David Writes In “I’m About To Lose My House”
David wrote to me at GetOutOfDebt.org and asked me for help with his debt situation. If you have a question, you can ask me for free help and advice also.
“Dear Steve,
I accepted a job in Seattle. My wife and family and home are still in Idaho. My wife is on a fixed income, and we have been hanging on by a thread for the last 6 months. I was just laid off.
Our house payment is killing us. Is there a source for grants for people in tough situations
We have to sell our house but cannot drop the price. Are there sources of grants available.
David”
Dear David,
The only time I have seen any sort of money really available in a situation like this has been for union members, check with your trade union if you belong to one, or for current employees of large companies with support services like the Clara Abbott Foundation, an awesome resource for Abbott employees.
From what you’ve shared it sounds like you have fallen into the headlines on the nightly news and become subject of something much larger than you as an individual.
Your situation is typical with 10,000 foreclosures a day happening as I write this. Those 10,000 homes belong to families just like yours. They belong to people who have found themselves in impossible situations without seemingly any way out.
I would encourage you to contact your mortgage company and explain to them what has happened. Who knows, maybe you’ll be one of the one in ten that actually gets meaningful help from the mortgage company and get your loan modified so that you can actually afford it.
You don’t need to worry about being honest with them about your situation, they will discover soon enough that your ship is sinking fast.
The three most realistic solutions here are:
- Increase Income - I know, easier said than done. But use the job bank page I put together. It is a free service that helps you to identify open jobs in any state. Income now will bridge that gap.
- Bankruptcy - Bankruptcy won’t make your home payment for you but it will allow you to eliminate your debt and obligations for a home that you simply may not be able to afford right now. Finding a bankruptcy attorney and getting a free bankruptcy review is always a smart thing to do.
- Pay Only What You Can Afford On The Mortgage Right Now - I know, you’re probably saying I’m crazy for saying that but read on. If there is not enough money coming in to make a full mortgage payment you can always send in what you can afford to pay. Now that partial payment will put you behind but at least by sending in what you can afford now it will reduce the amount you’ll have to catch up once you get another job.
The partial payment will put you in default and hurt your credit report and credit score but as long as you are open, honest, and not a jerk with your lender then your past due mortgage will begin to flow through the normal process for delinquent mortgages. That will buy you some time to find a new job.
Once you are behind on the mortgage then the lender may be more willing to talk about solutions for your mortgage situation. As long as you are current on your loan, lenders don’t want to tell you what they can do for you, they want you to make the regular loan payment.
With the number of past due mortgages flooding the lenders, yours will just be another in the stack. They will not take your home this month or next month or maybe for many months.
Use that time to make a job of getting a job and spend eight hours a day looking. Try temporary companies, the job board link I gave you or one of the other many places online.
You can keep your spirits up to face the hard task of looking for a job if you draw a line in the sand and agree to evaluate your situation again in say 60 days. Until then, pay what you can really afford, don’t overpay, on the mortgage and hunt, hunt, hunt for that new job with optimism and hope.
While the economic conditions sound dire in the news, the unemployment rate is still relatively low and jobs can be found.
Please come back and let us all know how things turn out.
Big hug.
Steve
Charlotte Writes In, “I’m Desperate To Get Out of Debt”
Charlotte wrote to me at GetOutOfDebt.org and asked for free advice and help, which I gladly give. You can write me using the forms on the site.
“Steve,
I owe nearly $20,000 on a loan, a bunch of credit cards and some store cards as well. I’m 27 and I still live with my parents because I just can’t get ahead.
I can’t pay my bills, live on my own, or have my own life until I can get ride of this debt.
This must be my fault because I don’t work hard enough. My 22 hour a week job is a joy and I don’t want to quit but I want to make more money.
I’ve worked full time before and the thought of going back to a full time job I will hate makes me so depressed.
You see I want to be a writer and I spend a lot of time trying to become one.
I want to do something I love, but to get there I have to invest the time and find a way to be able to afford to do what I want to do. Some days feel hopeless, most days actually.”
Dear Charlotte,
Thank you for writing me.
Rather than look at your situation as hopeless, it actually looks like there is some hope.
Sure, being 27 and living at home with the parents is a downer. It can feel oppressive and that you have no life of your own. That is actually your reality at the moment, but rather than look at it as a curse, your sentence or punishment, why not just look at it as your cross to bear right now on your path to a better future.
The vast majority of writers make little to no money. We write because we love to write. Some are elegant, talented and poetic writers. Others are like me. LOL
Just the other day I was telling someone that the reason I had some jobs that I hated, was not the attitude of the job, it was my attitude. I did not want to be there because I certainly deserved to be some place else having more fun. That was silly thinking. I was not hired for my enjoyment, I was hired to do whatever my employer wanted me to do during my alloted time.
“You want coffee?”
“With cream and sugar?”, should have been my response.
Finding something that you love to do is a rare experience for many. Instead they hate their jobs, have nothing joyful to pursue, are dissatisfied with their families and spouse and just all around nasty bags of bones and flesh.
That doesn’t have to be you. You don’t have to give up your dreams to pursue a different future. If anything, maybe just a bit of rearranging is in order.
My suggestion would be to rearrange your life by getting a full time job, adopt a mental attitude that this job is helping you to achieve your dreams, move out, get a roommate, focus on saving money and write, write, write.
There is plenty of time to write if it is your love and passion. I wrote a book in three days on a trip once. If you are passionate about writing and you’ve got something to say, you will be able to write, even after a tough 40 work week.
The pivotal moment for you is if these uncomfortable facets of your current life become excuses that hold you back rather than hurdles to overcome. I say make them hurdles that you’ll cross.
Until you do begin to achieve some of your goals, like moving out or writing professionally it would not surprise me at all if you made little to no progress of reducing your debt. Your debt will ebb and flow with your emotional outlook on your life does. When you think it is bleak you will most likely unconsciously spend to cheer yourself up. And when you are feeling better about the future you will lament about the size of your debt and it will feel hopeless.
The debt is the debt. Stop going further into debt, tread water till you can make some life changes and develop a path that will lead you to a better outlook and that will lead you to success. When you do make these changes it will be easy to face tomorrow and do what you have to do to get out of debt and look forward to your real and authentic life.
Big hug.
Steve
Mark Writes In “I Need to Go Bankrupt in the UK”
Mark wrote in about his financial situation.
“Hi Steve,
My wife and I need help. Since 2001 we’ve been living in the U.S. and we’ve just got our green cards. We moved to the U.S. from the UK and for years I’ve been struggling to pay back debt there using dollars to pay back British pounds. The conversion rate has not been in my favor.
I do not have any property or belongings in the U.K.
I’ve used up all my savings now and don’t have any more money to send back to the UK to pay these debts. I’ve only been able to pay about £100 a month on £25,000 worth of debt. What should I do?”
Mark,
If you had lived in the United States, or anywhere outside the UK for less than three years, you could have still gone bankrupt in the UK using a foreign bankruptcy service.
But since you’ve been gone longer, bankruptcy back in the UK is no longer an option.
You have a few of options.
- You could make payment arrangements the UK creditors but that makes it hard to pay off £ with $. But as you have learned, a repayment plan without an expectation that it will resolve the situation only drains you of cash and does not eliminate the debt.
- You could speak with a US bankruptcy attorney and consider a US bankruptcy and include your UK debts. There are more cross border bankruptcies these days.
- You could do nothing, stop paying the UK debt and then deal with any creditor that comes after you in the US.
As silly as it sounds, option 3 might be the best at this time, certainly making more payments isn’t going to help at all. But I would still suggest speaking with a US bankruptcy attorney to learn about how that solution may help you.
Any more payments to creditors, I’m afraid, is just going to be throwing more good money after bad.
Big hug.
Steve
Jess Writes In “My Mobile Home Has a Hole In It”
Jess used the form at the bottom of this post to send in the following question.
“My babies mother and I have lived in a mobile home for the past three years. We had been having a tough time making the payments for the truck. Just last week we found some water damage in the floor of our mobile home and on the same day I accidently blew a hole in the roof when my shotgun accidently went off. What are we going to do, we don’t have insurance or money to fix it?”
Jess,
Wow!
I appreciate the tough question and I’ll help the best I can.
When people are facing tough times and they don’t have two pennies to rub together to their name they often turn to families, friends, church or religious congregation for assistance.
With a little help from you friends you might just be able to repair the damage to the mobile home yourself, or at least good enough to get by.
It is natural for many to feel hesitant about asking for help or seeking help, especially at times when they might feel embarrassed or ashamed.
But don’t look at your situation as a negative. Maybe this is just your opportunity to ask for help now and be available to help someone else that needs your assistance at some point in the future.
The good news is that most mobile homes are fairly easy to repair so someone with a little carpentry experience and some free hours will be able to make the repairs. Now, the worst thing you could do is not work harder than those that might help you to make this situation better.
If people are going to lend you a hand, do what you can to help them to help you.
- Set a time for people to come help that works best for them, not you.
- Have all the tools or supplies they might need to make the repairs. If you can’t afford supplies and they are bringing some, make room for them to put them when they get to your place.
- Have some drinks and snacks on hand to nourish the helpers.
- While they are working to help you, get and do anything they ask or need to help accomplish the task.
- Don’t forget to say thank you for their help before, during and after it is all over.
All of those things above you can do at little to no expense on your part but it will show those helping you that you are rich with appreciation and grateful for their help.
Thanks for writing in and asking for my help.
Steve
Janie Writes in “Are Debt Counselors Safe?”
Janie wrote me and asked me the following question:
“I’m running into deep debt and I’m thinking of using one of the debt counselors I’ve seen on my local television station to help me get out of debt. Are they safe?”
Janie,
Well you’ve come to the right place for an expert answer. If you are concerned about the safety of your money, the answer is almost always yes, your money is safe with a debt counselor. While there have been some horror stories of a few debt counseling groups losing client funds because some employee stole them, that is the exception. In that case the company insurance policy should provide restitution for employee theft.
People always want to know if the debt counselor is going to run off with their monthly payment. Logically it does not make sense for the company to do that. Your monthly payment is probably so small that it would be illogical for the company to ruin their reputation and risk legal action over that.
I’ve never seen a company skip town over a monthly payment from a client of $500. That just does not happen.
There are things you can do to safeguard your money.
- Watch your creditor statements and look for your payment from the debt counselor made to the creditor.
- If the debt counselor has an online resource for you to check your account, logon and check the status of your payment.
- Ask the debt counselors for an itemization of the payments they have made on your behalf.
Big hug.
Steve
5 Ways to Cut Spending (without cramping your lifestyle)
James contacted me recently and wanted to contribute this guest post for the site. “Sure!”, I said. If you would like to contribute a guest post, bring it on, just contact me.
The web is full of advice on spending less. It’s just a shame that most tips involve doing without – no more holidays, no more car, no more social life…
Yet the expression ‘no pain, no gain’ isn’t always relevant. There are plenty of ways to save cash without missing out on the good things in life. We’ve put together a few examples. They won’t change your life, but they might just prove a point – that you can cut your costs without cramping your lifestyle.
Tip #1 – Trade your skills
Money isn’t the only way to pay for things. Your skills and your time could be valuable commodities. What if you could ‘pay’ your baby-sitter by mowing their lawn twice? Or do someone’s ironing in return for two lifts to the shops?
You could organize swaps with your family, friends and neighbors. The more people you get involved, the easier it should be to find someone who has something you want – and wants something you have.
Tip #2 – Shun the shops
How often do you go food shopping? Would you be able to go half as often and bring back twice as much each time? If you think you can, it’s well worth trying out.
Say you shop once a week and spend $20 per visit on things you don’t really need. If you shopped every two weeks, you probably wouldn’t be comfortable ‘wasting’ any more on impulse buys per visit, so this could be an easy way to save $40 a month.
Plus, you’re more likely to stick to what you really need when you’re buying more – when you’re forced to pay attention to the size and weight of your shopping, whether you’re fitting it in the car or carrying it home on foot.
Tip #3 – Try something new
On the subject of shops, it’s no secret that discount supermarkets tend to do well during hard times. The mother of Karl and Theo Albrecht (as in ALbrecht Discount, better known as ALDI) is reputed to have said “The worse off the people are, the better off we are”.
Many people turn to discount shops – as well as supermarkets’ own brands – during times of economic hardship, and stick with them once times are good again!
Hide the labels and there’s a good chance you couldn’t tell the expensive version from the cheap one anyway. If you’re looking for objective proof, you’ll need to cook two similar meals – one using cheaper ingredients, the other using more expensive ingredients. Try them out and see if your guests can tell which one cost more.
Tip #4 – Who needs cash?
Books, PCs, games, clothes… The computer game you sell to a second-hand store for £2 could sell for £10 the next day.
The age-old tradition of bartering could deliver much better results. If anyone you know has (for example) the same games console, shoe size or taste in books as you, you could trade your items directly and cut out the middle man altogether.
It’s the kind of thing that the internet could really accelerate – one e-mail to your family and friends could easily reach your family’s friends, your friends’ families and so on. The more people get involved, the greater the variety you’ll all have to choose from.
Tip #5 – Don’t judge a book by its cover
Dented tins and ripped labels can be your ticket to good food at a good price. They won’t change the taste, but there’s a strong chance they’ll affect the cost.
Many supermarkets keep a ‘bargain bin’ where they can sell off slightly damaged goods. It’s often near the end of the shop, so it might be worth taking a different path around the shop and checking out the bargains before you move on to the rows and rows of normal prices.
Over to you
These are just five simple ideas. You might like one of them, or all, or none! Hopefully, they might get you thinking about other small changes that could make a big difference to your budget but not your lifestyle.
Whatever kind of debt you’re dealing with – and whether you’re going it alone or receiving debt help from a financial specialist – cutting back on your spending is one of the most important changes you’ll have to make. Why not make it as painless as possible?
Five Inside Truths About Debt Management Plans (DMP) You Need to Know
People are often so confused or uninformed about debt management plans in the US that I wanted to share some truths with you. Here are the five biggest misconceptions people have about debt management plans, in no particular order.
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Debt Management Plans Are Not Designed for You to Get Out of Debt
Since the DMP terms are really dictated by the creditors a debt management plan is not really designed to get you out of debt.
A true get out of debt plan would be created using your circumstances as the starting point and then crafting a plan to allow you to get out of debt from your starting point.
The DMPs of today, with creditor dictated terms, doesn’t work like that. It tries to get you out of debt using what the creditor wants as the starting point.
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Debt Management Plans From a Not-Profit Credit Counseling Group Are Not Better
A debt management plan from a nonprofit, non-profit or not-for-profit charity is not any better or worse than from a commercial or for-profit company. Being a nonprofit credit counseling group does not change the basic security measures necessary for a safe debt management plan.
A nonprofit charity like a consumer credit counseling office is not much different than a commercial company. Except for the following major issues.
The nonprofit credit counseling company gets paid for collecting money from you on behalf of your creditors and does not want to “rock that boat” and fight back against creditors if that will reduce their favor or funding.
The nonprofit credit counseling company “pretends” for the most part to be a charity when in fact they generate the majority of their income as debt collectors.
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Most People Don’t Get Out of Debt Using a Debt Management Plan
The majority of people that participate in debt management plans do not make it to completion and thus do not get out of debt using a debt management plan. This is not really a fault of the DMP provider but that a debt management plan takes years to complete and the debtors circumstances can change along the way.
The majority of Chapter 13 bankruptcy plans fail to complete as well for the exact same reasons. The failure of debt management programs is due to life and time, primarily.
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Bankruptcy is Often Better Than a Debt Management Plan
Strictly from a time point of view, bankruptcy can be a better option. When you file bankruptcy the credit report recovery clock starts ticking immediately. In a debt management plan the history of you plan and payments can remain for longer since it can be reported from the date of your last payment.
Bankruptcy also allows many to get a fresh start and a second chance to start over. Recovering from a bankruptcy is hard but not impossible and the breathing room people get after bankruptcy is often just what they need to move forward, faster.
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Paying For Help to Get Out of Debt is Good
The charitable debt management industry fails to inform you that they are paid by the creditors to collect money from you. There is no way around the fact that this can cloud their assistance because they are trying to please their pay masters and the clients at the same time. Which do you think gets the higher priority?
When you pay for debt help the company you hire is motivated to work for you. You are the client and there is no confusion about who the allegiance is owed to.
