“Dear Steve,
I was in the military for a couple years, got used to plenty of extra spending money due to not having any rent or bills. I didn’t stop spending money once I got out so I ended up racking up the credit card bills. I’ve stoped using the cards for almost a year now so the spending isnt a problem anymore, would just like to get some tips to get out of debt with the least amount of interest charges and stuff.
2 Credit Cards: $7,000 and $6,000. plus two store cards $600 and $300. and car loan: $4,300. The min. payements all together run about $450, but would willing to pay about $700 a month, possibly more as soon as I can get a job. (unemployed, income is a military disablity check) My question is though, with that much debt would it be better in the long to just keep paying about double the min payment each month or should I get help with debt relief or something. (I don’t have any extra money each month, but I have friends and family that help me out with everything else so all my money is going towards the debt). I’m not planning on buying a house or anything that really requires good credit either for awhile (only 22, still planning on going to college with GI BILL).
Carolyn”
Dear Carolyn,
You might want to check and see if the interest rates on your cards can be reduced significantly in a credit counseling program. Click here for credit counseling information.
If not then use the debt snowball method to tackle your debt right now. But if you have $700 a month to use for debt repayment I’d rather like to see you use $600 towards the debts and put $100 a month into savings to build up an emergency fund.
The path to really good credit does not happen overnight. It takes time. So we need to plan now to make sure you have good credit in the future. Have you been current with your credit cards? If so you might want to consider not including them in a credit counseling program so they are not closed. If you keep them open and keep paying them off on time then they will help you to have a higher credit score when you need it.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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Thank you! Thats exactly what I was thinking with starting an emergency fund along with paying as much of the bills as possible. I’ve seen so many of those get out of debt commercials and stuff, I just wasn’t sure if that was such a good idea. I would rather be on a tight budget for a couple years then have horrible credit for even longer. Plus I feel like the longer I have to go through the pain of seeing so much money go towards it the less likely I will be to act so carelessly with credit cards in the future!
Carolyn,
Follow that plan and you’ll be fine.
Steve