First, the bad news:
A high FICO score is no guarantee of getting yet another loan.
You now have so much debt that your FICO is being hurt by your debt/income ratio.
Now, the good news:
YOU CAN BE DEBT FREE IN 12 MONTHS.
Making $34,000/year, no rent, and $25,000 in debts.
Here's how you're going to get yourself out of debt:
1) SELL THE CAR.
Buy a $2,000 used car, and drive that until you pay off the rest of your debts.
2) "I solemnly swear, I will never use a credit card, borrow money, or get a car loan again. And I will put all my efforts toward getting out of the debts I'm in."
3) Write up a detailed written budget.
Every month, before you get your paycheck, write down on paper what you will spend your money on.
4) Make sure your budget is balanced.
That means (money going in) = (money going out)
Some of the money going out can go out of your wallet and into your savings account.
5) Squeeze out as much money as you can.
That extra money will be the tool to use to get yourself out of debt, and on the way to saving toward becoming rich.
6) Once you have the budget, and money to work with, here are four goals to hit, IN ORDER,
First, get current and just pay the minimums.
Second, get $1,000 cash saved up.
Buy a $5 picture frame at Wal-Mart, put the ten $100 bills in it.
Put a sign in the frame: "In case of emergency, break glass"
You'll use this, not your credit cards, if the transmission breaks.
Third, go on the attack. Every dollar attacks the smallest debt you have. So kill it.
Fourth, attack the second-smallest debt, etc.
Look at this budget, and tell me if it's realistic, assuming you're serious about being completely out of debt in 12 months:
Salary: $34000 ($2833/mo)
401K: -0- (pay off debt first, then invest)
State Income Tax: 6%
$2,150 Monthly Income after taxes
$1200 Savings / Debt Repayment
Pay the minimum on the credit card, and the rest on the unsecured loan.
$80 Groceries ($20/week. Beans & rice and Ramen noodles. No steaks. When I was unemployed, I stretched $11/week to feed myself, so I know this is realistic.)
$-0 Restaurants (The only time you'll see a restaurant is if you're cleaning tables at your second job. No hamburgers.)
$-0 Rent (Free Rent - Great)
$20 Clothes (second hand, or one new shirt a month)
$30 Laundry (Laundromat. If you own a Washer/Dryer, add this $30 to 'debt repayment')
$-0 Car Payment (you sold the car and bought a broke guy's car, right?)
$300 Gasoline ($75/week, one tank a week)
$10 Oil Change (once every 3 months)
$80 Repairs (You know something will break, so save this in a separate envelope, and be prepared)
$60 Car Insurance ($360 per 6 months)
$-0 Car Replacement (pay off the debt first)
$10 License and taxes
$80 Natural Gas
$5 Doctor/Dentist ($60/yr)
$30 Household Stuff (soap, toothpaste, etc.)
$10 Hair cut (A $20 haircut every two months)
$20 Christmas Gifts (Don't put Christmas on Visa)
Once you pay off the debts, that $1,200 will go a long way. Put $500/month into retirement, $400 toward a house/apartment (I doubt the rent-free arrangement will last forever), and enjoy the other $300.
· 1 decade ago