Inspired by Fritzo's thread: Need help managing money

[slackerinabox]

So I've read Fritzo's depressing thread and see that I'm a lot like him and that my current relationship could easily end like his did (he's a big spender and racked up $13,000 in debt behind his wife's back).. I need to figure out the basics of budgeting and need to come up with a plan to get my credit in shape....My gf and I have had serious talks about this (we've been together for 6 years but she refuses to marry me until I shape up) and I think it's about time that I take some action... Here's hoping that Frtizo's tragedy will help others like myself... My credit is terrible - I admit that all of my credit woes are my fault. I made a good amount of money and still foolishly spent beyond my means... So I had around $14,000 in credit card debt - that's a lot for a college kid (not including college loans). So I started paying up the debt and lost my job when I had $5,000 left. My unemployment went straight to cover my car expenses so right now I'm broke off of my ass and judgments have been filed against me. I'm pretty fvcked. Two companies have charged off on the loan and a 3rd is suing me... I understand that I?m a huge idiot but what is my way out of this? I hope to have average credit in 5 years time - is this possible? I'm desperately looking for part time work right now and I feel that I've learned from my mistakes ... I just need help actually repairing the past (and budgeting).. Thanks guys!

 

[P.O.W.]

Your fault was (besides getting into debt) not negotiating with the creditors when you saw the crap was starting to hit the fan. Many times creditors will accept very small payments as long as there are payments rather than being totally ignored. This crap will stay on your credit for 7 years, but if you dig out of the hole soon and pay off what you have, there will be light at the end of the tunnel.

 

[StageLeft]

Negatives will stay on a report for 7, so after 7 you can start having great credit worse case, but it's possible even with some negatives that you can still have average in the future.

Obviously at this stage you need to maximize income and minimize outcome. Stop spending money on anything that is not a necessity. Contact all of your lenders and tell them your situation and that you really do want to pay them back but you're just trying to get some money coming in now, so they'll have to wait.

In terms of budgeting you could buy a book (if you can afford one!) at the bookstore, but the heart of budgeting is keeping track of expenses vs. income and using self-discipline to spend only where you think it's wise to do so.

Directed to those readnig this: Not to belittle you or fritzo but anybody reading these threads who has their own credit card debt climbing should think long and hard as to whether they want to end up in the financial situtations that freedom and fritzo both are in. I don't need to have been there myself to know with certainty that it's a massive source of stress, and for what? So that you can buy computer parts and tvs? Just stop the spending.

 

[slackerinabox]

Originally posted by: P.O.W.
Your fault was (besides getting into debt) not negotiating with the creditors when you saw the crap was starting to hit the fan. Many times creditors will accept very small payments as long as there are payments rather than being totally ignored. This crap will stay on your credit for 7 years, but if you dig out of the hole soon and pay off what you have, there will be light at the end of the tunnel.

You're right - I shouldn't have avoided the bills.. I guess that's part of being stupid, poor, and depressed- instead of dealing with the problem I avoided it.. But now I'm actively looking for work and hope to have an "attack plan"... I refuse to believe that it's too late (I'm only 22!) so any advice would be great.. Is there any book out there or site /program that really helps you budget? I won't have a lot of money since it's very tough to find a nice P/T job in new york, but I should at least practice budgetting what I have..

 

[slackerinabox]

Originally posted by: Skoorb
Negatives will stay on a report for 7, so after 7 you can start having great credit worse case, but it's possible even with some negatives that you can still have average in the future.

Obviously at this stage you need to maximize income and minimize outcome. Stop spending money on anything that is not a necessity. Contact all of your lenders and tell them your situation and that you really do want to pay them back but you're just trying to get some money coming in now, so they'll have to wait.

In terms of budgeting you could buy a book (if you can afford one!) at the bookstore, but the heart of budgeting is keeping track of expenses vs. income and using self-discipline to spend only where you think it's wise to do so.

Directed to those readnig this: Not to belittle you or fritzo but anybody reading these threads who has their own credit card debt climbing should think long and hard as to whether they want to end up in the financial situtations that freedom and fritzo both are in. I don't need to have been there myself to know with certainty that it's a massive source of stress, and for what? So that you can buy computer parts and tvs? Just stop the spending.

You're right.. A lot of my problems (financial and otherwise) are due to a lack of common sense... I think I'll start to actually use my palm pilot to track my expenses - I can't believe that I used to go to expensive steak houses while I was in debt!

Contacting the creditors doesn't work at this point. Two of the debts are in the hand of nasty collection agents and the third is with the city marshall.. The marshall has been great and I've been sending them money consistantly.. The debt collectors, on the other hand, demand a 25% payment up front - I just don't have that money so the cycle begins again (I ignore them, they threaten me, I explain my situation and they give me a deadline that I can't make)....

Skoorb- you're right .. Don't buy the computer parts.. Don't buy that TV.. SAVE YOUR DAMN MONEY.. I hope that I can come out of this before I'm 30.. How pathetic is that - I may have to live with my parents for 2 more years because of this- don't let this happen to you just because of a snazzy new video card!

 

[kranky]

Don't give up. The sooner you take charge of your money, the sooner you will be in the clear. Many people get in bigger trouble than you are and don't learn their lesson until they are in their 40's or 50's. Congratulate yourself for being willing to do what you have to do.

Don't be intimidated by the term "budgeting". It's a very simple process. The more advanced stuff is just fine-tuning it and applying ways to spend less.

First, track every single penny you spend for two months. You cannot achieve anything unless you know where your money is going. Don't be tempted to shortcut this process or you will be wasting your time. Your ability to do this will tell you a lot about whether you are serious about changing.

You will then know where you are spending your money. Make any adjustments for bills that did not come up in the two months you tracked expenses (like car insurance, if applicable). Decide if you want to make any changes in your spending habits. Now look at your income and decide how you want to allocate it into different categories - car payment, rent, telephone, clothing, gasoline, etc. Include money for savings and emergencies and pay yourself first.

Now you have a budget. That's it. Just continue to track your spending to make sure you are staying within it. The idea is that if you have $3000 to spend, it's easy to rationalize spending $100 on some crap. If you take that $3000 and divide it into much smaller categories, that $100 will be a big enough dent in one category to get you to think twice about spending it. You'll also see where you are not being smart about your spending (like my friend who spends $100 a month on cable, while complaining he has no money).

Your next step is to look for ways to reduce spending. Eating meals out is probably the number one money waster. Don't think you are "saving money" if you buy a $50 item for $30 - you have to realize you are still spending $30, and aren't saving a thing unless you had to have the item anyway.

It's not a lot of work once you get started.

 

[rahvin]

I hate to encourage it but you should seriously consider chapter 7. Seven years after you declare it comes off the credit record.

 

[Double Trouble]

If you were still $14000 in the hole, I'd say you should seriously consider contacting an attorney to help you check out filing for chapter 7. $5000 is a different ballgame though, that's most definitely manageable.

First off, stop making decisions without being informed of your rights and responsibilities when it comes to credit/debt. This is a great resource to find information: Credit Info Center. You'll find a wealth of info. For example, you can find out how you should be dealing with nasty creditors and what the best strategies are for rebuiliding your credit.

If you start watching your pennies, work out a payment plan with your creditors (no matter how small the amount) and get the job, you'll be able to rebuild good credit in just two or three years.

Good luck to ya, keep your head up and check out that site for some good info. Also, whatever you do, don't waste your time or money going to one of those "non-profit" credit help companies like Ameridebt -- they are a simple ripoff and often leave you in a worse situation than when you started.