PostHeaderIcon Who to turn to for debt advice?

My wife and I have approx $45k in unsecured debt and second mortgage already. We’re paycheck to paycheck paying min payments now and its pretty uncomfortable.

I don’t want to shirk my responsibilities but we’re in a rut, treading water and not going anywhere. What type of professional should I trust? I’d like to sit down face to face with somebody. My research in different debt consolidation services scares me as does the thought of bankruptcy but for all I know, those are viable choices but I’d really like to talk to a neutral party to help me decide what to do.

A CFP would be more investment oriented right? Are there any government sponsored organizations statewide that are good?

Thanks,
We have a budget already and have cut down monthly expenses (tv, phone etc)to a minimum, living modestly. We analized a debt repayment plan but based on our surplus cash were looking at 4-5 years to get out by using the debt snowball thing. That is also assuming no financial hardships popping up.

4 Responses to “Who to turn to for debt advice?”

  • newton says:

    Go to your Citizens Advice Bureau

  • Rebecca M says:

    Consult with a credit counseling organization if you’re not comfortable thinking about bankruptcy. Try Greenpath.

    If you’re really having problems, consider discussing your situation with a bankruptcy attorney. It may be a way for you to save your house, or if you can’t afford your house, it may be a way for you to walk away from it without being held liable for the second mortgage. You would also either eliminate (Chapter 7) or greatly reduce (Chapter 13) the unsecured debt, depending on your income level and personal expenses.

  • jt6341 says:

    I would suggest reading a book by Dave Ramsey called “The Total Money Makeover”. He will teach you how to manage your money and get out of debt. I started his program at the first of the year and will be debt free with a 6 month emergancy fund by the end of the year. You can go to his website and get alot of information to get started, http://www.daveramsey.com. But here is a overdraft of what you need to do:

    Carry a piece of paper and track all your expenses for a month and see where your money is going.

    Do a budget, sit down with all your bills and that list. Figure paying the minium on all your bills and see how much money you have left each month if any. Once you do that see what you can get rid of or downsize on. Examples are phone bill, cell phone bill, cable, internet, taking lunch with you to work, making your own morning coffee and taking with you, if you have a car payment sell it and get something for cash, look into getting a roommate for a short time if you have a extra room, if your rent is high and your month to month on the lease look into a cheaper place etc. There are all kinds of ways to cut your bills just takes effort.

    Now save a thousand fast. Get extreme by having a garage sell, sell things on ebay, mow a few lawns etc. Whatever you have to do save 1000 for emergancy fund and this should be done in a months time if you are really getting gazelle intense as dave says.

    Next list your debt smallest to largest. With any extra money you have pay it to the smallest debt first while making minium payments on everything else. Once the first debt is paid off use that money and add it to your next debt and keep doing it’s called the debt snowball.

    Once you have all debt paid off then it’s time to save a six month emergancy fund. This is easy to do when you are debt free other then your home. Once you get to this point you are well on your way to living a great life but you have to use the same princaples that got you there. Living under your means.

    Best of luck but don’t fill a bk that will just hurt you even more and making it harder down the road to do anything and 45k debt isn’t bad. If you want more help just messege me on here i’v helped alot of people to get started and would like to help you too if needed. Best of luck

  • Jeanne R says:

    You probably can not get rid of all of your debts all at once, but you may be able to do it in a short period of time. Of course that depends on the amount of debt and your income.You can jump start your payoff by having a garage sale and selling anything that you no longer use and you should consider getting a temporary part time job until you get everything paid off. Here is a plan that will help you. If you work the plan, the plan will work for you:
    1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.

    2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

    3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

    To start :
    Debt #1 (highest interest): minimum payment+ extra payment
    Debt #2 (middle interest): minimum payment
    Debt #3(lowest interest): minimum payment

    Debt #1: paid off
    Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
    Debt #3: minimum payment

    Debt #1: paid off
    Debt #2: paid off
    Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

    That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

    4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

    5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

    5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

    5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

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