I’m not out of debt yet but am current on bills at this time.

I’m not out of debt yet but am current on bills at this time. I have old debt to deal with and that’s my next project. However, I have to agree with Rich here – budget! We use a monthly cash flow sheet by Dave Ramsey and know where every penny is going to go before we get our hands on it. DH owns a 6 month old business and I work retail. Our incomes fluctuate and trying to pay bills on time has been a nightmare. Forget saving money!

But we started using the envelope system for our business and personal expenses and wow, what a difference that’s made! Today is the 7th day of March and the business rent, electric and phone bills are paid already. We paid the phone bill the day after we got it, our first time ever to do that. Between the cash flow sheet and the envelope system we have a great handle on our money for the first time in our lives.

I can’t strongly recommend enough that you use a zero based budget (call it what you want) and look at every penny you spend to see where they’re going!

I also would like some tips on how to get started. We have quite a bit of credit card debt, car payments, mortgage and medical bills, We tried CCCS but we couldn’t maintain the payments that they set up, so we need to try to negotiate with the creditors. Any tips or info would be appreciated.

Are the debts old or current or what? I’m a firm believer in doing Dave Ramsey’s snowball method of paying them off. Are any of them small enough that you could pay them off in one chunk? If you haven’t yet, list them all from smallest to largest. If any are small enough to pay off now, call that one and negotiate a settlement price, get it in writing and pay it off then start on the next lowest one.

I suggest going to debtsmart.com… Scott Bilko is selling a few of his books on how to negotiate with Cc companies and the art of negotiating. Just a suggestion. I have the books and they will give you any information you need to know. I believe for all 3 it was like $25.00. Good Luck, if you have any questions let me know.

Here are the steps to successfully manage the debt. (as I would do it) Also, stay away from the CCCS and companies like that, you can do all they can do with some effort.

  1. Write it all down, use excel, whatever your comfy with. Write down the balance, monthly minimum ,etc.
  2. Sell the cars and get rid of car payments. :-) This is a tough step, but when the average car payment is over $300, that’s quite a bit of money going out the door for an asset that only goes down.
  3. Do a budget, a written plan for the coming month. Do food, shelter, transportation (car payment until sold) and clothing first. Then do all the other needs except for CC debt. Then, with what’s left at the end you determine how much you can pay the CC companies. At this point you also will call the CC companies and ask for a lower rate and ask them what the new minimum payment would be. Now, based on this information you can see if you can make minimums. If so, breathe a moment and add them to the budget. If you can’t meet the minimums, then here’s what we do. Add the balance of all cards together and then determine the percentage each card contributes. For example:

    Visa Citibank – 2000
    Mastercard – Wamu – 1000
    Discover – 6000
    American Excess – 1000

    So, Visa is 20%, Mastercard is 10%, Discover is 60% and AE is 10%

    So, if your available money for CCs is $200, you would divide it up amongst the creditors. So, Visa would get 20%, or $40, Mastercard would get 10%, or $20. Discover would be $120 and AE would be 420. You make a copy of your budget and send a letter every month with it stating that this is all I can pay.

  4. Sell stuff!!
  5. Get a second job

Hope that helps. It works well and will usually carry you for years though with extra jobs, selling the cars (and replace with beaters until you have the debt gone) you won’t need it to carry years.

One last reminder, always, always always, PAY HOUSING, FOOD, TRANSPORTATION and CLOTHING first!!!!!!!!!

P.S. clothing shouldn’t be top of the line stuff you can’t afford and food = no restaurants and no seafood at home :-) well, shrimp if it’s on sale with triple coupon 😉

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