Ask the DebtBuster

Email Question of the Day:

Mike, after a divorce and being stuck with all of the credit card debt, I have struggled to stay current. But that is it. Just current. I am not getting anywhere with the debt of $7,500. Do you think that I will be better off to do this or just tighten my belt and try to do it on my own? Will it hurt my credit even worse to do this? I just want to get out of debt!

Mike:
I suggest you complete an Income and Expense analysis for yourself and see how much you really can afford to pay toward this debt each month. Can you send $500 a month? If you really try? Can you find a >way to earn an extra 500-$1000 a month for the next year to pay this debt off? It is always better if you do it yourself. Credit counseling is a good option when you have exhausted your efforts and you are getting behind on payments. But, just paying the minimum payments is not enough. Here are some great Web based calculators you can use for free.

Response:
That is the answer that I was looking for. I checked several different options and without a doubt, you are right. I am better off paying it off on my own. I just paid my car off so there is an extra $400 a month right there. I plan on taking that money and putting it on top of what I am already paying. I went through a messy divorce.....of course......I took the debt since they could not find him. Such is life. That was two years ago and I am only keeping my head above water but managing. I just want to get out of debt. Thank you for your time.

Mike:
Great idea to use the $400 to attack the debt. That will really help pay down the debt and save interest expenses.

Keep up the good work and stay in touch.

Listener:
I am still debating on whether or not to use a credit counseling service or try to buckle down and pay off the credit cards on my own. My credit is already in bad shape so I am not sure which would help or hurt. Right now, I am just making the miniumum payments every month and even though I have just paid off my car, I do not know if I am displined enough to make that extra money towards this debt. Any suggestions?

Mike:
Discipline is something you must do for your self. I can't force you to want to be debt free and save thousands of dollars in interest. Try to look at it this way...If the interest rate is 24% and you pay $400 to that debt, you are earning 24% on that investment. I don't know anyplace else where you can get that kind of return on your investments. You can also try setting up an auto payment to your creditors. That way, the payment is made from your checking account automatically every month without you having to decide whether or not to do it.

Just think how nice it would be to be debt free!!

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