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Good on keeping your payments current. I only have a question: Are you keeping your payments current at the expense of other bills or obligations?
In other words, are you robbing Peter to pay Paul?
If this is the case then you are deeper than you thought.
Another take on this is that you are constantly playing the balance transfer game to keep the interest rate down. That is just the same as robbing Peter to pay Paul.
I am going to give you a secret on how to lessen the amount that you pay every month to your bills.
We all know that the lower the interest rate the lower the minimum payment at the end of the month. But what if you don’t have a low interest rate, how can you get that same break.
Your bill is calculated by what is called Daily Calculated Interest. What this figure is your interest rate divided by 365 days (ex. 20%/365 = .05). You then take you balance on one credit card (or mortgage, car loans, student loans etc.) and multiply that by .05 (for this example) and that gives you the amount you will pay interest for that day (ex. $10,000 balance x .o5 = $5.00)
So if you Balance is $10,000 for every day on the billing period (lets say 30 days) you’ll pay $5.00 for everyday (or 30 x $5.00 = 150 for interest).
Now your overall bill will be about $200 total. Leaving only $50.00 going towards principle. Now a heck’ve a lot is it?
Of course use your own figures to determine that amount of interest you pay every month.
Now to recapture a portion of that interest lower the daily balance and you’ll pay less.
Now here is a simple trick. Have two credit cards, both with limits $500-$1000 more than the amount of income you bring in (They also need to have a $0 balance to start off with).
- Now with Credit Card A use the entire balance to pay off a large portion of a debt (other credit cards, or carloans would be better to start off with).
- With Credit Card B us it to pay all your bills and expenditures.
- Put all of your income (every single dime) into Credit Card A. This keeps the balance down thereby lessening the amount you would pay in interest.
- Before the due of Credit Card B use Credit Card A to pay off the entire balance. This gives to you an interest free loan of 20-30 days depending on your billing period.
- Budget yourself to free up as much money as you can without depriving yourself. You need to live BELOW your means. This extra cash goes into Credit Card A along your income.
- Every 3-4 months use Credit Card A to pay off large chunks of debt…usually the high interest consumer debt first.
- Repeat steps 1-4 every month.
This is similar to the Dave Ramsey snowball method but gives it a kick in the pants and you are freeing up money that you would otherwise pay in interest.
If you do this right, then you can get completely out of debt even faster if you used Dave Ramsey’s program.
Then you can use all your income after that for investment purposes.
Now, I recognize that this is not for everybody. All I ask is that you look it over, ensure that you understand it, then make your decision if it is right for you.
Union Plus called and the rep I spoke with told me some interesting things.
He was trying to get me to sign up for a “hardship” program. It required me to make a larger payment and then the interest rate would be reduced for 6 months and I would have to disclose my income and all my debts and things like that. I would have to be “approved” for it. I decided against it as I did not feel comfortable with all that was required.
I started to talking to him about settlement options. He let me know that if I try to settle between 0 and 90 days past due they would probably offer to settle at 65% of the debt. When it becomes more than 120 days past due I could probably settle for about 45%. He also let me know that it wasn’t going to help me if I sent in the small pro rata payments if I planned on settling the debt anyway. I was only sending them about $25 a month. He suggested that I save it for my settlement payment.
He did say that they would even do a payment plan for the debt settlement amount. I clarified that it would all be in writing and he said yes, the agreement would all be in writing.
So, I will have some extra $$ in February and plan to call and offer a settlement at that time. My question is, what percentage should I start my negotiations at and what is the max that you think I should go? I was thinking to offer 25% of the debt and not go more than 30 or 35%. I believe that my extra $$ will be around 40% of the debt but I want to stretch the amount as far as possible and start saving for another settlement offer.
Your thoughts as always are appreciated.
45% is a great settlement especially with a credit union. I don’t think that you’ll get much better than that. You could try, and if you do start off with 30% and go up from there. Be careful as you could shoot yourself in the foot.
If I were you and they offered me 45% I would jump at it immediately.
Credit unions, as a whole, can be more difficult than banks to settle with. The reason s that the credit union is a collection of investors, like yourself. The profit goes to all that bank with the credit unions, so if you do a settlement for less, then you are taking away from your fellow members.
It was very smart on yourself to make sure that it will be in writing. Make sur that before you pay a dime you have it in writing. This would also be a good time to negotiate that they remove all bad marks from your credit report, and that they report the settlement as “paid in full” instead of “paid as agreed” or what other statements they use to indicate settlement. You may or may not get these concessions, but it never hurts to ask…if you get it, bonus.
Of course, this advice only pertains to the credit union. If it were a regular credit card I would say go for as much as you can.
Best to you. Happy holidays.