I get out of these debt situations?

Question

Don't ask why I have a dell computer that I've been paying $42/month for the past 4 years...and they say ignorance is bliss; not in this case. The messed up part is I still owe like $1,000 on it. I think original price was around $2,500...don't really remember. All I know is I don't wanna pay for this computer anymore. Also I have a 2004 saab. I love this car but me and the car note don't get along. I'm upside down like $5,000. I want as many suggestions as possible (positive and negative).

Answer 1

Stop buying things on credit and get a better job to pay off your bills faster.

Answer 2

You have to start budgeting.  Analyze your financial situations.  How much bills do you need to settle per month? And how much money do you make?  Of course, you have to consider your other outright expenses like gas, food, rent, etc.

Learn more about how to get out of debt:  http://www.happygodebtfree.com

Answer 3

With regret, I don't think you can get out of these debts. If you just quit paying, they'll put the notes in the hands of one of those nasty companies that pester you with calls all the time and make your life miserable, plus it hurts your credit anyway. I'd suggest grin and bear it, pay the things and get on with it.

Answer 4

Really you have two options.  Pay off the debt or declare bankruptcy.  Personally, I don't think $6000.00 is worth the negative effects a bankruptcy will have on your credit but you have to make that decision for yourself.  If you are upside down on a loan selling the item will help you bring down what you owe but you will still need to pay it off.  You can contact a consumer credit agency and they may be able to help you lower your monthly payments but it will lower your credit score (you will have a slow pay rating on your credit report). As far as not wanting to pay for it, you incurred the debt so.....  Good luck to you!

Answer 5

I am glad you recognize you have made some mistakes. That really is the hardest part of getting out of these situations. There is not much you can do to avoid taking a hit but getting these issues resolved sooner than later will minimize the extent. First of all, on the computer, is it rent to own? or are you just buying it by making payments? If it is rent-to-own give it back. For $1000 you can buy a better computer than that 2004 model. If you are buying it and can't just give it back without damaging your credit, Make higher payments each month. This will reduce financing charges and make it somewhat cheaper then just paying the minimums.

For the car, again I suggest making higher than minimum payments. Make the payment as usual then whatever else you can afford straight to the principal balance. You can also try selling the car for what is owed or in a take over payment fashion. You will have to talk to your lender and get specifics on this.  

Answer 6

You may want to reevaluate how you approach spending.  Do what millionaire do and find a way to live off 50-60% of what you take home.  10% is given to charity.  Another 10% is saved.  Focus on eliminating debt with a systematic approach, let's say 10% of your net income towards extra payments.  Then, start setting up a second savings account to stash another 10% away for things that you would like to save towards so that you are not buying things BEFORE you can afford them.  Then you live off the 60% that remains.  If you can't, then look for ways to scale back on your spending and simplify your life.  

Answer 7

I would try to get a personal loan and consolidate your debt, that will drop your interest rate quite a bit. If credit is an issue look at local credit unions which factor in more then just your credit score.

Answer 8

Figure out how to send in more money each month on the computer.  

Figure out how to send in more money each month for the car. (Note, read your loan docs carefully.  A few car loans that are for less than 5 years are "covered by the rule of 78"--in which case extra payments may not actually get counted as early.  I had one and discovered that I was better off saving up the money in my savings account and paying off the entire car at one time.)

Get a 2nd job if necessary.

Except for a house, you should never have a loan that lasts longer than 2-3 years.  (My last computer lasted 6 years.  Wouldn't it be horrible if your computer died the day after the last payment?)