Your Questions About Eliminate Your Debts

Ken asks…

What is the best way to start eliminating my debt?

I am a student and I have been out of work for about 6 months due to a car accident and failure to find a good job. I recently got a job working for regions bank (yay me!). Because I was out of work and had no money, I defaulted on my bill which I had been paying before I got into the car accident. I have about 6,000 dollars worth of debt because of hospital bills and other bills that I failed to pay on time. I don’t know whether to consolidate or just try to pay them out of pocket little by little. I am very lost. PLEASE HELP!

John answers:

This is what you do. Contact the hospital about your bills and work out a payment plan with them. They will be more than happy to work with you. Next make minimum payments on the other debts. Start saving as much as you can for an emergency fund. Let’s say $500. Once you have this in place tackle the smallest debt with a vengeance until it is paid. When this debt is paid take the payment you were making on this debt and add it to the next smallest debt and so on. This is called the snowball method! Do not consolidate! I have included a link below, which will really help you and give you direction!.. Oh YAY for you on the Regions Bank position! You will get through this!!

Ruth asks…

Reliable car or eliminate debt?

My fiance and I have a total of $4000 in debt ($3000 on a credit card and $1000 in student loans). His grandparents’ friends have been saving up money for him since he was young and they’re giving him nearly $5000 in a few weeks.

Now, we’re trying to decide what to do with the money. I would like to use half on the debt and use the other half to buy a newer car because the car we have now is falling apart (it’s a 92 Chevy Corisca). The transmission is going bad and I KNOW that it will cost a lot to fix. I think buying a newer car would be wise in our situation. Also, I will be receiving $1500 in October that we can use to finish paying off the debt so in the end, we’ll do what he wants anyways.

He thinks that we should just pay off all the debt and spend the rest on car repairs. I don’t think this is wise because in a few months, the car might poop out on us and we’ll be stuck with no car and end up with more debt by either having to fix it or buy a new car.

What should we do?

John answers:

The first thing I would do would be to put $1,000.00 aside in an emergency fund. That way if the car does poop out you are prepared. I would use the other $4,000.00 to pay off your existing debt. As soon as that is paid off, take whatever amount you were paying on the debt and put it into savings for a newer car. Keep saving until you have enough to pay cash for a good reliable used car. You already know that you will be getting another $1,500 in a few months and you can add that to the new “pre-owned” car fund.

Sandra asks…

Does anyone know how to eliminate debt?

I’ve been out of work for awhile now and bills have been backing up, and going to creditors. Im in alot of debt and Im not sure how to fix this problem. Does anyone know a way that I can eliminate my debt? If not, what are the pros and cons for filing for bankruptcy? The thing about this whole situation is Im only 25, and I wanted to work on getting my first house by the age of 30. Im in desperate need and Im really having a hard time coping with my debt and really low credit score that I have. Any suggestions?

John answers:

If it is already at the stage where you are so far behind that it affects your credit score then the damage is done and even if you paid it all off tomorrow it would not change your credit score by much.

You can keep looking for a job and then pay it all off and work on getting your credit score back to the level that allows you to qualify for a mortgage…. And that will take up all the time until you are age 30.

You can file for bankruptcy and wipe out all of the debt and it will take at least 3 years before you can recuperate enough to get a credit card again and will see the bankruptcy on your credit for 10 years.

Use that time to accumulate a large down payment. Money talks…

Lisa asks…

How can i eliminate my debt and get my credit score up?

suggestions please???

John answers:

Why YES YOU CAN! Stop shopping for a while and only buy the necessities. It took some time for you to get into debt…so it will take you some time to get out of debt. Why pay someone to fix your credit when you can do it yourself! A part-time second job to pay towards your debt usually helps the situation. Hopefully the job you currently have will allow for you to pay yourself first. If not, start saving half of your new PT income 1/2 for self and the other half save towards keeping up current accounts and towards paying off a target debt in a lump sum. Get in touch with the credit bureaus to see what you owe. Establish which debts are important for you to pay off first and that you can realistically pay off asap.These are usually debt that can affect you purchasing a home. Keep a neat file of debt payed off and letters stating Paid debt. Keep in touch with the 3 credit bureaus to make sure the paid debt is reported and you shall see your score rise. And as you are doing so, you will have money saved in the bank and your of proof attempts to make good on bad debt, Your bank or other banks will look at your differently. It sounds hard but I am going to be a MILLIONAIRE when I’m finished! I hope this helps.

Nancy asks…

Give several ways on how you can reduce or eliminate debt?

?

Thanks

John answers:

You don’t give any indication of the size of the debt or of your disposable income, so this is in general:

If you own property, take out a mortgage sufficient to pay off your other debts.

Otherwise, If you have a decent credit card you can consolidate your debt, and thus have only one problem to concentrate on.

Then spend nothing unnecessary until that debt has gone away.

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