Consolidated debt advice

I seem to type this same info over and over again on blogs and forums, so here’s a consolidated post.  It generally addresses a family with children still living at home.

There are things you can do to get out of debt without declaring bankruptcy.  It will still be a long hard slog out of debt, but you’re not trapped and you’re not alone.  A good place to start is the website getrichslowly .  It is FULL of information on debt, frugal living, different options etc.  The commenters are also, for the most part, stellar, and many of them have helpful and interesting blogs themselves.  And you, too, may find it useful to blog about your debt once you set on a repayment plan, or if you need help getting started.  There’s a huge community of experienced personal finance bloggers willing to help and encourage, whatever your problems are.

Depending on how you got into debt and what your personality type is, there are different books that could help.  Check these out from the library!

The Total Money Makeover by Dave Ramsey is worth a read, even if that isn’t your debt personality.  But his method is pretty foolproof and works well for people who have lost hope.

Elizabeth Warren’s book All Your Worth has a simple heuristic that can help you if your expenses are out of whack.

David Bach’s books, either Smart Couples Finish Rich or Smart Women Finish Rich, are good if you work much better on not thinking about your spending.

I don’t recommend Suze Orman’s methods (more recently she’s aligned with Dave Ramsey, but her earlier stuff encourages credit card debt), but her discussion of emotions and money in her 9 Steps book is fantastic and very helpful if part of the reason for the problem is negative emotions (possibly family influenced) about money.

Your Money or Your Life (by Dominguez and Robin) is a secondary book you should read no matter what your situation.  It will put all this money stuff into perspective, even if it isn’t focused on debt repayment.

The FIRST thing you should do today is call up all your CC companies and ask for a lower interest rate.  Call up your other companies if you have them– cell, phone, cable etc. and ask for a discount.  Call up your insurance companies and ask for a discount.  My husband did a round of calls recently and knocked $500 off insurance costs with no cut in service, just by asking.

Once you’ve been in a rental for a year, you can ask for lower rent so long as you have been paying on time steadily.  Or if you don’t want to do that, you can ask for no increase in rent if they try to raise it.  Good tenants are hard to find.

A lot of people get into debt, and a lot of people get out of it once they decide that’s what they’re going to do.  Yes, bankruptcy might be the best option in some cases, but there are many things to try before getting to that point.  You don’t want to be in the situation where you declare bankruptcy for something you could have worked your way out of, and then not have that protection later if you get hit with 6 or 7 figure medical bills.  (That happened to a relative of ours.)

There’s hope!  I don’t know what your individual situation is, but I know that you can get help.  You can get out of debt.  You do not have to stay trapped!


11 Responses to “Consolidated debt advice”

  1. First gen american Says:

    Good article. Could you explain your last paragraph though. I thought people could declare bankruptcy multiple times. Is that not true?

    • nicoleandmaggie Says:

      Depending on the circumstances of the bankruptcy etc. you must wait between 4 and 8 years to declare bankruptcy again. That’s why after a person declares bankruptcy they are often inundated with credit card offers.

      IIRC, our relative filed right before the big law change and had to wait 7 years.

  2. Kingston Says:

    It is beyond sad to think that our healthcare system is so dysfunctional that an individual would be wise to organize his/her financial life to allow for bankruptcy in the event of a medical crisis. (I agree that it makes financial sense to do so.) Why do we Americans tolerate this insanity?

    • nicoleandmaggie Says:

      There’s a long and interesting history behind it… starting with price controls in WWII, continuing with union opposition during the Nixon era, and finally the entrenchment of big insurance companies.

  3. feMOMhist Says:

    I really really need to do this to pay off that student debt, that I rolled into a HEL, with completely deductible interest. Now that we are living on half salary this year, I REALLY should be able to figure out how to make it happen in a relatively short term.

    • nicoleandmaggie Says:

      Sabbatical is a good time to get a handle on your finances. The first step is figuring out what you’re spending money on (including debt). The second step is asking for interest rates and costs to be lowered.

      Check out the above books from the library and see which system works best for you. Dave Ramsey is pretty much fool-proof but if you take in more than you spend already David Bach or Elizabeth Warren may be better fits.

      Paying off debt early takes some sacrifice, but it is totally worth it later on when you no longer have that drain on your finances.

  4. frugalscholar Says:

    I really like the book “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.” Not as well-known as Ramsay et al.

  5. Ask the grumpies: Financial advice starting out? | Grumpy rumblings of the (formerly!) untenured Says:

    […] you find YMtMM helpful, then you can find some more personal finance book recommendation from this link here.  The post is about debt advice, but most of the books cover other things too.  In addition to […]

  6. We are not Mr. Money Moustache | Grumpy Rumblings (of the formerly untenured) Says:

    […] Otherwise, that’s something only you can answer.  We recommend checking out financial calculators and maybe the balanced money formula and so on.  Make sure you’re doing the basic good things with your retirement savings (ex. low fee index funds).  That sort of Money 201 stuff.  If you’re not doing ok, then it’s time to rejigger the Money 102 stuff, or possibly even Money 101. […]

  7. Ask the Grumpies: Credit Card Debt Question | Grumpy Rumblings (of the formerly untenured) Says:

    […] for everyone even if the numbers just based on money are the same.  So definitely read the excellent introduction to Suze Orman’s otherwise terrible book about how to deal with the emotional aspects debt.  She gets emotions.  I […]

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