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Debt advice - Bankruptcy or keep chugging along?

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I am looking for some advice. I am able to make all of my payments, but I feel like I'm spinning my wheels and getting nowhere. At the end of the month, I have approx. $290 leftover as "discretionary income", but this goes towards gas, groceries, etc. Any extra cash I get, I throw at my debt, but that means I have $0 to add to my savings. Since I have $0 savings, anytime I have an emergency (like a medical issue), I end up having to put it on a credit card, pushing me futher into debt. I would like to avoid bankruptcy, because I don't want to lose my car or house. With $16k in credit card debit alone, I'm wondering if that's my best option though? I know my federal student loans will keep haunting me for life regardless, so I'm honestly just paying the bare minimum to avoid harrasment/garnishments. I'm also practically underwater on my car. . . I was quoted it's worth at $6,900.  

 

  CC 1 CC 2 CC 3 CC 4 Car Loan Personal Loan Federal Student Loans Mortgage Total Debt
Balance $8,462 $4,673 $2,267 $1,230 $7,508 $8,099 $59,850 $101,358 $193,447
Interest Rates 18.00% 0.00% 23.15% 23.99%          
Payments per Month $150 $100 $70 $40 $295 $328 $217 $730 $1,930.00
Utilities, etc. per Month                 $580.00
Bring Home $$ per Month                 $2,800.00
Leftover                 $290.00

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What are the limits on the four cards and how much time is left on the 0% offer?  What is the go-to rate on that one? 

 

Also, what is the APR on your car note?  You are not as underwater as some, nay many, that people like Marv probably see on a daily basis. 

 

With what you have put forth, which by the way is better insight than many in your position have come to CB with, there is light at the end of the tunnel.  A few more pieces of the puzzle would help though, as it may be possible to shift some of the load.  It would not free up a ton of funds for a year or so, but it WOULD clear at least one of those cards within the year...

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Beyond solutions for your debt payments, how ruthlessly have you chopped household expenses?  

 

Which bills does "utilities, etc" for $580 cover?  

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Hi Centex + cv91915. Thank you both for the responses. Here are my limits and interest rates. the 0% APR card is only good until October 2020, then it'll be 7.99%.  Hearing that I'm not THAT underwater on my makes me feel a little better, but I do have 112,000 miles on it.

 

  Balance Interest Limit
CC1 $ 8,462 18.00% $ 12,100
CC2 $ 4,673 0.00% $ 25,000
CC3 $ 2,267 23.15% $ 7,000
CC4 $ 1,230 23.99% $ 5,500
Car Loan $ 7,508 3.39%  
Personal Loan $ 8,099 11.99%  

 

Here is a breakdown of my utilities, etc. 

 

Water $45
Electric $110
Trash/Recycling $25
Internet $70
Cell phone $110
Car Insurance $160
Pet Insurance $60
  $580

 

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$70 for internet is a lot!  I work from home and spend much of the day on Skype meetings (audio and video) and have a VOIP phone line, and I have 10 Mbps service by choice (I'd still have 5 Mbps, but my ISP stopped offering it).  Works flawlessly.  It's fine for streaming as well.  

 

That internet bill is $44.99/month, which is obscene for a basic connection, but there is only one ISP wired into my neighborhood.  (We have 30 Mbps at our other home for $34.99 a month).

 

$110 for a cell phone is a lot!  I have both of my parents and my aunt on a 3-line Consumer Cellular plan for $68/month with tax.  Service is AT&T.  They don't use much data (~2 GB/month) but most data use is discretionary.

 

When is the last time you shopped your car insurance?  Literally 45 minutes ago I switched our California auto policy (one vehicle) to Esurance and went from $1,376/year to $899.  

 

I recently tried to convince a friend that pet insurance is a luxury (because it's attached to a pet, which is 100% a luxury), but of all of my comments I suspect you too will be most resistant to this specific piece of feedback.  :) 

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Sorry, foggy memory on the $34.99 internet service.

 

We were at ~$45 a month for 30 Mbps before we called the ISP's retention line a couple of months ago.  

 

They upgraded us to 100 Mbps and dropped the price by $10/month to keep our business.

 

 

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3 hours ago, Joolie567 said:

Hi Centex + cv91915. Thank you both for the responses. Here are my limits and interest rates. the 0% APR card is only good until October 2020, then it'll be 7.99%.  Hearing that I'm not THAT underwater on my makes me feel a little better, but I do have 112,000 miles on it.

 

 

  Balance Interest Limit
CC1 $ 8,462 18.00% $ 12,100
CC2 $ 4,673 0.00% $ 25,000
CC3 $ 2,267 23.15% $ 7,000
CC4 $ 1,230 23.99% $ 5,500
Car Loan $ 7,508 3.39%  
Personal Loan $ 8,099 11.99%  

 

Here is a breakdown of my utilities, etc. 

 

 

Water $45
Electric $110
Trash/Recycling $25
Internet $70
Cell phone $110
Car Insurance $160
Pet Insurance $60
  $580

 

With a go-to rate of only 7.99%, it may be worth looking at putting the balances of CC1, CC3 and CC4 onto CC2.  That would bring the balance of CC2 to somewhere around $17K depending on fees.  Utilization on the card would be around 70% and cause a score hit.  However, it recovers somewhat once the three zeroed balances have posted, since you then only have one of four cards reporting a balance (another component in utilization scoring).  If we presume a 2% minimum, that brings CC2 in around $340 per month.  Savings are not huge right off the bat, but it ALSO means you would be spending FAR less on interest each month, even at a go-to rate at the end of the promo. 

 

It ALSO cannot be overlooked that the three cards you just zeroed out might send out their OWN BT offers, allowing you to play the balance transfer arbitrage game, provided the fees don't offset the other savings.  Also to be considered would be including the personal loan into a good BT offer.  It IS somewhat of a shell game, but clears THAT amount and, if able to incorporate into the high-limit card at a good BT rate, frees up a few hundred per month that can be shoved to the car.

 

Once the car has been paid off, look at insurance coverages...comprehensive should always be kept IMO, but collision tends to be a tax on eventual stupidity since so many of those claims are solo accidents where the owner wrecked their own vehicle. 

 

I would be wary of changing companies unless you are already with one of the shadier ones (ie. Progressive or GEICO) that screws their customers over if there is a claim.  Those cheaper rates carry a hidden consequence...

 

I understand the WHY of pet insurance, but unless an animal is prone to issues, that is almost pure juice for the insurance carrier.  It may be worth re-evaluating whether it makes sense to keep that payment.  That IS an extra $60 each month that could be used to pay down the vehicle...and the sooner the vehicle is free and clear is the sooner you can eliminate some of the coverage on the vehicle insurance. 

 

The other option on the cards, now that we know what the balance was on each relative to the limits, is to see about getting a new card with a good BT offer...

 

On the student loan...are you in a position to where a re-fi would serve to reduce the monthly nut?  The other advantage to a refi is that it buys a month or two where no payment is being made.  This obviously means interest is accumulating, but sometimes that breathing room of six weeks or so may be worth the hundred or two being paid on the back-end...

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On 2/24/2020 at 10:22 AM, cv91915 said:

I recently tried to convince a friend that pet insurance is a luxury (because it's attached to a pet, which is 100% a luxury), but of all of my comments I suspect you too will be most resistant to this specific piece of feedback.  :) 

Pets are like children in the fact children are a luxury item also.

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Thank you, Centex, for the awesome tips! I hadn't thought about shell-gaming my debt, but I do see that I'll save a bit since it'd be 1.99% vs. 26.99% for 12 months. On the downside, CC1, my highest balance card, is held at the same bank as CC2 with the 0% interest rate, and they won't let me do an internal balance transfer. I like the idea of waiting or looking for another external balance transfer offer, so I'm going to keep my eye out for that. 

 

My student loans are all federal, and in looking into refinancing, my monthly payment would jump from $217 to almost $400. Right now, I need the lower monthly payment, so I'm going to just keep riding it out as is until I'm at a point I can try to refinance. I looked at my statement the other day and of the $217 I pay, only $11 went to the principal, the rest went to interest. CRAZY.

 

To me, the pet insurance is worth it, and I'd honestly go bankrupt or sell everything before giving up my doggo. Go ahead and rip me for that, but for $60/month, I get 2 free comprehensive exams a year, he gets all his vaccines, and flea/heartworm prevention. He's my buddy and keeps me sane, so the least I can do is keep him healthy :)

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4 hours ago, Joolie567 said:

Thank you, Centex, for the awesome tips! I hadn't thought about shell-gaming my debt, but I do see that I'll save a bit since it'd be 1.99% vs. 26.99% for 12 months. On the downside, CC1, my highest balance card, is held at the same bank as CC2 with the 0% interest rate, and they won't let me do an internal balance transfer. I like the idea of waiting or looking for another external balance transfer offer, so I'm going to keep my eye out for that. 

 

My student loans are all federal, and in looking into refinancing, my monthly payment would jump from $217 to almost $400. Right now, I need the lower monthly payment, so I'm going to just keep riding it out as is until I'm at a point I can try to refinance. I looked at my statement the other day and of the $217 I pay, only $11 went to the principal, the rest went to interest. CRAZY.

 

To me, the pet insurance is worth it, and I'd honestly go bankrupt or sell everything before giving up my doggo. Go ahead and rip me for that, but for $60/month, I get 2 free comprehensive exams a year, he gets all his vaccines, and flea/heartworm prevention. He's my buddy and keeps me sane, so the least I can do is keep him healthy :)

On the CC1/CC2 issue, will they permit a BT out to a checking account?  If so, then add a step, move funds to your checking account and then push the payment to the other card. 

 

On the student loans, was that increase with someone like Nelnet?  Or was that a recast with the current servicer?  Makes no sense that it would come close to doubling unless there was some other piece of the equation that changed substantially (ie. term being reduced by a number of years).  As to the issue of interest versus principal, do you typically pay at the beginning of the cycle or the end of the cycle?  If the end, then it easily explains why you are seeing so little going to principal.  Something else I do with ALL loans, including educational back when I was dealing with them, is to round up to the next hundred (or more).  I've also had times where I paid oddball amounts to get my statement balance at an even thousand dollar or five hundred dollar increment...but the net effect was still the same.  And then continue to do the same each cycle that followed even if the account was far enough ahead that the statement claimed no payment was necessary...

 

On the pet insurance, you have to ask yourself whether that $720 is worth the exams and vaccinations.  I know that the same for my cats would not have reached $720 (combined).  I get the notion of putting a lot to the side for the care and treatment of a fur baby.  I've been through that with spending more than a few thousand on a feline emergency.  But the reality is that those are few and far between, and, had I been paying $720 annually, I still would never have even reached a break-even in terms of the return relative to the premiums paid...I lost my oldest during August after nearly 22 years.  I can assure you that I spent nowhere NEAR $15K on the care.  Pet insurance is an expense that can be reconsidered once the rest of the financial house is in order...

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6 hours ago, centex said:

On the pet insurance, you have to ask yourself whether that $720 is worth the exams and vaccinations.  I know that the same for my cats would not have reached $720 (combined). 

We just spent this on our two cats at a non-profit feline health center about 20 minutes from our house.  

 

3z9hxlD.jpg

This is the first appointment they've had since I got them prescriptions for kitty Rohypnol, and then drugged them before they went into the belly of an aircraft when we moved in mid-2014.

 

I have no idea what this included.  My involvement is limited to ensuring that the bills are paid on time.

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Dear Joolie567,

 

Keep chugging girl!

 

STOP...EVALUATE BEFORE MOVING FORWARD!!!  And give yourself some credit.  Bravo!  You have a job!  You have a house!  You have a car!  You have an education!  You have a loyal friend (pet)!

You have a brain!

 

You see the writing on the wall and you’re applying the brakes before the catastrophe.  That’s using your head.

 

There’s a lot of talent on this thread and I wouldn’t dispute any of the suggestions offered here.

 

 I’d like to add to it by suggesting you reconcile your money philosophy.

 

Rule 1). Pay yourself first.  You state that you’re using credit cards to fund emergencies.  Immediately, go to Human Resources and have $200.00 per month automatically deposited into your savings account.  In five months you have $1,000.  In one year you have $2,400.00.  (You May be using this money initially to cover gaps but you may discover creativity and discipline on the path and not touch it).

 

2). Immediately stop using your credit cards.  Do Not make  another charge till you catch your balance.


3). Check in with HR and see if you can adjust your withholding information so you can take home more money to be used exclusively for debt reduction.

 

Now, you have taken the first few steps that put your money moves in line with your values.


This situation will turn around in six months if you follow some of these advisors.

 

Furthermore, what are you charging on cards?  Impulse?

 

If yes, no judgement, your new hobby is reading all of these threads until you’re the master of finance.  Yes, I said it.
 

Meanwhile, you can also apply various theories on these threads to put into service better credit tools for the future.

 

These processes may take up to two years to execute in entirety but your growth will emerge and the rewards of your efforts will be apparent.  
 

Reasons to consider bankruptcy:  you are physically and mentally unable to produce income.  Otherwise, fix the mindset and the solution will emerge.

 

 Is it possible to get a few hours overtime or weekend gig just until the pressure is off.  I’m sure you’re feeling the strain.  Action is key.  If you’re paralyzed in inaction, get a family member or friend to help execute and negotiate the first thirty days.  You can do it by simply devoting 2 hours each evening to your debt clearance goals.

 

Best wishes

C

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