We Want to Start Paying Back Old Debt From Six Years Ago. – Jen
 | By Steve Rhode Ask me your question. |
|
Jen wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty. If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help.
“Dear Steve,
Well we are young (24)married, and make good money, also live above our means a bit. depending on where you live this may sound high to you, but we make 70k a year, and about 4-7k per month varying. well it wasnt always this way, back when we were 18 my hubby got a truck re-posessed and into some debt. cell phones bounced checks, ect ect and they just blew up the bill after a few years of course. we knew we would pay them off someday and until then its a big burden on our credit. he did pay off the truck they took, but the remaining debt is about 3-4k. we were young and didnt make much then. we opened several credit cards ….all of which are maxed out still. most only have 200 or 300 limits and they charged it with 100 bucks in the first place to open them.
Well 6 years later now, and were finally making good money for about 2 years. weve been living on our own, and i guess above our means. i dont know what people normally spend per month, but our cost of living for an average month is all of it. lol.
We get paid once a month, so we often run out and pay a lot of fees to the bank, or loans for money back. really our cost of living is about 4k a month, and then sometimes we have nothing left, and rarely we will have 1-2k extra, which we spend on going out, vacation, our baby, ect ect ect.
This year we did our taxes and realized we owe 9k to the irs. we didnt really know what to expect when becoming self employed, but we owe a lot. So as of this month we pay 2k a month to irs, and our paycheck just got was 4k. thats half gone. were barely gonna pull thru this month. we are also trying to buy a house while prices are down, but credit is an issue. with that old debt from 18 years old on there. we’d like to pay it off, but arent sure if we can even afford it now! or the best way to go about it. i mean should we call them directly and negotiate? lump sum, or monthly payments? should we call a debt consolidation agency and try and do all of them on monthly payments?? or are they just an extra cost becasue you could call directly and do it yourself?
Jen”
Dear Jen,
I think before you contact anybody or do anything you should first concentrate on opening a savings account and building up cash to cover you in an emergency. I’d like to see at least $10,000 in that account as a cushion since you have little or no access to credit. If an emergency arises you will probably have to pay cash.
Building up a cash account will also let you save money to use to resolve these old debts when you can afford it. Just go and open a savings account at your bank or online with a group like ING. Start depositing a regular amount in that account each month, If you could put $1,000 a month in after you take care of the IRS issue, that would be a good start. Be sure to pay yourself first each month and put the money in savings in the account as soon as you get paid. Otherwise, the money will vanish into miscellaneous expenses.
Until you build up some cash reserves I think it would be a mistake to launch into any repayment of a big old debt.
Big hug.
Source: We Want to Start Paying Back Old Debt From Six Years Ago. – Jen
Other Related Articles to Read
Comments
Comment by Jen Steve,
well they dont really hastle us, no collection companies calling all the time or anything, but they do send letters once in awhile offering payment plans or lump sum options. problem being that we owe to several different companies and we dont know who has added all there fees and interest, and who hasnt, as far as their payment plan options go, and there are so many, i wondered about going with a company that can consolidate all the payments into one, or a lump sum. but lump sums with the diff companies wouldnt be so hard, just add them together. with the payments i dont know what to expect with the interest. anyhow, i do belive most of them have done there damage. most are from age 18, but 1
or 2 are from within the last 4 years. i didnt think about/know that they will take them off his credit report after 7 years. its been 6 so were getting close on that. that will help emencly if it happens. so since were not too bothered yes i beleive we can save until we have a good chunk of funds available, and deal with it then. i just want to deal with all of it at once and clear our past. ok well thanks! and i will contact you when we save up some.
Jen
Leave a comment
Do You Have a Get Out of Debt Question You Want to Ask?
I'm happy to answer any question you have about how to get out of debt, as honestly as possible by sharing with you my experience and truth that I learned from helping thousands of people to get out of debt. Don't be shy, if you need help, ask now, click here.And if you want to follow the latest questions and answers, just subscribe to my site RSS feed or get the email newsletter for free.
Thanks for the fast response Steve! relaly appreciate it. good advise! we had to pay the IRS now….so will continue to do that till next year. and we are going to buy a home this year, for the tax credit as we need it on next years taxes, but our loan guy is getting us pre-approved with the debt from 6 years ago. he has looked past that and more to our income and stability of it, having the same job for 6 years.this shouldnt hurt our situation any worse as the mortgage payment is the same or LOWER than rent in most cases. especially since we are moving cities to a much more affordable one, sonoma is soo expensive and vallejo is much cheaper. and then come january we will start a savings. and when we feel we have enough in there, take the next step to pay off old debts, and also our current credit cards which are maxed out. at that point do you think we should try debt consolidation, or call them driectly and set up lump payment or monthly payments?
Jen
[Reply to This Comment]
Steve Rhode Reply:
July 17th, 2009 at 2:02 pm
Jen,
If they don’t hassle you till you are able to save up the funds, just wait to do a lump-sum payment. It’s just easier and whatever damage has been done by this old debt is already done.
When you get at least 60% of the funds together to pay off that old debt come back and contact me. Let’s see what options exist then to resolve this old issue.
Of course, after 7 years it will fall off your credit report. They could still try to collect anyway.
Does this sound like a reasonable game plan to you?
Steve
[Reply to This Comment]