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Solvency issue resolution

I have my student loans now coming due and today I have a payment of $561.77 due but only have less than $100 in my accounts due to making some more pertinant payments (att bill and a megabook yellow pages bill) that were due yesterday. I am able however to pay the interest that is going to accrue against my student loan for the unpaid amount which will amount to $28.05 so I plan to send a payment of $30 to them and let the bill become wreckage of my past and go unpaid today only to pay it ASAP when cash is available.

Am I still considering myself solvent? I say yes because I have no new debt with paying the accruing interest on that amount of unpaid bill. As for other debts and payments it is one day at a time and today I have 46days without debting.

under Canadian rules an insolvent person is a person who owes more than $1000, can’t pay their bills as they come due and if the person sold their assets they would not be debt free. Is the definitely of insolvent different in the US? Why not put your defer your payments for a few months, until you can make full payments? You can ask for forbearance. Yes interest accrues but at least your credit isnt getting hit constantly and you are not getting charged late fees etc.

There are humans behind this money thing too

Have to remember there are humans behind this money thing too.

We have $50K in student loans (10 individual loans) and they just take our payment and apply it how they want to (Sallie Mae). Looking at a $50K debt go down penny by penny is not stimulating. I decided to pretend that I am paying the lowest first and wrote it up on the refrigerator that way. I won’t even look at the real balances until I think I’ve paid about all of it off. Now, I am looking at the lowest loan ($700) and strategized ways to knock it out of the ballpark today!!!!! $700 is attainable, no matter the interest, $50K is not.

We all got into this mess because we wanted things TODAY, not over time…. Therefore, being the critters that we are, we want to see results TODAY, don’t we? Lowest balance first is the closest we can come to that.

Well I just paid off the $290 and I paid the minimums on the rest, so now my priorities look like this:

  1. $1760 ($2000 limit) 22.5 apr $47 payment per month
  2. $5806 ($6000 limit) 22.5 apr $146 payment per month
  3. $5090 ($8400 limit) 6.99 apr $94 payment per month
  4. $4775 ($5500 limit) 0% apr til August $72 payment per month

I’m not sure what happened to #2 but the balance went up, I’ll have to check with the company. I’ll probably put some of the bonus towards #2 because its less than $200 from being maxxed out. The rest will go towards paying off #1. The way it looks not #1 could be paid off by February.

Thanks for all th input and advice, I know I’ll get there eventually!


Last night I paid $460 to card #1, and $500 to card #2. So my chart
should look like this:

  1. $1300 ($2000 limit) 22.5 apr $47 payment per month
  2. $5306 ($6000 limit) 22.5 apr $146 payment per month
  3. $5090 ($8400 limit) 6.99 apr $94 payment per month
  4. $4775 ($5500 limit) 0% apr til August $72 payment per month

I am leaning towards paying down the balances to a certain point (50% maybe)so that I can consolidate to a lower interest. I know transferring balances doesnt solve the problem if I just use the old cards again. I still have a couple hundred to put towards one of these, probably #1 as I want to have that one paid off by February. Thanks for all the encouragement and ideas!

The reason the snowball works

The reason the snowball works rather than the “pay the least interest” method is this:

If you have ever run a race or done anything taxing…. when you can see the finish line and you just have a little bit more to victory, your body kicks in full force – it’s emotional.

When you see your smallest debt going away with “just a little bit more” you will find ways to scrape up that “little bit more” money and knock it out. When the extra $300 has you $50 away from wiping out a debt, you find that $50 under the couch cushions, in the car ash tray, your pockets, the used cds you sell….. That extra “burst” kicks in. When you start doing balance transfers and pegging at large debts first, or split your efforts, it all seems to far away that $300 a month is quite content.

Money is not all logic… it is emotional too.

Financially speaking, the best way to do it is apply it to the balance with the highest interest rate. Dave Ramsey’s way is to pay the smallest balance first to give yourself the feeling of accomplishment. It all depends on how you want to ffel about the debts. Do you want small victories along the way or do the small victories not mean that much to you? I would pay off the small one and then apply the rest to the $1800.00 balance. With the extra you have every month, that second will be gone in a couple of months.

I just read all of the various advice given and just like opinions, there are many. Some of the suggestions seemed complicated, almost need a calculator to computer which to pay off first.

Then was a suggestion about not trying to pay them all off. Many of the participants here are under the bondage of debt and want out – completely and forever.

I know there are many schools of thought, but as I keep reminding everyone, FICO a.k.a. Fair Isaac is an I LOVE DEBT score and you can live without one. That is not to say to destroy your FICO while trying to get out of debt, but to let it gracefully die as you pay off debt and close credit cards. If you insist on keeping them, keep on the oldest since 15% of a FICO is for credit history whereas on 10% is for new credit. The 30% on amount if debt is amount of debt as it relates to your max. So if you are at 98% credit limit as I am on 2, then your score is lower than it would be if you were at 30% of your credit limit.

One place I do deviate from Dave Ramsey, is that if you get a windfall and that windfall will retire a single debt with a large min payment, put it towards that debt. That allows you to increase the size of your snowball exceedingly.

You need to start saving an emergency fund. You will have debt and I can completely understand that you want to pay it off as soon as possible. But you need to start put money aside so this way you will never become dependent on credit cards ever again. Your emergency fund by the time its full funded should normally be 6 months of your living expenses. If you don’t have this or even start to work on this, you will always be dependent on credit cards in case of an emergency. My opinion…Put a partial of your money into savings and partial into your cards…If you got any small ones that you can eliminate, get rid of them…it is a mental thing…Then start tackling your highest interest rate cards….but dont forget that you need to have an emergency fund….So save as much as you can pay off.

John Cummuta has a formula

John Cummuta has a formula for which to pay off first and uses an accellorator payment that is above the minimum payment per month. The way he tells you make the decision on which to pay off first is this: Divide the total payments by the min payment and figure out how many months to payoff when you have all the numbers the lower the number the higher on paying off first. that allows you to pay off quickly and then take the accellorator money which is above the min payment and apply it to the next debt with including the amount of the first debts min to the new payment on second debt. All other debts get the min payments until they get to the point where they get the accellorator payments.

I was drawn to your posting, as I saw myself there. I was in Debtors Anon. for many years and I remember what they told newbies that really helped me. So here are a few ideas:

  • People in debt generally focus on what they owe, but the focus is best used to look at what you make and how you’re spending it now. There are general guidelines on how to spend the money you earn which may help you get out and stay out of debt.
  • For example, one rule of thumb is that debt repayment for credit cards and unsecured debt would be no more than 10% of your monthly gross income. Anything more is a red flag that you’re spending in a way that will continue your debt indefinately.

Note: If I added right you are paying $369 in payments now without student loan. Earning $3,690 per month gross income would manage these debts according to this rule… To add in your student loan, you’re talking a gross income of $6,690.

Another “rule of thumb” would be to take only about 10 per cent or $150 of your bonus would go initially towards debt repayment, if you want to break the debt cycle. 10 per cent of it would go into savings/retirement and the rest would be up to you, including if you want to pay a little more of it on debt. But to pay it all on debt may actually contribute to your debting cycle.

– Here are the general rules for managing unsecured debt, in a perfect world. Even a good financial consultant would probaby tell you this.

  1. Unsecured debt repayment should not exceed 10% of your monthly gross income;
  2. Take another 10% of your gross for retirement/savings. Even 5% will help in most cases. Having savings has a positive overall effect on health.
  3. Take another 10% for charitable giving if you believe in that. 5. Live on the rest. Adjust your lifestyle to do that. If you do, you’ll eventually eliminate debt completely. This is an age-old formula for financial health.

Obviously, it’s not this simple in anyone’s reality, but this may be good food for thought. Please note that I still struggle with these principals and have recently lost a job and am struggling to remain in my home, so take what I say with a grain of salt. In my experience, living a cash-only day to day life when I’m working and distributing my income even close to this way, seems to make financial dramas disappear from my life.

As for what to pay off first, there’s no easy answer… except to say whichever you pay off, make sure you never charge anything on that card again until you’ve got a year or two’s worth of assets in the bank.

What to pay off first??

Im a newb here so let me first post my debt info:

I have 5 main credit cards that I want to get paid off.

  1. $290 ($900 limit) 0% apr til January $10 payment per month
  2. $1810 ($2000 limit) 22.5 apr $47 payment per month
  3. $5645 ($6000 limit) 22.5 apr $146 payment per month
  4. $6082 ($8400 limit) 6.99 apr $94 payment per month
  5. $4844 ($5500 limit) 0% apr til August $72 payment per month

I’ve also got about $300 a month worth of student loans, but I’m not worried about those right now.

I’ve already heard about the idea of paying off the smallest first to the biggest, but what makes the most sense financially. I get a bonus next week that will be about $1500, where should I put it? I can afford about $300 a month extra to go towards payments, which one should it go to?

Thanks for taking the time to help!

I would still start knocking them out in order, smallest balance to largest. If you have $300 extra to go towards the debts anyway, #1 is going to be gone in a month any way you look at it. Get that paid off and have one less card on your list. Paying the other $1200 of the bonus and $300 extra is going to knock out #2 within a couple months and then you have only 3 cards and $357 MORE to go on card #5, you next smallest.

I envy you. Your snowball is rolling pretty quickly. I have three cards…and my lowest balance is still about $9900.00. Its going to be a long while before my snowball rolls. I just have to remind myself that each month I am getting myself in a BETTER situation, it isn’t getting worse, so even though I can’t yet pay one off, I am improving my situation. That has to be enough for me.

In case you decide to get some quick cash for your emergency expenses – there is a great company named ElcLoans – they offer payday loans online without credit checks. Therefore you can use their services to get some cash and do not worry about your credit score at all.

Apply your entire bonus to debt #2, in Jan. balance transfer debt #1 to Debt #5. Apply extra monthly payment to debt #2 until paid off. Once paid off add the monthly payment to your extra monthly payment and apply to Debt #3. Then once it is paid off, apply all extra monies toward either debt #4 or 5 which ever has the highest interest at that point. The name of the game is to minimize the interest paid out. Do not close any cards once paid off, just leave dormant. Consider appying for other 0% interest cards and balance transfer highest rate balances while paying off debt.

Now is the time to eliminate debt! Do not look at what makes sense ‘financially’, look at what will get you going and keep you going. That is why Dave Ramsey suggests the snow ball method.

Pay off #1 now. Put the 1500 towards #2 plus the extra $300 and you have 2 CCs gone in 2 months.

Take extra $57 you no longer pay towards them, along with the extra $300 and put it towards #5. Even though it is zero interest, get it behind you where the CC cannot change their mind on the zero interest. In less than a year, # 5 is gone.

Take the $329 and go after #3, and then #4. Any more bonuses or extra cash go towards the lowest.

This method gives positive incentives quickly and helps keep you going and not quit. Taking on the biggest mountain first tends to get discouraging.

Debt Management vs Debt Settlement

When working full time, I was able to reduce my credit debt from 16,000 to 13,000 paying $395.00 a month (using a debt management program). My job ended and I have not been able to get full time employment only contractual opportunities. Two of my three cards are 60-90 days late. As I work on regaining financial footing, I’ve am trying to decide between rejoining debt management or doing debt settlement. I know if I do debt management – paying $395 a month-it will take me 4 years to pay it off. If I do debt settlement, I will pay $307 (including fee) for 23 months. What is the better choice? Thanks.

I imagine that both will make for NEGATIVE information being reported to your credit reports, which will cause future derogatory actions (higher interest rates, more fees, etc.), plus the late payments, which creditors will definitely not look at kindly.

If you settle, get the amounts in writing FIRST, well before making a payment. Keep copies of everything. Mail the bank checks and a copy of the letters to the creditors, and make them SIGN for the receipt of the payments. Document, document, document.

Then, send copies of the checks and the letters from the creditors clearly showing the amounts to the Big 3 credit bureaus so your paperwork is updated promptly.

Take care & good luck!

I am in almost the exact same situation. I’ve been on a Debt Management Plan for 1 year. I lost my job because the business just closed and have missed two payments on most of my cards.

I just got hired for another job but haven’t started training yet. I know that if I had a month I can get back on track once I start getting paid again. But I’m not sure if they’ll even let me back into a DMP. I owe about $8,000 total so I don’t want to file bankruptcy for something so small. I am thinking of calling them individually and trying to settle. If they don’t agree, I will tell them that I am contemplating bankruptcy. its better for them to accept some rather than nothing at all. I definitely won’t go with a Debt Settlement Company because I don’t trust them.

What I’ve learned (tracking strategies too)

Okay, so I thought I posted this here, but it was another group I’m in. Apologize off the bat for the length, but I got carried away with responses (that actually may be relevant to some of us) and some tips based on a year of making plenty of mistakes and finally figuring out what works…….

Also, can’t post my Excel spending tracking chart, but there’s a good descrip of it below:

First, on cards. I didn’t close my unpaid-off cards because I don’t want my credit score to drop (to save on my insurance premiums, etc). However, I don’t carry them. If you carry them, or even keep them, you always have a need to use them.

It’s scary to get rid of them when they’ve been a crutch for so long. But if you are truly serious about making a change in your life, you need to actually make the change. I was on the fence for a while – wanting to make a change and stop debting, but never doing it. I started telling people, “I can’t afford to [go to lunch, etc] this week. Can we go next week?” Or, in some cases, I flat out said that I didn’t have the money to do some expensive activity a friend proposed. And when I started dating my boyfriend, I told him about my situation.

As soon as I started admitting to others that I had a problem, I felt like I’d been freed from this horrible, dirty secret.

I also started watching Suze Orman every Saturday (well, recording it, and watching it later). I started watching Dave Ramsey every day. I started reading as many books as the library had to offer in the world of personal finance. Some were great. Some were eh. Some were a complete waste. But I started learning. And making changes.

Oh, and probably the most effective thing I did was to create an Excel sheet with a few columns (month, date, $ spent, overall category, smaller purpose, location, and deductible y/n). I wrote down EVERY single penny I spent in this Excel chart – from $57 at dinner to $.60 library fine. Wow. I started spending less. And I really knew what happened to my money and where my budget categories weren’t realistic (for example, my $20/mo for pets was actually $25 in real spending). I was also ashamed for the first two months at how much money I wasted. Money I didn’t have.

I also created a “debt watcher” chart. Made columns with the name of each debt and below that, the amount I started with. I listed out each pay date, and each pay date (I pay everything twice a month to reduce the avg daily balance), I write down the new debt amount. The farthest right column is a debt total. I can watch my total debt (which is a bit overwhelming) go down every time I make payments. I feel like a success because of this.

Despite a fency year, I paid off $4K. This next year, I plan to pay off $15K. That will still leave me with about $36K in a loan and a CC. It was much faster to get into this mess than to extricate myself from it. But I’m sick of it. I’m finally sick of it.

What will make you sick of it?

A couple good resources:

  • Suze Orman – anything but esp “9 Steps to Financial Freedom” and “Women and Money”
  • Mary Hunt – anything. Plus, she has a free daily e-newsletter and a (CHEAP – maybe $26/year?) subscription web site with great tools, including a debt repayment calculator that tracks your repayment plan and is the best one I’ve seen by far.
  • Dave Ramsey – Total Money Makeover

If you have weight problems too, it’s not surprising. You’re filling a void with money and food. Trust me. I am a Weight Watchers lifetime member – 3 years at goal and counting. Tracking what you eat AND what you spend every day is really successful.

People who get out of debt aren’t any smarter or more capable than the rest of us. They just mean it. Every day, they wake up with the intention to follow through.

I am new here

Hi everybody! I am new here, I am new even in what “New Year’s Resolutions” are concerned (I always avoided them because I always thought that they won’t last), but now I am very motivated and one of my New Year’s resolutions is to be free of debt as soon as possible, in order to be able to go on with my life. I never planned my finances, never tracked (well, not seriously) my expenses, but it really is the time for me to start doing those things. I hope I won’t get onto anyones’ nerves with my questions, which could sound stupid for someone which is financially wise, but I am also new to the financial system here and I don’t really understand a lot of stuff. So please bear with me! :)

Thank you all and have a great & debt free year!

welcome I too am new and suggest that we track the money in and out within daily spending…..that is a starting point….vagueness prevails many of us….hopefully you will stick around all year. hugs bill

I am sure I speak for all (although not really qualified to do so, LOL) when
I say, “Bring on the questions!” I am sure there are people here who can
relate to every situation. You are no nuisance.

I am Melissa, on babystep 2…which means I have funded my $1000 emergency fund (BS1) and I am paying off my debt by using a debt snowball plan. I have a ways to go, I still owe about $39,000 in cc/medical debt (bad divorce, period of unemployment using a cc to pay everything else, too many times of trying to help my friends, etc…) . I followed Dave Ramsey’s plan a number of years ago and got it all down, but then life got in the way and I got in worse debt. I started back in September, and although it is slow going so far, I have paid off my smallest medical debt and and working my way though it. I just keep reminding myself, my situation is getting better each month I go by without racking up any more debt and am paying on it all.

Thats me. I am also a single working mom to three boys, with a great boyfriend. I think of all the things I could do if I weren’t paying $1200/month on debt…LOL…its motivating!!

Re: urgent help needed for a GA foreclosure issue

I work for a mtg company so I will try to explain some things. If you were not originally escrowed for tax and/or ins, your pymts would have just been P&I. If you had no Insurance or proof that you paid your Ins, you could be Lender Placed for the Ins. LP’ed Ins is very expensive. If it was tax that was due, the Mtg. Co. would pay that rather than letting it be delinquent and possibly have the home sold at a Tax Sale. If you could not pay those and requested the Mtg Co to pay that, then an escrow acct. would have been set up and then you would owe both P& I and T&I (escrow).

There are steps that should have been done by the Mtg Co before it got to this place. You should have been notified by mail that you needed to provide proof that you had Ins and that it had been paid or you should have gotten notices from your Tax office saying that the taxes were delinquent. You did not specify whether it was tax and/or ins that you were escrowed for so I am giving both scenarios.

You should have gotten an Escrow Analysis after they added T&I showing a bunch of figures and the new pymt amount with the T&I. Honestly, I am very surprised that they continued to take just the P&I part of the pymt. The Co. that I work for, would have mailed your cks back as short pymts with a letter explaining that. Did they ever send you any correspondence about the pymts that what you were sending being less than what was owed?

I assume that you have spoken with Default Mgt or Loss Mitigation about the Foreclosure. It seems very odd that they cannot work something out to get the escrow funds they paid out for you. Since your escrow acct has a deficiency and shortage, maybe they could spread that over 24-36 months. If the Mtg Co did not send you correspondence about your pymts being short along with asking for the whole pymts, then they were negligent, IMHO.

If you received correspondence and just kept paying the P&I only, then you need to get them the money that the Mtg Co paid out for your T&I. From the Mtg Co perspective, it was their money that was paid out for T&I and they do need to get paid back for that. I have not heard of Foreclosing over T&I and I would question that just because they did continue taking just the P&I pymts. Of course, I do not know all the details so I can only speculate on what you may or may not have gotten in correspondence, etc.

Your offer of $4000.00 right now sounds very reasonable. They should be willing to take that now and then spread the rest over 12 months. In the current housing market, it seems like they would much rather do that than a foreclosure. Foreclosures are very expensive for Mtg Companies to do.If this is set for a Foreclosure sale the second week of Feb, you should have been getting many letters during that time requesting money.

The only thing that I can suggest it that you keep calling them. Call your current Company Monday but at this point, they will probably not be able to do anything. I don’t know what the Foreclosure laws are in GA so you would have to speak to a Real Estate Atty for that. I wish you the best.

Urgent help needed for a GA foreclosure issue

Here is the gist of things.

P&I of mtg. payment has NEVER been late. Mtg. company paid our taxes in 2012….they never added to our payment for that and I guess I just played dumb and assumed they’d add it in our payoff someday. So Feb. 2013 they added an escrow acct. to our payment which increased our pmt by 298.00 a month. I didn’t know this cause I kept sending in the normal P&I every month and they kept taking it. In July/Aug. of 2013 I get a letter that we are behind… I quickly hunt up all my cancelled checks and fax them over… didn’t hear any more about it. Dec. 18th my DH opens a letter from an atty that we are being foreclosed on.


I’ve been on the phone with the atty and the lender every day since that day. Going over the situaion, going over our previous PERFECT mtg. history… yada yada…. Ok, final question, how do I clear this up…….. answer……. send them certified funds for 5865.00 (includes 1300.00 worth of atty’s fees). I explain, I don’t have that much, but I can send you 4000.00 today… that would EASILY bring it to a non foreclosure status and then we’ll get on track with the payments again and work with your repayment specialist.

NO NO NO NO NO NO… I’ve been told no by everyone exect the cleaning lady. It’s all or nothing. They have sold our loan to another company and they want the loan totally current including atty costs or they want it in foreclosure (that makes NO FLIPPIN SENSE TO ME).

I call the new company that takes our loan over this coming tuesday to see if I can talk common sense with them. Having a loan on your books that is 30 or 60 days late is much better than a foreclosure. Especially with the market… our house would sell for MAYBE 90k currently and it was 160 just 18 mos. ago when I had it appraised. The new company has no interest in allowing us to reinstate the loan…. however, they’d like to just foreclose on it and then sell it back to us at the current market value of 90k (we currently owe about 125 so they are tring to tell me it would be like making/saving 35k)……… HUH? What lender in their right mind would finance us at this point with you people showing us in foreclosure?

I’m calling my original lender in the morning to see if I can get to someone that took some common sense meds before coming to work. Then my next call is going to be to a few attorneys to get an idea of where I stand. The foreclosure sale date is set for the 2nd. tues. in Feb.

If anyone has knowledge of GA foreclosure laws, QUALITY attorneys in metro Atlanta or any other solid advice I surely would appreciate it. I am just baffled that in an economy of massive foreclosures from peolple that absolutley can’t pay for the house that I can’t get someone to work with me over a screw up.

Thanks in advance for any and all ideas, helps and prayers!