Featured Discussion: Common Reasons You May Be in Debt

[MathTeacher]

I agree with you except when the reason you are in debt is due to emergency medical bills like trips to the emergency room, followed by emergency hernia surgery, lost time off work etc.  Those are things you just can't "quit".

[Kkirton91]

Im in debt because of going in jail one year and a few years later went back to jail then straight to prison. So while I was sitting in there my bills kept reaccurring and calculating up while I had no way of contacting any body to put a hold on accounts

[AK3]

Hello

Just finished reading your  how you were scammed by an Debt Consolidation Program. I don't know that much about Debt Consolidation. I do know many years ago my ex and I did  two Debt Consolidation.  They paid our debt and we paid  the company It was done quickly. Just one  pyt each month to the (Debt C.) company The other option was we gave the Debt C. Company the name and acct number of our creditors,  They wrote/fill in the checks  , Then gave to us to mail or  or give personally to the creditor.. Didn't your creditors contact you within that two year period that "Where's our money"  Late pyts etc If they never got consolidated then  I would assume they were never paid.You had to get Phone calls letters,  pay up or going to a debt collector. Credit reports show  balance etc.  Within the 2 years if your credit report showed no activity.. I would be concerned. I'm just trying to figure out if the debt consolidation  program never paid your debt why the creditors did not contact you. It only takes a short time to settle with a creditor.  through debt consolidation. Also if you were not getting any updates from the Credit Consolidation company or statements regarding your account. That's a Red Flag.  I just have a hard time understanding that $10,000 was put out  in two years,,Did you get receipts, Did you keep a paper trail?  

Yes tell your son  Not only look straight ahead but look at all directions, "You never know what's going on in the background.  In and around you.  

[FFPPSSLLC]

We didn’t get the letters of calls, when we signed up, the debt solutions company took over all contact with the creditors bc they were supposed to be renegotiating the debt, so, no I didn’t know until the Sheriff came for 1 account. They paid off little accounts in the first year, we got those receipts from the service, but they they were “trying to work with creditors to get us a reasonable settlement” I KNOW, I was incredibly stupid, but we were desperate for a solution & thought a government backed program would be best.

[FFPPSSLLC]

Yes, btw we got monthly statements, they were divided up into amounts being saved per each account to be paid off. So, we paid them, they reach a settlement amount, set up a pay off amount which our payments were added to each month, but they never actually got a settlement agreement. It was a perfect scam, bc by the time creditors go to a legal route, we were to broke, credit destroyed & unable to afford a lawsuit. As soon as the Sheriff came to the door, I called them ASAP & told them, by the next day, their phone line was dead. We took a everything to 2 lawyers.

[Lube 1333]

My debt on credit cards resulted from a need to seek reversal of my wife’s painful Pancreatic Cancer which lead to her death in 2005. I tried in the US & in Germany. Had to use my credit cards! Seeing her suffer was horrible. My credit score was no issue or of concern to me. Now, there r reversal methods which doctors did not share in 2005.

[Lindsey_mcdonald8]

I turned 30 this year and finally paid off my only credit card. I have a couple medical bills but my debt is my student loans. About $24,000 worth. I deferred after graduation and am still able to based on income. I got a new job and I’m afraid with my income now, I will have to start paying on them. It’s not that I don’t want to, but my income increased just enough to afford health insurance, where before I wasn’t covered (thus the medical bill debt).

Is debt consolidation a thing when it comes to student loans? I’m wondering since I took out both subsidized and unsubsidized loans each year, if combining them (or at least the ones with the high interest rate) with debt consolidation company for a lower interest rate is even possible?

I’m curious as to how people pay off student loans when they are stretched so thin anyway. I have a budget I stick to very strictly and I apply to multiple jobs daily, and like I said, I’ve been able to find a job with a little higher pay, but it’s still not enough. I don’t have a car payment, I don’t have a cell phone contract, I rent a room and just pay a flat rate for board and utilities. Even if I wanted to spend my money, I work too much to go do it.

I don’t know enough about debt/student loans to know the best option for me. I will say that I do put 5% of paycheck into 401K because my company matches up to 5% and I haven’t saved at all for my retirement yet. Should I stop allocating that 5%, or half maybe?, toward 401k and redirect that money to my loans? Seems like the only solution if debt consolidation with lower monthly payment is not an option.

[MikeCopper]

Super Carl - looks like you're quoting Dave Ramsey - if folks need help they should load his APP or listen to his free advise on youtube etc......

[e7sara]

Commitment  may still have a negative feeling attached to it allowing you to begrudge it. Try thinking of it as an Opportunity to do something that will definitely improve the quality of your life and  it's tangible.  You can measure your progress as you go.  Seeing positive results, even small ones, is a huge motivator for me. 

Thank you for considering my thoughts.   Hope someone finds this idea helpful.

[Carl]

@MikeCopper I'm a big Dave Ramsey fan. First started listening to him back in 2000-2001. With the exception of mortgages, have been debt free since 2006 or so. Best friend I ever had. Prior to becoming debt free I had my primary residence and 3 rentals with a mortgage on it all. Got one of the rental mortgages paid off back in 2014 or 15 and working my next one now - smallest to largest just like Dave advises.

My biggest financial complaint now, is all the junk mail I get offering me tens of thousands in credit and loans at super-low rates. I don't need to borrow money anymore. But I'll be happy to loan money at a fair rate, provided it's secured by some kind of collateral. 🙂

A few weeks ago I got a phone call from someone claiming to be with the small business administration (I'm self-employed) and wanting to loan me money. That call didn't last long when I asked them how much they were going to pay me to use their money instead of my own. I think we both had a good laugh.

[tarheella-france]

The steps work if you put forth the sincere effort.  My concern and question is if I stop my retirement contributions that would raise my take home pay?   What ideas do you have so that I will not owe federal and state taxes in an effort to pay off my debts?  Certainly would appreciate a reply.

[JAB2019]

I didn't see listed what I think is a common reoccurring factor that another frequent reason is individuals having children way too early in there lives. There are people with kids who haven't established themselves as adults, and successfully obtained being able to self sustain. Often in these situations the bulk of the responsibility ends up landing on the grandparents. A lot of these young parents are unemployed, government assisted, and file to receive considerable returns by claiming kids that the government provided for, and done after going a whole year without contributing a single tax dollar.

[JAB2019]

Stealing your social security taxes? Has there been any legal action? I don't see how he could have hid that from the IRS. You have to pay into social security. I had a 1099 one year, because I was young, and was unaware of the fact I was going to be filed as a contracted worker. I didn't owe any federal, or state taxes, but did end up having to pay some social security tax I owed for my accrued income that wasn't taxed. I was only with the company for three months which worked to my benefit, and fortunately only ended up owing fifty something dollars for social security. My point is that if nothing else, they are going to get that from you.

[Unhappy Person]

Our problems are ours. How we handle them is our business.

[bellamia]

I appreciate the steps that Carl shared.  My question and concern about cutting up all credit cards is two-fold.  One, while it would not have me sleeping in a box, if my washing machine died (for example) and I had to buy a new one, I would not have enough cash on hand to buy it.  While it is not a 'sleep in a cardboard box type of emergency, having clean close to wear to my job is important.  And laundromats are not cost-effective over time.  It is an example of something I would feel the need to replace to keep my life on track.  So keeping a card active for that kind of emergency would seem wise.  Two, I've read that closing credit cards will negatively impact our credit score.  And to stop using them, which will cause them to go dormant produces the same effect, I think.  

I wholeheartedly agree that credit cards are one of the biggest problems contributing to our mounting debt.  And, if one has spent down their savings, and using their income to pay off debt, how do we buy the necessities that are before the cardboard box and not nonessentials like a 65" screen tv or a trip to Hawaii, but things we can all live without.  

looking for ideas...

Michelle