As the title suggests, there’s something rotten in the state of Texas. Namly my financial well-being. You’ve all heard me gripe about this before but this time I’m getting serious with you. Now, since I’ve moved to Texas I’ve been changing addresses for things like magazines and letters and even bills. Even school loans got the updated address. Apparently it didn’t stick. I got a letter from a collection agency yesterday saying they were trying to find me on behalf of one of my loans and that they demanded payment immediatly. Apparently I’ve not been receiving the bill. Serveral bills to be exact. The amount they claim they need is quite large. I’m a bit scared actually.
Lauren’s been going to this financial seminar (I can’t go because it’s Wednesday evenings before I get off work) for us and we’ve learned about a technique called the debt-snowball. Basically you don’t consolidate anything. You start by paying the minimum payments on everything. You put any extra money towards the smallest bill. After you’ve paid off that smallest bill you don’t consider the money you had been sending now to be free. You roll that payment into the next lowest bill. So, using our own bills here… we’d pay off lauren’s bill for my ring (about $300 I think). Once we’ve paid that off we’d take the $20 we had been spending on it a month and roll that into our next highest bill, my credit card. So, my credit card minimum payment is, let’s say $30, we would now send in $50 a month. When we finish that we apply that $50 to something else. This method gets you two things: first, you pay off you bills, which gets you favorable credit ratings and second, you pay off the larger bills faster. My $20,000 school loan will go much quicker if I’m sending in $400 a month instead of $50. See how that works?
Now comes and interesting question. Do I consolidate? I’m not talking about consolidating everything here, but maybe just the school loans. I have three of them, of various sizes, all of which have a monthly bill of about $50-$75. Then there’s the car and my credit card. I can’t swing those extra amounts each month, at least not right now. My basic concern is that if I consolidate to make it ONE payment of $50 a month, something I can handle, is it worth it if it turns three bills into one large $60,000 bill? That would take 30 years to payoff. But, then again, wouldn’t three smaller loans of equal amounts? It’s so confusing. I’m so stressed about this. I didn’t sleep at all last night and I haven’t been sleeping very much at all. It’s hanging over my head and I feel like I have no peace at all.
I outright refuse to declair bankrupcy. I think it’s wrong. Both on a financial and moral level. I made this hole for myself and I’d like to do the honorable thing and dig myself out. But, then I think about who I’m being honorable to. A group of corporations who don’t care, at all, if I’m alive or dead. They’re a faceless, uncaring group of blood thirsty, money grubbing bean counters. They’re whats wrong with American. They’re keeping the people in poverty and ruining lives. Everyone is judged by their credit report, not their character. That’s fucked up.
So, bankrupcy by 25, debt until 50 or poverty forever. What would you choose?
I’m actually glad I get to talk about this and get a little off my chest. It’s making me sick inside not to be able to talk to anyone about it. I feel physically ill, probably ulsers, and I can’t take it anymore. I don’t know what to do.
Hey bro,
you’d need to see if the interest rate on the consolidation would be higher or lower than the average amount that you’re paying on your current debts, especially the bigger ones.
how many of your college loans are via the govt? you might be able to consolidate those together (and perhaps your other ones, if they’re through sallie mae or someone like that). You should def. consolidate the school stuff if you haven’t already. you can lock in a much lower interest rate that stays fixed. It’s a win-win. You shouldn’t be in a rush to pay off your school loans either, as you already build up credit from making your payments on time, plus any money you pay towards student loan interest is tax-deductible, so take your time paying those off. While on the tax sitch, there is a big tax credit for people who were students in 2003, up to $2000, i believe. If you guys haven’t already, I’d recommend paying the money (~$300) to get your taxes done by someone like H&R block. With both of you being students in 2k3, student loan interest payments, moving expenses, as well as the whole little marriage thing, you could be in good shape for a refund, which could help you pay off some of the those big bills that were lost in the mail. Getting your taxes done by one of them also virtually guarantees you get the max possible back.
The other thing that you need to know is that not all debt consolidation is the same, there are some that hurt your credit and some that don’t. debt counseling services are the ones, I believe, that don’t hurt you, but triple check that before you commit 😉
Don’t declare bankrupcy either, it *will* come back to bite you in the ass somewhere down the line (e.g house buying time). Oh yeah, get a house too, lots of tax breaks there, and you get so much for the money down there. you’d prob get a nice house for what you’re paying in rent now, and I believe you get money back for mortgage interest payments (someone correct me if I’m wrong there…)
hope it all gets straightened out soon…
Thanks for the input cheif. There won’t be any bankrupcy any time soon but I’m thinking I should consolidate the school loans at least. Maybe not everything else in with it, but the school loans definatly. As for their number, I have 1 govt loan, 1 salie mae loan and 1 wells fargo loan. As for my taxes, they will definatly be gone over with a fine-toothed comb this year. I got a big school intrest payback that should be headed my way. I’m hoping it will put a serious dent into something. I’m going to contact each loan creditor and see what I can work out with them too. Most of the time so long as you’re doing it in good faith they’re willing to take a little less so long as you’re actually sending them something. We’ll see what happens. I appreciate the support though. Thanks bud.
yeah, go chris, i’m bookmarking this shit for when (or if) i graduate. you’re the man.
matt, i don’t have any knowledge of any of this financial crap, but i have boatloads of moral support. big boats too. as a matter of fact, if you ever need to flee to mexico, i’ll help you *ahem* acquire a boat. rockin’.
everything will work out, it always does. don’t let this type of crap ruin everything going right…just remember how hard you’ve worked to get to where you are. just keep working, do your research and you’ll be good…maybe not über-rich anytime soon or anything…but you have your girl, your camera, your music and your ride, right?
that’s all you need.
First off, you can’t declare bankruptcy – because you are not bankrupt, and you don’t really want to ’cause you can’t get ANY credit for many years if you do.
Either method you describe will work – the trick is to get out from under the credit bills. Typically the credit card interest is the highest and the temptation to consolidate is great. However, 30 years of payments at low interest is A LOT more money than you may think. It may be better to eliminate the credit card debt first. Also STOP USING the credit cards. Cut them up, throw them away, whatever. The temptation to buy stuff with them is too great, and you will never pay them off that way. Go to your bank and get a debit card for stuff that you cannot pay for with cash or check. DO NOT buy things you do not NEED! CD’s, games, etc. are nice – but not neccessary – look at the home bills – do you really NEED high speed internet access?
I would be inclined to consolidate the school loans and make a full effort to pay off the credit cards. You will be surprised how quickly you can make that happen – the trick is not to charge more until you can afford it. When you have the cards paid down, don’t let them get out of hand again – if you cannot pay it off at the next bill, don’t buy it.
I find that using Pocket Quicken on my PDA helps – I enter all my credit, debit and check purchases on it, usually the same day I make the purchase. That way I always know where I stand, and if I can afford to buy something or not.
In any case – make a plan – and stick to it! Good luck – it will all get better eventually!
I just re-read the comments here and wanted you to know I didn’t intend to be “down” on you – just trying give you some thoughts. However, Chris mentioned a couple of tax issues that are valid. As soon as you possibly can – BUY A HOUSE! (I keep telling Chip the same thing). The sooner you get into the housing market – the better off you will be – even if you have to eat Kraft Mac & Cheese for a couple of years to make the mortgage payments – it will be worth it!
Mortgage interest is tax deductible – and makes a big difference to your tax bill. Typically, along with a mortgage, you can get a home equity loan – pay off your school loans with it, then pay the equity loan down – the interest on an equity loan is also tax deductible (it’s how I bought my airplane!). (The interest on your school loans MAY be deductible – I’m not sure).
Finally, your moving expenses are all deductible – so figure out how much it cost to move from NH to TX – that is gas, food, accomodation, shipping stuff and storage. If you don’t want to pay for H&R Block to do your taxes (and I think they are a waste of money) – use Turbo-Tax. It is cheap, easy to use, and will walk you through an H&R Block type interview to make sure you don’t miss anything. I have used it for 20 years!