I'm in Debt, what now?

Do you have Debt, I Do, more than I want.

I hear it all the time, and I am no expert at Debt Relief. I personally have a over $24,000 in Debt of which only $10,000 is for a car payment. This debt is burden and weighs heavy on my mental health. Do you not budget because you are worried to see how much money you don't have? Budgeting is the key to knowing how much debt you can afford to pay off. But if you are like me, you just want to make your monthly payments and forget how much you actually owe.

Good Intentions, Bad Execution.

About a year ago I got an AMEX Credit Card (American Express). With the intention to Pay monthly bills with the card, and pay it off each month. This worked out for about 3 months. I was getting crazy rewards and earning cash back, everything seemed perfect. Until I started using the credit card on Amazon to purchase things that I would normally save up for. Like 5 Raspberry Pi computers, to play around with making a small super computer. This purchase totaled over $200, money I didn't budget or save up. Now I owe American Express a couple thousand for purchasing things I didn't really have money to buy right then.

Payoff Credit Cards First. Or Consolidate.

Again, I am no expert. But, Credit Cards have insane Interest Rates, Some around 22% to 28%. These should be paid off first. Then worry about other debt like car loans. Lets say you owe $1,000 to Capital One, and $4,000 to BarclayCard US, and add $17,000 on a car loan. This could result in monthly payments of $65, $170, & $350 respectively. That is a lot of money to pay out monthly, and could limit your ability to save money for future purchases or for an emergency fund. Focus paying additional on the Capital One card, you will never pay off a Credit Card paying the Minimum Payment. That is usually just Interest, basically a fee for owing the Credit Company.

After the Capital One (The smallest debt) is paid off, add that $65 you were paying to Capital One to the Payment to BarclayCard. Now you should be reducing that debt more quickly.

Consolidation can help a lot too.

With the previous example, you owe $5,000 in high interest Credit Card Debt. Probably around 22% interest. A way to reduce the interest is to get a Debt Consolidation Loan. I did this for my credit card debt of $6,000 and even consolidated a car payment into it. The consolidation loan totaled $17,000 at 10.99% interest, which is better than the Credit Card interest alone. Bringing my monthly payments to $450 to a single debt, instead of $200 to BarclayCard, $150 to Capital One, and $370 to Ford Credit. That is $720 per month that I was paying, and barely making a dent in my debt. Now I am paying the $450 and most of it goes to paying off the debt, and little to interest. Now if I continued to pay the $720 on the loan, instead of the $450, I can have the debt gone in just a couple years, instead of the 4 years, which the term of the loan is.

Debt reduction.

In some cases, you might be able to have your debt reduced. This is especially true if the Debt is owed to Debt Collection Agencies. I have not done this personally, but I know it is possible. There are companies and organizations which work on your behalf to reduce your debt, in turn for a set fee. It seems likea good idea, pay something like $60 or even $200 to reduce your debt by $2,000. This is all figurative of course.

My Plan!

Here is my plan, and it is working:

  • Consolidate Debt (Reduce monthly payment, & Interest)
  • Pay down extra each month (The old payment totals)
  • Save Emergency Money
  • Cancel Credit Cards


Interested in Debt Consolidation? Give these guys a try.