Student Loans and Credit Cards

Not only do I have student loans, as you others have mentioned, I also have significant credit card debt.  I'm trying to pay all this debt down now.  It's tough, but I'm making slow progress.
NihonjinRXS NihonjinRXS
26-30, M
5 Responses Aug 3, 2007

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I can only tell you from experience, but you must be committed. I strongly suggest going to Dave Ramsey's website and ordering his book.<br />
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We refuse to borrow any money for anything and refuse to pay interest. We do have a couple of credit cards but never charge more than we are certain can be paid off in one month. About once a year, some unexpected bill comes up that takes a couple of months, but generally we carry no balance and therefore pay little or no interest on the card.<br />
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But to get to that point, you have to do a couple of other things first. It takes determination and agreement with your significant other.<br />
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Save five to ten percent of whatever your income is each month, even if you make only minimum wage. Save up to $1,000. Most who feel overwhelmed with debt don't think this can be done, but it can. Anyone who is determined can do it. This is an "emergency fund."<br />
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Once you have saved $1,000 emergency fund for unexpected expenses that eventually come up, start paying that same percentage on your debt. Pay extra on your credit cards first (but check remarks below about credit cards first). The start paying extra on your other expenses. You will have enough money to do this if you do the following:<br />
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Stop buying anything that isn't absolutely needed. This includes unnecessary food. Go on a rice and beans diet, literally. Don't go into any restaurant unless you work there. Don't go to concerts or movies and don't buy DVDs or video games, and don't rent them until you have paid every cent of debt. Don't buy clothing that isn't absolutely necessary.<br />
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If you have a car or truck financed that costs more than about 10% of your income, sell it, even if you're upside down on payments. If the creditor insists you must pay off the difference, you may be better off paying off the difference than continuing to pay on that unnecessarily expensive vehicle. Buy a "beater" just to get around. You don't need to impress anyone with an expensive vehicle; if you are convinced you do, you're sunk.<br />
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If your credit card debt are extremely heavy, call up the company and tell them you cannot pay it. You want them to reduce the amount. You will be told at first they won't do that, but they will. (This is where Dave Ramsey's book comes in handy.) If they don't agree, just stop paying until they're ready to deal.<br />
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When your debt is finally under control, start saving. This means mutual funds, savings accounts, whatever. Put 10%, or more if you can then afford it, into those savings.<br />
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If your credit isn't already destroyed, get your bank or credit union to refinance your debt on your mortgage to a more manageable level. If you can pay it off in 15 years instead of 30, do it.<br />
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We don't buy any car until we have saved enough money to pay cash. We buy only used cars; we can afford to buy one 2 or 3 years old. But if we couldn't, we would buy an older car.<br />
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If you don't have the discipline to do these things, you will be a slave to creditors the rest of your life. But if you have the courage and fortitude to do it, You will sleep better, smile more and live longer in peace and harmony.

I project it will take me the full 30 years to pay off my 50k in student loans, unless I get a big windfall of some sort.

Good for you... if your making progress and not crying like so many college students with loans. You have a good attitude.

Good luck, and good budgeting!