Need Money Advice (I have to update-- it's that pride thing I mentioned)
I was hesitant to post this as I am not proud of my situation, but after seeing others in this position, I will swallow my pride for those of us who could benefit from some advice. Besides, my pride won't feed my girls if things get as bad as they say.
My situation is that I live paycheck to paycheck. My Credit card debt is about $10,000, we have no savings/investments of any kind. We are getting a good tax return about $6,000.
Do I:
A: Pay down debt because interest rates are killing me.
B: Buy gold/silver and keep the debt.
With the way silver is climbing would an investment be wise, then using interest earned to help pay bills?
Also, when things do go bad and the dollar crashes, what happens to
credit card debt? Will credit card companies be in business to collect on debt owed, or will the close shop? Just curious how this works.
UPDATE: Some really great advise here! I am feeling a bit defensive with some of the comments posted. I know it's hard to justify financial instability but I want to try anyway.
1) We moved a few years ago and because of the housing situation in Florida, we were paying a double mortgage. This hurt us tremendously for about 6 months, not to mention the loss on the house, it cost us to sell. Good news in this: We went from a $1800 mortgage to an $800 mortgage and also bought the house next to my parents on an acre we plan to grow food on. I think considering the way things are going this was a smart move.
2) The loss of a job in Florida caused most of the debt and add that to the move, like I said it hurt.
3) After the move (and this is a very long story I will try to make brief) my husband was contacted by the department of education. They told him he had an outstanding school loan in the amount of $8,000 (originally $2,800) from 20 years before. We thought it was a scam, 20 years? Come-on, he's owned houses, been in the Navy, paid his taxes, etc.. We were contesting it asking for documents with signatures and over a period of 5 months we argued but it turned out it was true. They split his loan in two and he paid off the first part and thought he was done. They never solicited him for the balance on the second half in 20 years, never a letter, never a phone call (this is no excuse we know but it is what it is). Well, that year after the move we told them, fine will pay it but not the $5,000 in interest accrued. No go. After we filed a tax return that year the dept of education notified us they will be keeping our $5000 return, we still owe $3000.
4) We started a business here in SC, publishing a magazine. Some of that debt went into initial overhead. We were planning on that tax return to cover the cost of our investment. This obviously didn't happen.
We have not used a credit card in over 8 months. We are paying them down slowly but surely. But in the past 8 months we have been able to purchase strictly with cash.
I've heard that when the
I've heard that when the value of the dollar goes down. 10,000 dollars could be a paultry sum, easily obtainable with a weeks labor.
"Those who make peaceful revolution impossible will make violent revolution inevitable."- JFK
Fooling yourselves.
I think many people fool themselves. The idea of taking credit, goes against the whole idea of responsible living. The questions I hear are, am I taking on too much debt? Am I within a reasonable limit? The whole idea of taking on debt is crazy and only serves to feed the investment class, those who do not produce, and live off of the work of others. Bond babies! The government sustains this class of people and we pay for it. We have to change our mindset and stop thinking in terms of borrowing to grow. And this starts with our personal lives. We have to think in terms of working to grow. Of course we also need to eliminate the barriers that exist to work and produce on our property, but this is protected by the Bill of Rights. We have to stand up for our rights and stop listening to corrupt politicians, we out number them. If you believe they are going to save you, your a fool!
Transfer the balance
of your credit card debt to a new
credit card at 0% interest for a year.Most people get these offers all the time.
One last comment...
If you have any balance on a credit card at the end of each month, you are living beyond your means - PERIOD!
And with the interest rates they charge, whatever you've put on the card will end up costing you two - three - four times original price!
So, you could be making money by not using the card instead of loosing it - understand?
Absolutely
We have one card, that cost us $100/month in interest. This is the first one to go.
I know the tax return is going to put a big dent in this debt and then the money we "save" by having those gone, we will turn around and be able to get the others paid down pretty quick. We are a frugal family. We almost never go out to eat, only the children get new clothes ect.. Luckily, I am not a shopper.
We have a lease up in April and plan to dump that car and just run with 1 for a while. This will be only slightly inconvenient but because of the magazine we publish I work at home.
Hopefully, we have some time to do investing in gold/silver whatever but according to the posts on here it isn't wise at this time. I think we are better off getting that garden up and running and focussing on the debt.
Mathew 5:9 Blessed are the peacemakers: for they shall be called the children of God.
You can call the credit card
company and negotiate a lower interest rate.
I've been able to lower a few
not significantly, but every bit helps.
Mathew 5:9 Blessed are the peacemakers: for they shall be called the children of God.
Couple quick comments...
Step #1) Please order this book: KILLING SACRED COWS (killingsacredcows.com)
It dispels the myths about money we were taught while growing up. Many of those myths were caused by the Great Depression
Step #2) If you take that student loan and include in in refinancing your home for 30 plus years, then you can use the interest as a tax deduction. Also check on an "interest only" loan.
Step #3) Pay yourself first! Before paying any bills, put this money aside for make money. 10% to Church (when you give, it always comes back to you more than you give); 10-15% in a WCA (Wealth Contribution Account) Instead of investing in a 401k or the stock market. (The WCA is a name given to a particular savings account)
Use your WCA $ to make money, then put it back in along with the money made with it. It's about utilization and not accumulation. You use the same money over and over again to make money.)
Then 10% to a Savings account, to be used for tires, couch, TV, vacation, emergency, and things like that (Save for them first.) You can even use it to save for your property taxes or start another separate savings account for that.
If you can only put 1% in regular Savings, that's ok. Better than nothing.
ALWAYS, ALWAYS, PAY YOURSELF FIRST!
If you use a charge, only put on it what you can pay off at the end of the month. Keep your balance to under 30% of your maximum allowed credit. (ie: charge no more thatn $3K on a $10k limit.) But, I would say, if you got in trouble before with credit cards, just pay them off and close them - one by one - not all at once. Keep one for convenience or small emergency. Then use your checking account only.
My husband has never had or used a charge card and his credit score is 749. I have ONE major credit card and pay it off every month (on time). My credit score is 793.
Step #4) Use your checking account to pay your bills; mort.,elec,phone, heat.
Setp #5) Live within your means. If you charge something and cannot pay it off at the end of the month - your are not living with in your means!
Save for the things you want or need.
This makes no sense: "Step
This makes no sense:
"Step #3) Pay yourself first! Before paying any bills, put this money aside for make money. 10% to Church (when you give, it always comes back to you more than you give); 10-15% in a WCA (Wealth Contribution Account) Instead of investing in a 401k or the stock market. (The WCA is a name given to a particular savings account)"
Pay off those debts. This is job one. This includes taking the 10% you might usually give to your church. Pay off those debts. Anything other than eliminating the problem is contributing to the problem.
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"The main thing that I learned about conspiracy theory is that conspiracy theorists actually believe in a conspiracy because that is more comforting. The truth of the world is that it is chaotic..." —Alan Moore
Nope - I am
still right here. You just don't understand. By paying yourself first, it gives you a sense of having something instead of owing everything. It gives you hope. It's about utilization instead of accumulation.
I know, from experience, the more you give, the more you get back. Guess you are not a person of faith. Agency implies stewardship.
You should get the book I recommended because you are living one of the financial myths that keeps you in bondage.
Once you read the book, you will understand - too lengthy to discuss here. And, what do you have to loose? But everythng to gain and you can then share and create value for others.
You can live the life you want today and still have debt - just not the stupid kind like credit cards!
I'm proof this book will give you the kind of life you've always wanted - it will teach you what to do and what not to do - and give excellent examples!!!
There will be plenty of time
There will be plenty of time for this person to go to contribute $ to whatever cause later... and by the way, why would you assume she is a churchgoer? Surely you are not suggesting that 'people of faith' are poor stewards of their own finances?
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"The main thing that I learned about conspiracy theory is that conspiracy theorists actually believe in a conspiracy because that is more comforting. The truth of the world is that it is chaotic..." —Alan Moore
Some want their cake and to eat it too!
You can't have it both ways, either you are for continuing the situation of a debt run consumer economy, or you are for a system of work and pay. The whole concept of sound money is based on not encouraging debt! So it is not wise to borrow money to go to school, work and pay as you go; buy a house with a 30 year mortgage, save and live in a simpler home until you can afford a better home; buy a car on loan, take a bus or car pool, business loan included. Stop fooling yourselves! You are working to maintain the current system if you do.
grant
About your update...
Lynnopoly. don't get defensive about some of these posts. If you post a question on a forum, you're going to get a breakfast cereal mix of responses... some good fiber mixed with fruits and nuts.. ;)
The avarage household in America last time I looked was 112,000 in debt. AVERAGE. So don't worry too much about your bills.. you're better off than some. Growing your own food I give you HUGE cudos for, btw.
An easy answer for you since you've updated is still the same as most posts here... work your credit card debt out. Don't cut all your cards up, keep one or two. BUT... keep them 0 balance at the end of the month. For instance, use one for fuel, one for groceries. Pay in full end of month, once you've gotten out of the hole. Do not buy silver or gold... you've still got a mortgage to worry about. Throw a couple thousand under the mattress... keep savings out of your bank. (I'm weird that way, my grandparents lost a ton of money the last depression... bank closed ).
Get out of credit cars debt... and stay out. It's a good first step.
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
You should continue to avoid
You should continue to avoid credit cards like the plague. Use cash for purchases only, and stick to a budget. The MOST IMPORTANT THING IS TO PAY OFF YOUR CREDIT CARD DEBT FIRST! Credit cards charge high interest rates and unless you pay that off, you are losing ground.
Secondly, avoid bankruptcy. It is absolutely a last resort. You can damage your credit rating for up to 10 years, a very bad thing.
Another thing to consider (and again, a last resort measure) look at selling your house and becoming a renter. If this will help you get out from under your debts and keep you from declaring bankruptcy, think about it hard. Don't let pride get in the way of doing the sensible thing.
Forget about buying gold. Gold is not your problem, debt is your problem.
Good luck.
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"The main thing that I learned about conspiracy theory is that conspiracy theorists actually believe in a conspiracy because that is more comforting. The truth of the world is that it is chaotic..." —Alan Moore
I agree on keeping money out of the banks
you might want a safe instead, but I would find a secure place to put it.
Libera me, let the truth break, what my fears make--Leslie Phillips
But that man should play the tyrant over God, and find Him a better man than himself, is astonishing drama indeed!~~D. Sayers
There is no difference between an authoritarian government from the right or the left...F. A.Schaeffer
how much
how much interest are you going to get in your safe ?? and is your money insured ??
Put that $ in silver coins
pre 1964 - dimes, quarters, and half dollars. If something happens, you can use them (when flat money finally dries up) to buy things during a depression. If there is a run on an insolvent bank - your money is gone!
This way it's a win-win and safe in your safe.
This is not sensible advice.
This is not sensible advice. This person needs to get out from under her debt first. Get out of debt. Start saving slowly. Never spend more than you can afford.
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"The main thing that I learned about conspiracy theory is that conspiracy theorists actually believe in a conspiracy because that is more comforting. The truth of the world is that it is chaotic..." —Alan Moore
Do you honestly think
That if your bank shuts down then FDIC will write you a check?
Oop.. I forgot.. this is betterhalf... of course you do.
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
I have a defensive nature :)
I have a defensive nature :) I shouldn't get that way, I work on that all the continuously (you see how that's going).
From the advise posted on this forum, I believe you are right. The debt is my main priority, I will stay the coarse...
Thanks
Mathew 5:9 Blessed are the peacemakers: for they shall be called the children of God.
Any time!
I've run across dozens of your posts on DP.. you seem to have your head on straight.
Besides, fixing ourselves economically I think is the first step towards fixing this country... we have to start with ourselves... then work outwards.
So the best thing a patriot can do is help another patriot!
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
Time to get yourself free!
Unfortunately you sold yourself as a slave when you went to school. Should have better spent your time working and getting an education at a library for free. That being said, why are you borrowing more money? Have to cut expenses and get these things paid off, never borrow again. Get free from the chains and stop being a bankers slave or indentured servant.
Response
"Unfortunately you sold yourself as a slave when you went to school."
My wife has 2 Master's Degrees that allow her to teach at the University level, so her student loan debt is crucial to her career. This education will also enable her to homeschool our child, which will save us a lot of money in the end. It has been proven that an advanced degree increases your earning potential significantly. Somehow, telling a potential employer that you learned everything in a library doesn't cut it.
"never borrow again."
I borrowed money to start a business. Anyone who wishes to be self-employed needs to raise capital to get started. Impossible to grow, otherwise.
So what you're saying is
So what you're saying is that material wealth is more important than freedom.
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Liberty for Dummies
Lame response
I seriously doubt that the commenter chose material wealth over freedom. Early in our adult lives, we all have to take a good long look around us and decide how we want to fit (or not) into the world. We all make choices and live with the consequences.
You doubt the commenter
You doubt the commenter chose material wealth over freedom, then you say he made a choice and must now live with the consequences. I don't disagree. I simply deduced the values of the commenter and his wife, based on his description of the choices they have made. If I'm wrong, I'm sure he'll correct me.
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Liberty for Dummies
Clarification
I'm sure that if measured against others, my family's lifestyle might seem materialistic. We have certainly over-extended ourselves on occasion. But its all relative, and almost anyone can point to extravagance in their own lives.
I don't see how becoming the first person in her family to gain a Master's Degree is a choice that she should be ashamed of, even it will cost our family down the road. And the money I borrowed to start a business has allowed me to pursue a dream, work from home, and spend precious time with my little girl. I would say that the freedom these two investments have created in our lives was money well borrowed.
We should all be aware of how we frame others in the context of a failing economy. I appreciate phoobaar's zeal and clear position on his/her beliefs. Perhaps he/she has always had this insight about debt.
This will be a very challenging transition for all of us, even those among us who have never been in debt. This is going to be more than about money.
It could be relative to age.
I'm 43... when I hit 18 it was expected to either have a scholarship or take out a student loan and go for it... paying back your student loan was seen as a rite of passage... your first debt to pay. Getting a degree helped to pay off that debt, as long as you got the degree, of course. So you had more than one incentive... ;)
It is not viewed that way by some anymore. A pity.
As far as a business loan, well.. that is the American dream, is it not? To start your own business, become financially stable, let your creativity and individuality shine. One certainly cannot be faulted for that.
These are things that are passing to the wayside right now... but were once part of the fabric of America. These things made us unique in the world... the land of opportunity, indeed.
The current generation does not see that, in most cases. They see all debt as bad debt... when in all actuality debt was supposed to be a tool we could use to be creative.. not a tax on our very soul.
That's why we need to fight to get those ideals back.
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
I said we all make choices
And you chose to reply in a judgemental and negative manner.
How Would You Rank/Rate These Various Types of Debt?
1. $60,000 (3% APR) Student Loans
2. $13,000 (11.99% APR) Personal Loan to start a business, which is starting to thrive, by the way...
3. $10,000 (11.99% APR) Household loan
4. $1,000 (10.99% APR) Credit Cards
Is my family in financial trouble? We make about $60,000 a year as a household, are renters, and are very conscious about spending. Does this level of debt sound unreasonable? Keep in mind, we don't have a mortage, and are putting money into our savings every month...