Financial Planning for Generation X & Y Women
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Expert Q&A Archive

How do I catch up on the debt I owe?
I have recently run up a large amount of credit card debt with living expenses, purchasing books, and college expenses. I am already working two jobs, but am having a hard time paying off the debt because of late and over-the-limit fees the credit card companies put on my account every two weeks. I never had a problem with my credit card debt before, but this summer I’ve have had some unexpected financial emergencies. I kept calling the credit card companies trying to make arrangements but only one company would help me. The rest kept charging me fees and as a result I cannot catch up on the debt. My question is... how can I get my debt down without going broke????!!!!!
Bettye J. Banks:
expert info »
By all means, contact a legitimate credit counseling agency. You can contact the National Foundation for Credit Counseling (NFCC) at 1-800-388-CCCS, or go to their website at to obtain information on a reputable agency near you, or look in your phone book for an organization in your area. Ask about the services each provides (budget counseling, debt
management, education programs). Be sure to ask about costs for counseling, set up, monthly service costs, etc., what you can expect as an outcome and a timeline for helping you to become debt-free. Call more than one service and compare. Ask also about accreditation. A reputable agency should be accredited by the Council on Accreditation of Services for Families and
Children (COA).

The main reason your creditors may have chosen not to work with you is your pay history. When you miss, or pay payments late, you jeopardize your relationship with them. Counseling agencies with longtime relationships with creditors have a record of credibility that you may have lost. The counseling and debt management programs help you to rebuild that credibility and to become debt-free in a timely manner. Be aware that you may suffer some immediate negative effects to your credit report, but as you pay in an orderly manner over time, you should see improvement. These programs offer you the opportunity to become financially stable and rebuild.

I would suggest consolidating your debt and making one payment. As you find more available funds, double up on your payments. When you pay off your principal, then you have no associated interest. It's the interest that kills you!

Here's a harder will need to make some sacrifices in order to free up some funds. Below are some cost cutting / savings techniques:

• Reduce eating out. Cooking at home is less expensive
• Give up Starbucks (only if you are a Starbucks addict like me :)
• Consolidate trips to cut back on gasoline charges
• Cut back shopping, just for a little while, for only things you need. I
know. I find I shop more for what I want than what I need.

I think you get the general idea. Consolidate your debt and cut back on your expenses. Eventually you will get there. This comes from a person who, when I was in my 20's, had accumulated about $20,000 worth of debt. I am happy to report right now I'm debt free except for my mortgage, and have been for about 25 years. Good luck
Suzanne Kincaid:
expert info »
Contact a free debt relief agency to help you ASAP. Get professional advice and assistance with reducing the debt load. At least get the interest rates and excess fee/charges removed. Best Wishes!

Rebecca Schreiber CFP®:
expert info »
I wish I had a silver bullet for your debt problems. Working two jobs it sounds like you don't have any time to spend your money, let alone rack up new charges. I have two suggestions:

• Since you are already working two jobs, find out if you can make more money at work. Is there an open position just up the food chain where you are where you would earn more money for your time? With two jobs you have two sets of opportunities to make more money with your current employers.

• Are you currently living alone or do you have a roommate? Is there something you can do to take a large chunk out of your monthly expenses, like bringing in a roommate or using public transportation to get to work? If you're always on the job, are you buying your meals out? Take a look at all of these options. Each offers an opportunity to save hundreds of dollars per month. Good luck & best wishes!
Jody Rorick, CPA:
expert info »
If you can consolidate your credit card debt into one card with the lowest interest rate that would be best; however, it sounds like you're paying over the limit fees, so maybe consolidation isn't an option for you. In that case, if you're becoming delinquent on your debt and your credit score has been affected, you might be in a bargaining position if the credit card companies think that they won't be paid at all otherwise. You might be able to negotiate a balance due without the interest and late and over the limit fees. If, though, you've been paying regularly and your credit score hasn't been affected adversely, they won't want to negotiate with you. In that case, you should concentrate on the card with the highest interest rate first, and put most of your available funds towards reducing that to zero while keeping the payments on the other cards current, paying at least the minimum, and adding a little more to the minimum if you can.

When you've reduced a particular credit card debt to zero, you should consider closing that account. Too many credit cards can be confusing and adversely affect your credit score. Debt is serious and paying it back should be your top priority. I think people get into trouble, sometimes, because they're not taking debt seriously. Hopefully, if you set it as your number one goal, you will reduce your debt to manageable levels. You should allow 7 days for your payment to reach the credit card company and make sure it arrives before the due date. You can mark this on your calendar--the date you need to send each payment. You might consider adding more income, or maybe replacing a lower paying job with a higher paying job, or reducing other expenses somehow.