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Not in trouble yet!

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).

  1. 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).
  2. With Credit Card B us it to pay all your bills and expenditures.
  3. 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.
  4. 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.
  5. 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.
  6. Every 3-4 months use Credit Card A to pay off large chunks of debt…usually the high interest consumer debt first.
  7. 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.

Hanging on the cliff but reluctant to make a move

I got myself in a pretty good pickle, and I’m starting to realize it may be more of a pickle than I thought. I had two credit cards one with $10K and one with $8K. With the higher electric bills and other raised expenses I was just making the minimum payments to keep me in my monthly budget. Chase raised my rate to 29% soon after that payments started being made late then Bank of America raised my rate to 31% from 0% for being 3 days late. I decided I needed help so I tried for a home equity loan to consolidate the two high interest cards. My credit score has dropped from 780 to 530 and i have only owned my home for 8 months so I had no luck with lenders. I have been considering a CCCS but have been reluctant after reading the posts to this group. I did manage to acquire a new credit card through USAA who only deals with military persons, ($10K limit) and was able to transfer the $8K/31% to the new card at 0% for the life of that transfer. I’m expecting a raise after the new year and the wife is in search of employment which will help in the future but for now I’m getting deeper and deeper. I’ve read this statement in an earlier post :

****** “But I stand by my original statement that if you can afford a CCC then you don’t need it as there other programs out there that can do an even better job.*******

I would really like some info on these programs. I am in the military so bankruptcy or debt settlement would do more damage than good for me ( separation from service due to fiscal irresponsibility). Can anybody out there steer me in the right direction???

First suggestion: Contact the executive offices of the credit card companies and see what you can negotiate with them. To get those offices look up the companies at www.bbb.org the better business bureau website. You can also file a complaint with the bbb over their abusive interest rate practices e.g. raising a credit card rate from 0 to 31% for being 3 days late. Also check out Scott Bilker’s site www.debtsmart.org. And also ask the military if they can help you. Good luck to you!

I have read your post, and the response from Ben. Ben makes some good suggestions, but factually they will not do much for you as you are in the military.

And you are right debt settlement and bankruptcy are out of the question for you. I was in the military too so I know from first hand what financial situations can do to you ( I once bounced a check and they put me on extra duty for a month.)

I was in the Army and I know that they do have programs that can assist, but I don’t know about the other Aremed services, but If the Army has them then there is a good chance that the Navy, Marines, Air Force and/or Coast Gaurd have them as well.

And thank you for quoting me about “if you can afford a CCC then you don’t need them.”

Write back if you have any other questions. There may be other options as well which I could tell you about if you let me know a bit more about your situation.

Does this help you at all? Let me know.

Credit has its purpose, but it is a tool

When I bought my car, I didn’t mind the credit because I knew exactly what the amount was, what I would pay each month, and how many months until the debt was gone. I never had to worry that the amount of debt for it would increase. I never had to worry that my interest rate would be jacked up by the bank. I never had to worry that, by only making minimum payments, I might still be paying it off in 20 or 30 years!

I guess in my mind, the problem is the credit card and related debt, that has no set boundaries – except to try to keep one locked in to it and always tempted to use more. As “ok” as I felt about my car debt, much of my credit card debt was originally about paying for repairs/etc for it. Much of the credit card debt since has been about the mobile home I can’t sell and can’t afford all needed repairs on.

So even the “safe” credit – like cars and homes – has led me into credit card debt and beyond. That’s why I’m feeling so “ick” about any credit at this point. I’m planning to sell the car in the next few months, and not buy another. I’m also planning to never buy another home, as anything I can afford will require more repairs than I can keep up with.

The day I’m finally out of this trap with the mobile home, etc., will be a very blessed day!