HELP!I'm pouring my heart out here, need advice!*Updated 6/12/07*

[MrsPete]

I think it's abysmal. But go to any mortgage lender website, punch in your income levels and just take a look-see at how much money that they're willing to lend you. It's incredible! Apparently I should be living in a mansion! I don't know how I get by with 3,000 sq ft!

I'm laughing because this is EXACTLY what happened when we bought our first house! We wrote out a list of everything we felt we needed and could afford in a house -- actually, we wrote out two lists: must-haves and wants. When we started looking at what "they" say we could afford, suddenly our eyes grew larger than our stomaches! "They" said we could afford a McMansion! So we started looking at some of them . . . and we liked them! The bank encouraged us to "buy as much as we could, as soon as we could".

Fortunately, however, we sat down and looked at what we could COMFORTABLY afford before we bought. We realized that if we'd bought a McMansion we'd be unable to furnish the rooms in that house, we'd have to live in constant terror of a car breaking down, we'd never have a vacation, and we'd have no choices once the children came along.

Our first house was almost exactly what we wrote out on that first list -- a basic starter house that we could afford.

 

[MrsPete]

I did state that some of the cc debt was due to school funding. About 9500 of it. In the past four years we have had 2 children. I have had my appendics and tonsils out. I had spinal fusion surgery done on my neck. My son has had tubes put in his ears three times and his tonsils out. And my daughter has had tubes in her ears and another set this Fri. This equals out to alot of time off of work, only some of it on short term disability and alot of medical bills that I stupidly paid with my cc's.

Personally, I"m not a fan of school loans, but I know that most people see them as a necessity. I worked my way through school (I didn't do it in four years, but I did emerge with a degree and debt-free), and that's very possible for most people.

As for the medical bills, well, this is why you never stretch yourself to your financial limit. These things happen! (Sorry you had so much at one time.) You have to keep something in reserve "for a rainy day".

 

[crisi]

Blaming banks for giving you credit is like blaming McDonalds for making you fat. I really wish McDonald's didn't sell fries and that they didn't taste so good, but they do. And I've learned just not to order them to start with, because they go straight to my hips and sit there until I'm ready to deprive myself of basic necessities like bread and chocolate to get rid of it.

 

[MAGICX2]

I'm thinking I need DisneySteve or DVCgirl for my credit counselor. Either of you close to Ohio?

 

[binny]

I can SO relate to the medical bills issue.

One thing that I learned over the past year is that MOST doctors just want to see SOMETHING from you each month. I,too, stupidly put medical bills on CCs at one time until I started talking to my doctors. MOST of them, here at least, are happy to see $20/month every month just to show youre doing something about it. My orthodontist hes a different story so I do owe more on that one BUT theyve been very understanding. The months that I knew I was going to be late I called. They have been really good about it.


Thats probably the most important lesson Ive learned out of all of this: CALL them! Communicate with your creditors. It shows that you ARE concerned and that you are being responsible enough to take this seriously. Now it doesnt work with ALL of them but many with work with you. They would rather get something from you than nothing.

If you get a nasty person at the call center, call back and try someone new or ask for a supervisor.


It can be a little embarassing but, really, youve told all of us so if you can handle that you ought to be just fine

 

[karisbell]

I truly understand where you are coming from. I could have written your post 3 years ago!! Our income was the same, with both of us working. I was strongly convicted that (even earning 50% of our income) that I should be home with our kids. We made plenty of money, bought whatever we wanted, whenever we wanted it and still went into debt. I too felt a temporary high from buying "stuff". The key is to nip the source of that black whole in the bud.

We are now living on half the income and paying cash for everything. Our debt has not vanished, but it has decreased. For me, staying home with my kids is worth more that all the stuff in the world. ALL of my friends have bigger houses, newer cars, more cute clothes for their kids. However, I remember each day what it was like to leave my kids in daycare every day and come home worn out to a pile of bills in the mail box and it is all worth the sacrifice. We live in a relatively small house (no playroom, no dining room-just a bedroom for everyone and more bathrooms than I want to clean anyway!). I no longer need to shop to make myself feel better because I have found true contentment with what I already have TODAY. My hope is that you will find that peace too, wherever yours may lie. There is nothing like it!!

 

[tlbwriter]

One thing that I learned over the past year is that MOST doctors just want to see SOMETHING from you each month. I,too, stupidly put medical bills on CCs at one time until I started talking to my doctors. MOST of them, here at least, are happy to see $20/month every month just to show youre doing something about it. My orthodontist hes a different story so I do owe more on that one BUT theyve been very understanding. The months that I knew I was going to be late I called. They have been really good about it.

Good point. I never pay medical bills in full when I get the statement - I always ask for a payment plan. And 90% of the time I get it. No interest, either.

 

[disneysteve]

I'm thinking I need DisneySteve or DVCgirl for my credit counselor. Either of you close to Ohio?

I can see it now: DBCC - DIS Boards Credit Counseling.

 

[dvcgirl]

I can see it now: DBCC - DIS Boards Credit Counseling.

LOL! Hey, I learn things here all the time. I like to hear different people's perspectives on how they handle their finances. I love hearing from other fiscal conservatives....those of us who are big savers, live below our means and are still able to really enjoy life.

And I definitely think it's brave for people like MagicX2 to post their personal finances. Hopefully she's hearing some of the good advice being given (I think she is hearing it)....and I think others are reading along and may have learned a thing or two as well. Of course, none of us here are professionals in this area (at least I don't think any of us regulars are anyway), and so it's best to speak to a fee based credit counselor. Or better yet, a *free* credit counselor who isn't looking to sell you products.

 

[d-man's mom]

OP- have you talked to your dh about all of this yet? What are his thoughts on the feedback from here?

 

[disneysteve]

LOL! Hey, I learn things here all the time. I like to hear different people's perspectives on how they handle their finances.

Me too!

And I definitely think it's brave for people like MagicX2 to post their personal finances. Hopefully she's hearing some of the good advice being given (I think she is hearing it)....and I think others are reading along and may have learned a thing or two as well. Of course, none of us here are professionals in this area.

I agree. I think it's great that we have this community where people can feel comfortable enough to share pretty personal stuff and know that others will be helpful and supportive.

And no, I am not a financial professional. My advice, like that of everyone else, is just based on my own life experiences.

 

[disneysteve]

Blaming banks for giving you credit is like blaming McDonalds for making you fat. I really wish McDonald's didn't sell fries and that they didn't taste so good, but they do.

While I agree with you in theory, I don't think the banks (or McDonalds) are totally innocent. I think it is a disgrace that credit card companies issue cards to college students with zero income and no means to repay any charges other than hitting up mom and dad. Sure, the kids shouldn't take the cards but they should never be offered in the first place. Same with the monstrous mortgages that are being written these days. Surely, the banks realize that if the customer takes the max mortgage he "qualifies" for, he will have no money left each month for anything else in his life.

 

[nowellsl]

While I agree with you in theory, I don't think the banks (or McDonalds) are totally innocent. I think it is a disgrace that credit card companies issue cards to college students with zero income and no means to repay any charges other than hitting up mom and dad. Sure, the kids shouldn't take the cards but they should never be offered in the first place. Same with the monstrous mortgages that are being written these days. Surely, the banks realize that if the customer takes the max mortgage he "qualifies" for, he will have no money left each month for anything else in his life.

The banks don't care if you have a dime left over as long as they get their money (preferably late so they can charge you a late charge!) That's where personal responsibility should kick in.

 

[RADOPT]

Surely, the banks realize that if the customer takes the max mortgage he "qualifies" for, he will have no money left each month for anything else in his life.

And they would care why!!!!!!?

They make the money (and commision) on the fees and interest we pay. They days of "what you need" have been replaced with "what you want" for good I'm afraid. I don't think they "realize" it because they don't think about it (or care about it) that far.

The days of "thats a good life" (george & his bank) are long gone.

 

[minnie1928]

I just got to do the crash course update from pg 21, where the OP mentions credit counseling program. I enrolled my mother in Consumer Credit Counseling about a year ago. They charged $35/month, but it was an optional, tax-deductible fee since they are a non-profit based organization. They were able to negotiate new rates (one even went to 0%!) and waive min bal fees on some accounts. So from that perspective, they were great. In fact, all our dealings with them were VERY positive. They have great customer service people!

However, the flip side is that one of her creditors reported to the credit bureaus that her account was "managed by financial counseling program". The account has completely positive history on the credit report but it's showing as a negative account due solely to this comment. She has paid off her creditors and is no longer in the CCCS program, but now I'm trying to clean up her credit report.

OP-I you do decide to go this route, be forewarned. It has both positive and negatives to it. Also, the account I mentioned above had a balance of only $75 when we entered the program. We included it because Mom figured it was easier to do one payment rather than several payments to multiple companies. It was the only one that reported this negative mark. I wish we would have just paid it ourselves and been done with it, without the negative mark.

 

[disneysteve]

The banks don't care if you have a dime left over as long as they get their money (preferably late so they can charge you a late charge!) That's where personal responsibility should kick in.

I agree. And I don't want to stray OT too far but banking is a regulated industry. I don't believe banks should be legally permitted to lend money to someone with no means to repay it. If you have zero income, you should qualify for zero credit.

I'm all in favor of personal responsibility and certainly if you have zero income you've got no business applying for a CC. But when I was in college in the '80's, we used to go to the mall on the weekends and apply for all the cards and get all the free gifts just for applying. We knew we didn't qualify and we never got a card. We just did it for the free stuff. Now, however, those kids are qualifying so the banks clearly changed their guidelines and will now lend money to people who have no way to repay it. That's where I think the banks are at least partly responsible.

 

[RADOPT]

I'm all in favor of personal responsibility and certainly if you have zero income you've got no business applying for a CC. But when I was in college in the '80's, we used to go to the mall on the weekends and apply for all the cards and get all the free gifts just for applying. We knew we didn't qualify and we never got a card. We just did it for the free stuff. Now, however, those kids are qualifying so the banks clearly changed their guidelines and will now lend money to people who have no way to repay it. That's where I think the banks are at least partly responsible.

I am sure you are correct on this. I applied for a Macys credit card when I was 19 (in the late 70's) and denied even thought I had a job and plenty of money to pay for what was being charged ($200.00 - I wanted it to start establishing credit). When my father spoke to them (because I couldn't get any information from them), one person was honest enough to say that she believed it was my age, not whether I had a job or not. Back then they expected us to pay - now I think they fiqure that if they can't get it from the individual, the rest of us that use them can pay it in higher fees, etc.

 

[Jen D]

Here are a couple of articles on debt management services. Most of the pitfalls listed you've read about here. I find it interesting that while both articles emphasize that not ALL credit counseling services are shady, no one wants to go out on a limb and actually recommend one. The one I occasionally hear good things about (and is quoted in the Smart Money article) is CCCS, but I've never been sure if that was one group or an umbrella organization.

I would not recommend the one I used-- and I actually think they are one of the reputable ones.

I really feel this should be a last resort. Check all your options.


http://www.cbsnews.com/stories/2002/06/25/earlyshow/contributors/raymartin/main513362.shtml

http://smartmoney.com/debt/advice/index.cfm?story=debtdrowning

 

[Cindi0511]

Back then they expected us to pay - now I think they fiqure that if they can't get it from the individual, the rest of us that use them can pay it in higher fees, etc.

When it comes to mortgages, the banks get the property, and with the appreciation going on in most places these days, they really can't lose. They get what you DID pay along with the property that most likely can be sold at a profit.

Credit cards are what completely blow my mind. If someone defaults on that, the bank gets little (if they sell the account to a collection agency) to nothing (if the recipient declares bankruptcy). There needs to be financial responsibility on both sides of the coin, and there's apparently no way to enforce that.

 

[nowellsl]

Credit cards are what completely blow my mind. If someone defaults on that, the bank gets little (if they sell the account to a collection agency) to nothing (if the recipient declares bankruptcy). There needs to be financial responsibility on both sides of the coin, and there's apparently no way to enforce that.

That's exactly why the credit card companies where pushing so hard for the new bankruptcy laws! But I don't think they are any more to blame than a person who applies for credit knowing they can't make the payments. There are indeed 2 sides to that coin!

Interestingly my 20 year old DD applied for a Disney Visa and was denied because she doesn't make enough money. She does have some money from a part-time job. She did get 2 from other companies though.