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I need serious help and guidance.

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tonyjs
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I need serious help and guidance.  Reply with quote  

Hello everyone. I am new to these forums. I am also new to getting any financial advice, this is my first time reaching out to anyone about my financials.

I am 19 years old, almost 20 and I want to overhaul my financial decisions and I'm not sure where to start. I understand that I have made bad choices in my life and I understand that I may not be able to recover from it, but I want help.

My situation:
I have 3 Credit cards
1 Line of Credit
1 Student Loan

Credit Card #1 - Credit Union of Colorado - $600 Limit - Current Balance: $576.33
Credit Card #2 - Amazon Rewards Visa Card - $1500 Limit - Current Balance: $1443.53
Credit Card #3 - Wells Fargo Team Member Card - $1500 Limit - CLOSED due to overlimit - Current Balance: $2715.84

PayPal Credit (Line of Credit) - Credit Line: $3500 - Current Balance: $3419.92

Student Loan - Stafford Loan - Balance: 2767.96


I have never made a late payment, as soon as I put money on a credit card, I use it.. I don't know how to stop, I don't know what I can do. I have such high balances and all I keep doing is spending.

I can't go to my parents for advice, they don't even know I have so many credit cards, they want me to get my own car. I'm just lost, I don't know what to do. I don't know what the first step I should take to get these all paid.

I'm 19, I don't go to school anymore. I work at Wells Fargo (Teller), I'm even afraid to ask my coworkers or my boss for help.

I get paid around 11.33 an hour, 30-35 hours a week, 17000 annually.

Where should I start? I want to start getting better at my financials. Do you need more info? I'm willing to give as much information as possible for help.


Thanks
Post Wed Nov 26, 2014 6:57 am
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Wino
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You make about $17K per year, and owe about $11K. Let's call it 65% of your income.

The first thing you must do is stop spending money that you are not absolutely forced to spend. No Starbucks. No McD's for lunch. No movies. No Cable TV. Find somewhere with public wifi for your computer access. Cancel your cell phone the first chance you can without penalty. If that's years away, then save up and cancel now. Cut absolutely everything you don't need to eat, sleep, or get to work.

The second thing is that you must cut up the credit cards. They're at or over the limit, so you don't have the ability or desire to use them maturely. If you just can't cut them up, then instead, take a large can (like a coffee can) and pu the cards in it, fill it with water, and put it in the freezer. You can still use them after you thaw them, but you aren't going to do any spontaneous spending.

You might be able to get a deferral on the Stafford loan. I don't know. If you can get a hardship, then get it. Let it go dormant.

Now, figure out how much money you get in a month that is NOT allocated to basic living necessities. Ramen with hot dogs and peas or corn may not sound great, but you can make a whole meal for less than a dollar. You could reasonably eat all month for less than $50.

Once you know how much money you have, you can work out a plan to pay off the debts. You have a choice of methods: debt snowball or debt avalanche being the two most popular. These are lowest balance first or lowest interest rate first, respectively. Pay the minimum payment on the ones that you are NOT targeting, and pay every penny you can on the one you are targeting.

It's going to take you several months or maybe more than a year to get your head above water, but if you don't do this, you're going to eventually get to a point of no return, and end up making a lifetime decision of bankruptcy, for a sum that in 25 yeares you'll say, "I could pay that in three months, now." That's wall beyond "not smart."
Post Wed Nov 26, 2014 2:00 pm
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oldguy
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You are what is known as a 'spendaholic' - just like all addictions, it will take will power/strength to quit. (BTW, by your name I guess you to be male - the problem is more common in females, spendaholic/shopaholic, clothes, shoes, purses, cosmetics, hair, etc - I have daughters, lol.)

Did you buy anything of value with the $11,000 - things that could be sold, craigs list? Eg, ATV, boat, motorcycle, snow machine, big TV, furniture? Sell whatever you can, that will get you free of the toxic interest rates, 18% and 20%? Later, in 2 or 3 year, you can buy back some toys but only when you can do it with cash.

As for dropping out of school - you can probably see what the future holds for you if you don't fix that. $17,000 gross, maybe $14,000 after taxes. That will barely cover rent & minimal food when you go out on your own, you'll never have a car and a house.

One daughter was a bank teller while she was in college, got her BS in accounting. She grosses about $92,000 now. So, the BS makes a huge difference, $17k to $92k is a nice step. Very Happy
Post Wed Nov 26, 2014 4:17 pm
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tonyjs
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Hi guys, thanks for the responses.

When I get home from work today. I am going to cut up all my credit and debit cards. As far as paying my credit cards off, I think I will tackle my credit union card (lowest rate and balance).

I however, did not purchase anything worth of value to sell. A lot of it was digital goods or personal items.

I am making a plan on how much I get a month and how much I should be paying on each card/line of credit.

I do want to go back to school, but I just can't afford it right now. And I'm not sure if they will let me get another student loan. (Should I ask? or should I wait until I pay all this off) I really would love to go back to school, but I would like to know what the best options are for me right now.

What are some general tips so I don't withdraw money from my account and just spend it. No credit/debit cards will stop my online purchases and atm withdrawls.
Post Wed Nov 26, 2014 9:26 pm
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oldguy
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quote:
(Should I ask? or should I wait until I pay all this off) I really would love to go back to school, but I would like to know what the best options are for me right now


That answer depends on your major - if you are studying for a marketable degree (STEM) then it is best to borrow, get the degree sooner rather than later, and get on someone's payroll earning $50k, $60k, $70k - then you can pay back the loan quickly. Conversely, if you are working on a 'soft' degree (social work, psych, literature, geology, etc) you will probably start at $25,000 and it will take awhile to get a job - in that case it is better to pay as you go (cuz it will take a long long time to repay debt on a $25,000 income).

quote:
so I don't withdraw money from my account and just spend it


That is strictly a matter of personal strength and will power. It is like smoking, drinking, over-eating, etc - you make up your mind to quit and then stick to it.

One tip - become good at math, that way you'll understand your goals and have the confidence in your decision. Eg, if you invest $417/m into an 11%/yr investment for 30 yrs you'll have $1,100,000. The Law of investing - risk and return are directly proportional. You need to understand statistics and probabilities so that you can calculate risk.

In my case, my engineering degree served me twice - it gave me the math skills to earn a good salary and (2) it gave me the math skills to calculate how to invest that salary. The math is what helped me become wealthy.
Post Wed Nov 26, 2014 9:55 pm
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Publius
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The only thing I would add to the advice you have received is to consider the fees that you are paying on each of the over-limit accounts. If you are paying a monthly fee, you might want to focus on one of those first, rather than the credit union card. You could consider getting one of the cards below the limit as a quick win and then move on to the lower balance ones and knock them out once you aren't paying 50-60 a month/card in fees in addition to the accruing interest.
Post Fri Nov 28, 2014 2:08 pm
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Wino
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quote:
Originally posted by Publius
The only thing I would add to the advice you have received is to consider the fees that you are paying on each of the over-limit accounts. If you are paying a monthly fee, you might want to focus on one of those first, rather than the credit union card. You could consider getting one of the cards below the limit as a quick win and then move on to the lower balance ones and knock them out once you aren't paying 50-60 a month/card in fees in addition to the accruing interest.
Those cards are unsecured. After the OP catches up on everything else, he can come back to those and negotiate. Much depends on the State he resides in, but in most States, he can negotiate the unsecured debt. Who cares if they say he owes $10,000 on a card where he only charged $2,000? Once he's able to pay, he can most likely offer the $2K and settle. His credit is trashed, or soon will be, so who cares if the credit cards get their money? Visa cares. The OP should not.

Pay off what you can, and let the unsecured creditors suck wind until you're ready for them.
Post Fri Nov 28, 2014 5:05 pm
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littleroc02us
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I was in the same place you were in the my late twenties, so are ten years ahead of where I was. The way I got out of debt was to cut up your cc's like everyone said. The next is to work. You say you only work 35 hours a week. I got three jobs and I worked 80 hours a week and I didn't sleep but I got out of debt. Your young and can work all the time. By doing this you could double your income. So cut those babies up and go deliver pizza's or something. Stop spending on stupid things like going out and gas stations.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Dec 01, 2014 10:07 pm
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tonyjs
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[quote="oldguy"]
quote:
That answer depends on your major - if you are studying for a marketable degree (STEM) then it is best to borrow, get the degree sooner rather than later, and get on someone's payroll earning $50k, $60k, $70k - then you can pay back the loan quickly. Conversely, if you are working on a 'soft' degree (social work, psych, literature, geology, etc) you will probably start at $25,000 and it will take awhile to get a job - in that case it is better to pay as you go (cuz it will take a long long time to repay debt on a $25,000 income).


Okay so I either want to go back for Business'Marketing or Nursing. If I were to go back, how would I pay for school if I'm paying for a student loan and those credit cards? Would they let me get another loan?
Post Fri Dec 05, 2014 10:37 pm
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oldguy
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quote:
Okay so I either want to go back for Business'Marketing or Nursing. If I were to go back, how would I pay for school if I'm paying for a student loan and those credit cards?


If you are going for a 4-yr BSRN, you will get a job as soon as you pass the state license test - and you will probably get hired right away at about $60,000. And there will probably be plenty of overtime available at time & one-half (DW is an RN, always has plenty of OT if she wants it).

Conversely, the BusMarketing has way less near-term potential - who wants to hire a 22 yr-old fresh-out to do their Marketing when there are dozens of proven seasoned folks available?

If you go the RN route - live at home, keep the pt $17k teller job, go to a community college to get the 2 yrs of core courses (and maybe a few more transferable credits if available). That won't cost much, under $4000/yr. So you can cash flow your loan payments as well as pay your tuition with 2 yrs of income ($34,000).
After the 2-yrs are completed (and the $11k of debts are paid) transfer to State, get a new student loan, live in a dorm, and finish it up. You'll probably spend over $25,000 for the last 2 years - but you'll be ready to step into a $60k job - and repay the $25k quickly.
Post Sat Dec 06, 2014 12:04 am
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RetireInStyle
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First of all, good for you for reaching out to get some help. There are people in their 40's and 50's with severe spending problems that won't admit they have a problem or get help.

I'm not in the U.S., but I do have a quite a few years of experience helping people get back on track financially. There has been a lot of great advice posted here, so I'll try not to duplicate it with the exception of - Get Rid Of The Cards! If you want to keep one of the cards for emergencies down the road, keep the one with the lowest limit and get your Mom to hang onto it. You may have to come clean with her about your situation, but that make actually help you to shape up financially.

I would contact every one of your creditors, explain that you can't pay your debts, and see what they can do for you. Some will allow an interest free period, others may give you 6 months payment free, and others may reduce part of what's owing. They would rather receive something than nothing at all. Use strong negotiating tactics and don't back down, you have nothing to lose.

Arrange with your bank to deduct a certain amount every paycheck or monthly and transfer it to an account that you don't have instant access to. Use this to start your own "education savings plan".

Close down your PayPal account - the whole thing, permanently. Arrange some kind of payback schedule with them and NEVER use PayPal again. This should curb your online shopping addiction.

You may need to wait another year before you return to school, so you can pay off this debt burden. While you are doing that, take a couple of evening or distance education (correspondence) courses that can be used towards your degree or diploma.

Find out your employer's policy for paying for education. They may pay for a couple of business courses if deemed relevant to your job.

Follow the advice of whoever posted to work more hours, which also has the added benefit of leaving you less time to shop.

Here is a link to another forum that has some really good tips on finding the money to invest. Consider your future and education as a high priority investment. http://cryptomoms.com/forum/general-discussion/9/finding-the-money-to-invest/121/

Watch the show "Till Debt Do Us Part". I guarantee you will feel better about your own circumstances when you see how financially "challenged" some of these couples are. online - http://www.slice.ca/til-debt-do-us-part/
Post Sun Dec 07, 2014 7:21 pm
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GardenCat
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Hello,
I am also new to this forum, but have liked very much the sound advice being given... javascript:emoticon('Smile')
I have been a certified credit counselor for a few years in my recent past, and have many years of making my life be financially secure on what most would consider limited income - just to say who I am...

One piece of advice I would like to pass on is: you do NOT necessarily want to pay off the low interest rate credit card first, pay off the HIGHEST interest rate, highest fee card first. Then work you way down to the low rate card. IF the low rate card has the highest balance, then you may want to look at which card has the most interest in $$$/month and begin with that one.

If you don't want to go to your parents to put a last ditch card in the freezer or whatever, stash some emergency money as soon as you can and add to it regularly, even only $10 or more per week as a direct deposit. Do this in a credit union in a nearby town without a branch in your town - makes it more difficult to get to on a whim!

The snowball effect way of paying off debts is: choose the first debt you want to pay off, pay the minimum on all others and all the rest of available $$$ to the first debt. As soon as one debt is paid, choose the next highest priority debt, which you have been paying the minimum on, and add what you had been paying to the previous highest priority debt to that minimum, resulting in a larger monthly payment to pay off this next debt - and so on until all the credit debts are paid.

This method works. You may want to put a low dollar figure debt into one of the first debts to pay just to give you a boost and to see how it helps.

Good luck!! javascript:emoticon('Shocked')

PS
I have friends who are nurses and all are loving it and are making good livings...
Post Sun Dec 07, 2014 11:01 pm
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Benstoke
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The second thing is that you must cut up the credit cards. They're at or over the limit, so you don't have the ability or desire to use them maturely 650-393 dumps. If you just can't cut them up, then instead, take a large can (like a coffee can) and pu the cards in it, fill it with water, and put it in the freezer 650-472 dumps. You can still use them after you thaw them 650-474 dumps, but you aren't going to do any spontaneous spending.
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