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6 Reasons We Chose NOT to Use Debt Settlement, Debt Consolidation or Bankruptcy to Pay Off Our Debt

in Joan's Posts, Our Financial Journey, Pay Off Your Debt, Rants

Note: This is a post from Joan Otto, Man Vs. Debt community manager. Read more about Joan.

Since announcing our family’s quest to pay off more than $90,000 in debt, there’s been one set of questions that comes up more often than any other, especially when people hear that one card has a $25,000-ish balance with a 23.99% APR:

  • Why don’t you get a lower-interest loan – or consolidate into one payment?
  • Why don’t you settle with those creditors (either privately or through a debt-settlement company)?
  • Why not file for bankruptcy?

I’ve promised several commenters that these questions are good and fair ones, and that I’d address them in their own post.

I’ll talk about what we are doing – and explain some of the reasons why we’ve opted not to do the settlement-consolidation-bankruptcy thing.

Hopefully, by the time I’m done, you’ll understand how we came to our decision. We might agree to disagree – and that’s OK.

What we ARE doing: Our debt tsunami

We’ve got a list of seven debts that we’re working to get to zero, with a current balance between them of $65,876.32.

At its worst, that list was nine debts long and totaled $89,687.23.

Of the debts that are left, we’re using Baker’s debt tsunami methodattacking the ones with the most emotional impact first.

Since, in our case, the absolutely most-hated debt is the biggest one, our Bank of America Mastercard with its current balance of $24,697.75 and its current APR of 23.99%, several of the smaller debts will “fall off” while we’re attacking that.

In fact, once we get BoA paid off, we’ll only have a few months to go paying off other debts.

That becomes important as we talk about why we’re NOT making certain choices.

For instance, we have one debt that’s under $1,500, our credit card at our mechanic. We could pay that off in three months if we took the $500 or so extra every month that we’re attacking BoA with and put it on the Tires Plus card.

But we’re not doing that, because the emotional impact right now is greater when we “Bash BoA” (yes, we really call it that.)

The BoA sizes its prey (that's us...) up for the stranglehold...

So why NOT pursue bankruptcy, debt consolidation, debt settlement or lower-interest loans? Well, I’ve got six reasons to share.

1. We want to stay in control.

To be blunt, there are a LOT of things I don’t personally like about debt-consolidation programs. Some are a matter of opinion, to be sure, but in our case, one thing stands out above everything else.

We want to be in control of our money. Sounds strange, for people who were in almost $90K of debt, right?

We want to be the ones making the payments. We want to be the ones deciding what day of the month, and how much, and how much EXTRA.

That’s a mindset thing – but mindset matters. Just like I like to manually record expenses in my bank book, and manually keep a calendar of my bills, I like to have the physical step of PAYING BoA every month.

It keeps us mad – and in a debt tsunami, mad is a good thing, because mad means motivated.

2. It’s strangely motivational.

Speaking of motivation, the system we have is strangely just that.

If our Bank of America APR were lower, we would not be nearly so motivated to pay off this debt.

Is that embarrassing to admit? Well, yeah, but there you go. In general terms, I want to get and stay debt-free, but that’s one of those things you say and kind of fall off of.

But when I say I want to get the balance on a 23.99% APR credit card from a high of $40,000 down to zero, that means something!

That’s a large part of why we’re not looking to consolidate our debts into one bill each month. We work hard to attack this particular debt – because of how bad it is!

If we had a consolidated bill that wasn’t “for” any debt in particular – or that was at an “average” APR – I don’t know if I can honestly say we’d sell so much crap and work so many side hustles!

3. We don’t want to play games.

This is an area in which I get the system – but I choose not to act on it.

If you miss a few credit-card payments, your creditors are often willing to settle for a lump-sum payment of a percentage of what you owe.

I personally know plenty of people who have been able to make this work – and who’ve paid much less as a result.

If we really couldn’t pay, and were going to miss payments anyway, my feelings might be different. As it is, though, I refuse to play into the system of purposely missing payments we can afford in order to get a “deal.”

Honestly, I would hope no creditor would fall for that in our case – somehow, we’ve been paying $500 to $800 extra a month consistently for almost a year, and yet then we miss two payments and say we can’t afford it?

Some people might say it’s a matter of pride, but the fact is, I don’t want to lie, and I’m not out to game the system.

4. We can pay in full.

Tied in very closely with that point is one simple fact: Chris and I have the resources to pay off these debts.

I’m SURE we would qualify for settlement plans and even bankruptcy – though we haven’t tried – but to me, those are last-ditch options you take when you can’t make anything else work.

We’ve had close friends go through bankruptcy – it’s not a cure-all. Dave Ramsey – who has been through it – says it’s the hardest thing you’ll ever do, and I believe that firmly.

I would rather pay every cent of the $90,000 in consumer debt that we once faced, than go through that, unless I had no other option to keep a roof over my daughter’s head and food on our table.

As it is, we are INCREDIBLY blessed. It’s not easy – but because of our focused effort, we can maintain what anyone in their right mind would call a decent standard of living, AND pay off these debts.

5. Lack of quality options.

OK, here’s a shocker: People aren’t beating our door down to lend us $25,000 to $65,000 at a lower interest rate.

I know, you can hardly believe it, right? You’d lend me that much money – especially since I can show you every month how much I’m paying down!

Well, banking doesn’t work that way – and as a math/finance major, I understand why. Even with above-average credit scores and income, Chris and I are still a risk.

In fact, if you check out our list of debts, you’ll see that one is a loan from a company called Springleaf.

This came about when we lacked heat in our house last winter – we had to take out a personal loan for the cost of a new heat pump.

We’d paid down more than $15,000 in debt in less than a year at that point – and no one would approve us for the full $8,000 that the service would cost.

Springleaf was willing to get us to $6,000 – by assessing the value of our possessions as collateral.

I’ve had very few experiences in my life that were more humbling than knowing that I could only get heat in my house if I had enough snowblowers, computers and wedding rings to make up the value.

Having sold most of our crap (yeah!), we were forced to trot out a slew of $50 items like blenders and mixers, prolonging the agony of our approval process.

With that painful experience in mind, you can imagine we haven’t gone out of our way to apply for a lot of loans since.

But after reading several commenters’ suggestions that we look at a low-interest-rate bank loan to attack some of the debt, and knowing how much we’ve paid down in the past two years, I figured I’d make another effort.

Last week, we applied with our local bank for a debt-consolidation loan for $25,000, once we got the BoA card below that amount.

No surprise – they turned us down.

They said they could get us $5,000. Is that good? Well, mathematically, maybe.

But adding THAT loan to our list, and still owing $20,000 on the Bank of America card, is just not appealing at all. (And paying off the smaller debts, but adding another bill, doesn’t do it for us either.)

6. We are just done with this industry.

That experience above, with cataloging our housewares?

THAT’S why we’re looking to fund a hefty emergency account, as well as a large checking-account buffer.

Remember the control-freaky part of me I mentioned in Point Number 1?

I’m tired of other companies determining what I can and can’t do with my life.

If I need something, like a heat pump or a new vehicle, I want to be able to make the decision based on what best fills those needs – not who will take pity on me and finance it.

When we talk about being consumer-debt free, we mean no loans and credit cards – forever. No car loan, no “six months interest free” at the mechanic, nothing.

We don’t want to support this industry – or any of its offshoots.

To us, taking out a loan to pay off other loans, that’s still supporting the industry. Working with a debt-settlement company is, in a funny way, supporting the same industry – a business that only exists because of the credit business.

And playing games with our card issuers is DEFINITELY playing into the weaknesses of an industry with which we’re 100% through.

7. If it ain’t broke, don’t fix it.

With only a little more than 2 years to go until we’ll be 100% paid off, and with such great momentum, we hate to change it up now.

If I could get a single loan from a reputable local lender – that might tempt me. Then again, it might not.

No other option even comes close. We’re doing well with the plan we’ve got – and we’re motivated to see it through.

We’ve come close before, and faced setbacks due to that motivation factor falling apart. I’m not willing to risk that again. As long as this plan is motivating us and helping us succeed, I’m inclined to stick with it.

****

You’ll notice, maybe, that there’s one thing that wasn’t a factor in our decision to avoid debt settlement, debt consolidation and the whole works.

We don’t care about our credit scores.

Look around at advice about debt consolidation and bankruptcy and all online, and you’ll hear a lot about how its effects on your credit score are long-lasting and deep.

I can honestly say that I would not take these options if they RAISED my credit score – that’s how much I don’t care.

As I said, we intend to pay cash for anything we need in the future. We already have a mortgage – and if we need to move for any reason, we would almost certainly rent.

If, for one year after we finish paying off the credit cards, we put that same amount of money in savings as we are toward debt service, we’ll have $30,000 saved.

That’s all the credit score I need.

For us, it’s not just about the numbers.

We know that, at least by some methods of accounting, we’re leaving money on the table – and probably paying more in the short term than we would through something like a lower-interest loan.

But without the mindset change that comes along with our devotion to our system, it would be just that – a short-term fix.

I can honestly say that I’d be the person to pay it all off, only to go back into debt, if I wasn’t going through the painful process of changing my mindset and changing my habits.

Want to change your own money mindset? Get our debt payoff tracker, as well as several other awesome resources to “kickstart your money,”join the Man Vs. Debt community list by clicking here!

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· 10 Tips for an Effective Craigslist Ad

So for me, it’s worth it.

You might agree – and you might think we’re crazy. Either way, I hope I’ve shed some light on why we feel so strongly about this idea of “paying straight up.”

What do you think?

{ 108 comments… read them below or add one }

David Hunter June 28, 2012 at 8:57 AM

Joan, I think you ROCK! Keep it up!

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Joan June 28, 2012 at 11:35 AM

David, thanks! I appreciate the support a ton!

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Elliot Shoener June 28, 2012 at 12:08 PM

Although I agree that feeling the pain of high interest rates each month and manually writing out those checks each month will help you never fall into the credit card trap again, I still have to ask why. By the time you get the $90,000 paid off, you’ll be retired. Why would you want to pay double in interest and possibly thousands extra, if you don’t have to? I also wanted to point out a few things you mentioned that are just dead wrong.

As an expert in all areas of finance I can state with confidence that If you are paying $800 dollars extra a month, you would in most cases fall outside of typical hardship guidelines and would NOT be a good candidate for bankruptcy or settlement. Bankruptcy guidelines have changed and it’s not as easy as just going down to the court and filing anymore. Sure, debt settlement is good for some people that are trying to avoid bankruptcy, I would image assume if you decided not to pay your credit card issues would probably take you to court which could result in garnishment of your wages depending on your State laws. Settlement is for those who can’t pay, not those who can easily pay. Consolidation programs although they do manage your debt for you, are more about taking charge of your overall situation. When you decided to enter into a consolidation program, you are committing to your creditors that you will pay them back but just want a better rate. Banks like consolidation companies and if you wanted to send nine individual checks to a consolidation company each month, they would probably be glad to take it.

Paying down your debt is great, but most financially savvy people will also tell you to save a bit for that raining day, like your water heater. If you follow this practice, you won’t have to worry about taking out additional loans which would have saved you the embarrassment you describe. Bad financial choices are made when people are racking up debt, and can also be made when people are paying off debt. What happens if you were unable to put up the collateral? I am not sure if you have a family, but what if someone got sick and you needed money? You may feel differently about paying the extra $800 a month toward your 24% rate cards. If you had a lower rate, you would have a lower payment and would have been able to save for that water heater.

In regards to loans, every lender is different. You received $6,000 from the other lender because that is what they specialize in, smaller loans. If you need a larger loan for debt consolidation, you need to seek out a lender that specializes in this type of financing. Bank of America is not currently offering unsecured debt consolidation loans. However, there are banks that do offer consolidation loans like, Prosper and Lending Club. They also approved up to $25,000 and $35,000. Applying to the right banks for your situation is crucial. You also have to consider how the bank views you. You have $90k in credit card debt, just took out a $6k loan recently for the water heater, just got a BOA credit card and are now applying for another $25k? That looks like high risk. To a lender all of that applying looks like someone going into debt, not paying it off.

It’s important when looking for a consolidation loan to only approach those lenders that specialize in this type of financing. If you don’t, you will be denied every time. You see, if a bank is not taking into consideration that you are paying off the credit cards, they will consider your consolidation loan extra debt. This is why many debt management companies and lenders that specialize in debt consolidations loans require you to close out your credit cards before they will approve you. A lender doesn’t want to give you a loan for $25,000, to then have you rack up even more debt on your newly paid off cards. You may ask yourself why a bank might think like this, but not if you look at the numbers. The majority of those who take out consolidations loans later find they have the consolidation loan and maxed out cards only a year later. This is because entering into a debt consolidation program is not just about making one easier payment; it’s about changing your mindset. This is also why debt management programs require you to go through credit counseling before entering into a program. It’s about changing behavior. If you can show the ability to pay your debt each month (documented), have great credit and are willing to close those credit cards down, I know several lenders approving.

Ask yourself this question. If you were able to obtain that $25,000 loan what would you have done with it? Paid off your credit cards? If that was the case, what will happen when your current credit cards starting offering you 0% interest again in an effort to motivate your spending? You mentioned in your post that you would not worry about racking up debt or paying if off if the rates were low. This is exactly what will happen. Banks will continue to compete for your businesses, so you will get those offers. Not to sound cliché but that’s what bank are banking on, your bad spending habits.

I beg you to please care for your credit scores. I can’t tell you how many people I speak to every day that say they pay for things in cash. It’s the worst thing you can do. You need credit. Just because it’s so important, I’ll repeat, you need credit. You may have a mortgage now, but what about the future. You say the option to rent is on the table, but do you know that most rental communities also check your credit. Do you know your credit can affect if you do or do not have to put down a security deposit to turn on utilities or even get a cell phone. Credit affects your car insurance rates. It can even affect you getting a job.

If you want some motivation to get out of debt here is another way to look at it. If you have $90,000 in credit card debt, you should be paying at least $2,500 each month. If you are, it will take you about 65 months to pay off that debt and cost you about $162,500. If you took that money and instead of having to pay it towards cards (let’s say they were all paid off), was able to put it into an IRA with a decent 8% return for 20 years. You could retire with $1,112,877.00 more. If instead of a 24% rate, you were paying 6% with a consolidation company’s assistance, how much could you save? Every second counts!

If you are worried about spending, cut up the cards. You can’t spend on them if you don’t have them. Take part of your money and pay the highest balance cards first. Take a portion of your money and save it for a rainy day. Call all of your credit card companies and ask them to reduce the rate. Ask them if they have a “hardship” program. Many banks will reduce your rates significantly if you just ask.

If you would like more information on these topics feel free to call me or visit our site at AmOne.com

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Joan June 28, 2012 at 2:20 PM

Elliot, I appreciate the insight – but you missed the main two points, I respectfully suggest. (I’d really encourage you to check out more of our story, too – you can find lots of details at http://www.manvsdebt.com/joan-finances).

Using our method, we’ll be paid off in two years – not retirement. We’re paying $500 to $800 OVER THE MINIMUM on one particular card – we’re paying more than $2,500 a month total on our debts, and more than the minimum on all of them.

Also, all of our cards are closed – and we haven’t spent anything on them in 2 years, except to do a couple minor balance transfers before closing the last one.

Spending isn’t our problem – paying down the balance quickly is our goal, and we’re meeting that goal, I’m proud to say!

2014 debt-free, baby!

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Elliot Shoener June 28, 2012 at 4:21 PM

Congratulations on meeting your goal, Joan. One thing I’m concerned over is how you are paying down the debt. If can pay over the minimums on several cards, I would suggest you at least use the snowball method (or else you’re just wasting your money on interest).

I don’t want to take up even more space on your page explaining the snowball method but you, or your readers, are encouraged to read What is The Snowball Method (http://www.AmOne.com/blog/what-is-the-snowball-method/), which was inspired by your post.

Sandra June 28, 2012 at 9:54 AM

You have articulated your reasons in a very insightful, intelligent way. Your plan works for YOU, and along with the fact that you really don’t need to explain your life to anyone, that’s a good enough reason for doing it YOUR way. “Effort = Results”.

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Joan June 28, 2012 at 11:45 AM

Sandra, thanks! I appreciate the support!

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Elisabeth June 28, 2012 at 9:56 AM

Good for you!! your article is inspiring.

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Joan June 28, 2012 at 11:44 AM

Thanks, Elisabeth!

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Cathleen June 28, 2012 at 9:59 AM

I could just hug you, I am so proud and happy for you! I really have been enjoying your posts. Thanks for sharing!

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Joan June 28, 2012 at 11:35 AM

Cathleen, thank you so much – wow, you made my day! I am proud of this community – I truly do credit that as one of the main reasons this is working so well for us; support is key!

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Krista June 28, 2012 at 10:04 AM

Excellent article Joan. Interesting approach to the debt payoff order – I like it!

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Joan June 28, 2012 at 11:40 AM

Thanks, Krista!

Of course all credit goes to Baker on that – and I really do owe the guy big. (Not just for my job, though of course that’s super-awesome – but for this approach, which has clearly worked better for us than our past efforts!)

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Debt and Buried June 28, 2012 at 10:07 AM

I love the idea of tackling debt with the most emotional impact first. The whole point of debt management is being able to sleep better at night. The only concern I have is the statement that you don’t care about your credit scores.

Worse case scenario and you have to borrow soon, you’ll end up paying more and get set back in your debt destruction. Outside of that, love your approach.

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Joan June 28, 2012 at 11:44 AM

I appreciate the comment!

I knew that point would make some people cringe, but honestly – borrow for what? IF a true emergency arose, we couldn’t borrow anyway – not enough for something like a medical crisis or a loss of a house.

And if something lesser comes up, we do have cash – whether that would be to replace a car (which, honestly, if we couldn’t afford – we just wouldn’t do!) or to replace a major appliance.

So we have to rely on the cash on hand and the network of support we’ve built either way – and I’m working to up that cash-on-hand amount so that it would cover ANY emergency!

And that’s why I truly feel the credit-score point doesn’t matter to us – Chris and I are both well over 700 now, and yet we can’t get more than $5K in loans, so how on earth does it matter if it’s “good” or not! :)

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Greg@ClubThrifty June 28, 2012 at 7:08 PM

Joan,

I think you hit the nail on the head when you say “borrow for what?” I couldn’t agree with you more! The whole point of doing a debt snowball/tsunami is to pay off your debt and not go back into debt again – for anything!!! If you end up with a worse credit score but are debt free, who cares? A credit score is simply a way for lenders to determine how likely it is that they will be able to make money off of you. Screw them and the loans they rode in on! Great job, and keep up the great work!

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Joan June 28, 2012 at 10:51 PM

Thanks, Greg! That’s exactly what I’m getting at. I think I alluded to it in another comment – the point is that if you’re in a system in which the score doesn’t matter, then the score doesn’t matter – no matter how good or bad it is, nor what you do to raise or lower it!

You rock!

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Sebastian Kaupert June 28, 2012 at 10:12 AM

We’re going through the same thing, and have come to the same conclusion. We’re owning up to the money we spent when we didn’t have it. We’re done with loans and credit cards. We only spend what we have in the bank, and only buy what we absolutely need. We shrewd about every penny we spend. One of the biggest revelations was how little all these things that we ‘needed to have’ actually had to do with our happiness and our well being. It’s profoundly liberating.

Power to you, and thank you for spelling out your perspective. It makes so much sense.

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Joan June 28, 2012 at 11:36 AM

Sebastian, thanks – and congrats on the lifestyle changes! We really do believe we are making these changes “for life” and I can’t wait to spend the rest of my life doing as I’m doing now – buying what I can afford AT THE TIME or not at all!

Good for you – and thanks for the encouragement!

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celeste June 28, 2012 at 10:13 AM

Glad to know I’m not nuts…and that someone else drank the very same coolaid…I could have rote this very same post.

Thank you so much for sharing your experiences. I really do look forward to reading your posts.

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Joan June 28, 2012 at 11:39 AM

Thanks, Celeste!

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Shirleyts June 28, 2012 at 10:37 AM

I have debt – no one will loan to me – and I believe they can take my credit score and put it where the sun doesn’t shine.

I agree with you on not supporting the industry. Cash only for us, the old fashion way. I truly believe that 29% is CRIMINAL. We bail out the cheats and they still screw people.

No credit score – perfect – no more loans.
Personally I don’t know how these banks get away with raping the people who bailed them out.
Good luck to you and than you for your honesty.

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Joan June 28, 2012 at 11:37 AM

Shirley, thanks! I am glad to be done with the industry, that’s for sure!

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Carleen June 28, 2012 at 10:53 AM

That is awesome!!! My husband and I are currently working at paying down $50,000 in revolving credit and decided against the other options for the same reasons as you. Way to go.

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Joan June 28, 2012 at 11:39 AM

Carleen, I’m so glad to know I’m not alone! You rock – and I know you’ll beat that $50K just like we’re beating ours! Keep us posted :)

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Kate June 28, 2012 at 11:27 AM

Hi Joan! thanks for another wonderful post! As you went down your list I was completely in agreement with you, Yay! I too am sick of being at the mercy of whatever banking or lending institution loaning me anything, they can take it and shove it. Now that I am in much better position financially I so completely understand where you are coming from, now if only I could convince my family who are still head deep in keeping up with the joneses and mortgaged and in debt to their eyeballs. Thank you for keeping us motivated!

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Joan June 28, 2012 at 11:38 AM

Kate, thank YOU so much – it works both ways, these awesome comments keep us motivated too!

I know how it feels to want to convince those around you that there’s a better way – it’s slow going, but living the life of freedom will show better than any “telling” at the end! :)

Keep up the great work – and the great attitude!

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Philip Campbell (Freedom From Student Loans Blog) June 28, 2012 at 11:57 AM

Nothing like a little pain and sacrifice to lock-in your commitment to live free from the hassles of debt. We are cheering you on Joan! :-)

Love your approach to communicating the ins and outs of your thinking and the pros and cons of differnt approaches. Very nice talent.

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Joan June 28, 2012 at 12:07 PM

Philip, thank you so much – I am so glad you’re enjoying it! :)

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Mary Ann June 28, 2012 at 12:10 PM

Joan, I understand your reasons, and I have been there and done that recently. I took money out of my 401k to pay down my most dreaded debt, thinking how smart I was. It was at 29.9% so even worse than your BOA, just smaller. But guess what, very first emergency or need came up and because there was no suffering or effort in paying it off, I have already charged it up again. So I definitely see the reason it is necessary to go through the pain and change your mindset, so you never do it again. Thanks for continuing to be so inspiring, and Baker, too!

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Joan June 28, 2012 at 2:21 PM

Mary Ann, thanks! As you’ll see, you’re not alone – we (unwisely) took out 401(k) loans before too, and they’re on the list as the two things we’ve paid off!

(And our BoA rate was once at 28.99, so I feel your paid – isn’t it awful??)

I so much appreciate your comment, and I am so glad you’re changing your habits too – keep it up!

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Michelle Sevigny June 28, 2012 at 12:34 PM

Having no debt feels great and I take my hat off to you for accepting responsibility and getting to work … your effort is going to pay off and wow, you are going to feel fabulous with all your new debt-free freedom!!

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Joan June 28, 2012 at 2:21 PM

Michelle, thanks!! We ALREADY feel pretty good – and I can’t even imagine how good it’ll feel in a couple years!

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Peggy June 28, 2012 at 12:34 PM

I am in total agreement with you! And we are doing the same. But we have 2 houses..one stick built with a 112,000 mortgage and a mobile that is paid for…which do we sell? That is our question now…being as we are 55 and 62 yrs. old and self employed…it is an interesting concept. We will get that figured out eventually : ) Keep up the great work!

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Joan June 28, 2012 at 2:24 PM

Peggy, I appreciate your comment – and I agree – you’ll figure it out!! We will also have to deal with our housing situation once we’re credit-card-debt-free (probably by paying down our mortgage principal fast, but who knows for sure til it rolls around!)

Good luck – and thanks for stopping in! :)

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kara June 28, 2012 at 12:44 PM

You do realize that when you rent, they use your credit score to qualify you?

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Baker June 28, 2012 at 12:58 PM

This simply isn’t true many times. Some places will only weight your credit score, others don’t even pull it. Most property managers and landlords, want only one thing: a responsible, respectable tenant.

Joan will easily be able to show her income and expenses, her history of paying down huge amounts of debt, and her character when she goes to rent. :)

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Joan June 28, 2012 at 2:23 PM

Exactly! (And we have some friends who do property management, so we’d likely not rent from a stranger anyway – but from friends/family – which helps.)

Yes, an apartment complex would probably be out – but that’s OK; with four people, 5 cats and a large dog, our credit probably isn’t our biggest black mark ;-)

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Momof5 June 28, 2012 at 4:57 PM

Right on, Baker – as an unintentional landlord (renting out a house we haven’t been able to sell), I can tell you that we pull references, employment history, bank records, but never credit scores. Your credit score is a snapshot, your references and employment history are the real deal.

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Greg@ClubThrifty June 28, 2012 at 7:17 PM

As landlords, we actually do use credit scores to help screen our prospective renters. However, we buy rentals that we are able to price high enough to weed out potentially “bad” renters. Furthermore, we’ve found that – at our price point – almost all renters have bad credit. If they had good credit, they would be home owners. Therefore, we place much more emphasis on references, employment history, and honesty than credit scores. In fact, I don’t mind one bit if you have bad credit or have filed for bankruptcy. What I do mind is if I find out you’ve lied to me and told me that you haven’t. That is a sure way for us to reject your application.

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Financial Samurai June 29, 2012 at 1:02 AM

Actually, as a landlord in a hot rental market, I really depend on the credit score to filter out applicants. It is NUTS here in SF!

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That guy with the long Italian name... June 28, 2012 at 12:49 PM

Every time I think I’m going to drown, you publish another blog post that keeps my head above the mess. Your comment, “I don’t want to lie, and I’m not out to game the system,” is exactly why you will succeed. You are certainly blessed, and you deserve that blessing.

Now… if only I can convince you to agree to what I sent you in email…!

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Joan June 28, 2012 at 2:37 PM

Well, thanks!! Now if only I knew what email you meant? (Sorry, I get a few HUNDRED through various channels every day!)

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That guy with the long Italian name... June 28, 2012 at 3:52 PM

Heh, I should have known. But mine is important! ;) I sent you an email on June 22 to your “community” address (I won’t say it here, but you’ll know which I’m talking about).

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Ed June 28, 2012 at 12:58 PM

We did almost the exact same thing as you, about 15 years ago. Now, we pay off our credit cards every month, pay cash for our cars (even new ones), and have about a 15% loan-to-value ratio on our mortgage. The mortgage will be paid off a bit before our older child hits college, and he will have graduated by the time our daughter starts. So, our cash flow should be stable throughout that period if our college-cost crystal ball is accurate.

We save over 20% of our income, so when our daughter is out of college and we start thinking about retirement, we should be in good shape. In the meantime, we have a huge cushion should some sort of financial disaster occur.

You’re going to get to this position in just a few years, and your thinking is spot on: Not having to worry constantly about money and living hand-to-mouth will improve every aspect of your life. It’s a truism that couples fight more about money than anything else. We never have to, and it’s part of what makes our marriage great.

You’ve planned this out very well, even though it’s unconventional. Best of luck seeing it through!

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Joan June 28, 2012 at 3:22 PM

Hi Ed!! :) Thanks for stopping by!

You are so on top of things – and I’m excited to get to that point where money becomes an afterthought – and not my first thought. I’m not saying I won’t be careful with it, because that’s one thing this whole experience has taught me, but I’ll be careful differently, with less day-to-day worry!

I love that you guys have a similar story – and I love hearing how things are for you now, on the “other side” of it, because that really shows me what a great future we have to look forward to!

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Chris@SimpleFamilyFinance June 28, 2012 at 1:37 PM

Joan,

No matter how you decide to pay it off, I applaud you for not trying to find an easy way out. Working for a community bank, I see the opposite reaction far too often. Whether it’s bankruptcy or willing foreclosure, I’ve seen many people with very healthy incomes come across an easy way out of the mess they got themselves into in the first place and take it without a second thought. Don’t get me wrong, I also see plenty of people in very unfortunate circumstances that have no other way out, but it’s not as often as the media would have us think. I admire your tenacity to buckle down and get yourself out debt You’ll be better for it even if it takes you a little longer to be debt free. Keep fighting Joan!

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Joan June 28, 2012 at 3:24 PM

Chris, you understood EXACTLY what I was getting at. These are viable options – for some people, in some circumstances. But for us, they’re not the right choice for now – and hopefully in two years I’ll stand before this community with ZERO consumer debt, and proud of it!

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Andy Amick June 28, 2012 at 2:43 PM

Glad that you are taking the “right” approach and aren’t playing games with your debt or the banks. Also, so much of personal finance is mental and not the actual numbers, so paying off the most frustrating or hated debt first can be a better decision. Especially if that’s what keeps you going to pay off the rest.

Your honesty and openness is great to read. Keep it up.

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Joan June 28, 2012 at 4:16 PM

Andy, thanks so much! You’re exactly right – if it were all numbers, I’d have gotten it “right” long ago – but it’s not, and I’m just glad I’m doing it now.

Thanks so much for your support – it means a lot!

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Leah E-H June 28, 2012 at 3:07 PM

Thanks for this post Joan. I like your reasoning! And I agree with you, if you don’t go through the pain of paying it down and the routine of making new money habits, chances are you won’t change and things will end up the same in the future. I can attest to this. I consolidated our debt with a home equity loan. Cancelled some cards. Kept one for an emergency. Now we have a big home equity loan AND a big credit card bill. We didn’t set up the habits to get out of debt, so here we are again. One step at a time!

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Joan June 28, 2012 at 3:23 PM

Exactly!!! And I’m not saying those decisions are bad – in some cases, people do that really successfully. But I don’t want to gamble on my own self-control that much ;-)

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Elliot Shoener June 28, 2012 at 3:32 PM

I have received a lot of replies to my comment which I appreciate. One thing I have read a few times is that people are choosing to close out their credit cards. Please stop this. It’s one of the worst things you can do. If you don’t want to use your cards, cut them up but don’t cancel them. If you ever are looking for a loan in the future, having at least 4-5 major credit cards that are open and active will be key to getting the lowest interest rate. You credit score is determine using many factors, one is a good pay history and the available credit versus what you are using. This is called credit utilization. If you don’t have accounts open, your credit score will be crushed. You want to have a few cards open and you want to rotate those cards each month. Use one card for something as simple as gas and then pay if off right away. The next month choose a different card and repeat. This will show on time and regular payments on all accounts.

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Joan June 28, 2012 at 4:33 PM

Elliot, you’re right in a way – IF you choose to work in a system that relies on a credit score, closing cards CAN sometimes be bad, and there are plenty of sites out there that would back up your thoughts 100%.

But you’re in a community here on Man Vs. Debt based around people who are opting to live outside that system – so the “good” or “bad” effects on those scores are beside the point.

I’m not going to borrow from anyone – so I don’t need to worry about what closing a card does or doesn’t do to my score. I’m not interested in buying on credit and paying it off the same month, even for rewards. There again, there are lots of sites out there with information that supports doing so – but this isn’t one of them!

(And, honestly, my scores went up when I closed various accounts – so I have even less reason to buy in to that thinking!)

The bottom line is that there’s a lot of advice out there – but it all boils down to doing what’s right for you. Your system works for you, and that’s great – but we’re comparing apples to oranges to talk about why my decisions won’t be good ones in another system. They aren’t supposed to be – but they work great for me! :)

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Elliot Shoener June 28, 2012 at 4:55 PM

Ah, I think Joan I was confused then. I thought this was a recent post, it says above “Last week, we applied with our local bank for a debt-consolidation loan for $25,000, once we got the BoA card below that amount.” There is also a mention of a Spring Leaf loan last summer. If credit doesn’t matter and this is all about living outside the system, why the application for financing? I guess I am just confused.

I realize you are well off and can possibly never need a loan again for things like a house or car or medical procedure which can equate to thousands of dollars. That last post was a reply to one of the community members which may not be so lucky. Most people (about 60%) of the population live pay check to pay check and will need money at some point. Your own readers say they live this in this post. I understand leaving outside the system. I also understand the people that don’t want to seek medical treatment. However, usually that is only until they have a major issue. like a sick child or a broken water heater. I would hate to give anyone guidance and support a way of life that could seriously affect someone’s life.

You obviously have a great following here. I just wouldn’t want your readers to follow your lead if they will need credit at some point. 99% of Americans will every 5 years.

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James June 28, 2012 at 3:26 PM

Opting out of this system will improve your quality of life substantially. We’ve been there.

While we didn’t start being so deep in debt, we had pretty substantial debts as well, carried for over 8 years.

Having paid them off a few months ago, we’re never going back to that lifestyle. We don’t have any financial stress any more. At work, I don’t feel like I’m trapped, and have to take whatever they dish out. I can walk out if I want, got money in the bank, already have enough saved that I could go 6 months without working, and that buffer is only going to increase.

Don’t have a mortgage, not sure that we want one (still early 30s). Doing the numbers, 6 years of saving at current rates, and we can buy a house cash. Sooner if we really buckle down.

Screw the banks. We like being masters of our own destiny.

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Joan June 28, 2012 at 4:26 PM

James, that is EXACTLY what I’m talking about.

I have some Realtor friends who will tell you their day is made when they hear “cash sale” – and I firmly believe that no matter what the future holds, if I ever “buy” a dwelling again (instead of renting), it will be 100% in cash as well!

Keep up the awesome savings – I can’t wait to join you on that side of the battle! :)

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Kris June 28, 2012 at 4:06 PM

Joan, very honorable way to attack your debt. Not everyone has the resources to do this, but if they do, then this is a must read for them. You are fortunate to have that much debt and still be able to pay a large amount extra every month. I used debt settlement a few years ago because I didn’t have the resources, and it worked out well. But I still felt guilty. Keep plugging away!

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Joan June 28, 2012 at 4:19 PM

Kris, that’s exactly my point – IF I didn’t have the resources, my feelings would likely be different! I’m just very blessed to be able to do what we’re doing. We didn’t “think” we had the money at first, but we were able to focus, sell a LOT of crap (my husband just sold something last night on eBay for $110!) and work some side jobs to get ourselves into this position – and now it’s a habit, for the better! :)

Thank you so much for your support – and for sharing your own story, That means a lot!!

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Jenna, Adaptu Community Manager June 28, 2012 at 4:21 PM

Whoa! Thanks for the blunt honesty Joan!

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Joan June 28, 2012 at 4:27 PM

Thank YOU, Jenna! I always love seeing comments from you and your support of our goals. We appreciate it! :)

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Rebecca June 28, 2012 at 8:12 PM

I personally think that anger… hey who needs anger management to pay down your debts and going through the process of paying it all down and having to do the extras to pay it down just to learn the “lesson” of not being in $90,000 worth of debt is great! As for bankruptcy and all that other stuff I agree with you 100%. Bankruptcy and other things should be as a very last resort as in you cant keep a roof over your head, no food, water, or heat/ac. I personally think you are doing great. For me as of July 1 or whenever my credit card company gets my payment it will be paid off in full…who says anger doesnt work? After that I will concentrate on my student loans and once those are finally paid off then I will be debt free and hope to stay that way.

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Joan June 28, 2012 at 10:53 PM

Rebecca, that’s awesome – congratulations!! So glad to hear you “made it” on that credit card, and I know you’ll do just as good on those student loans!

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Financial Samurai June 29, 2012 at 1:01 AM

Joan, can you remind us how you were able to get so much credit in the first place?

Excluding my corporate card, the highest line of credit I have is $35,000. I don’t think any CC company would lend me $90,000.

At least you had fun buying the goodies though right?

Thx!

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Joan June 29, 2012 at 1:24 AM

Sadly, it’s very little in “tangible goods!” Most of it was actually what started out as a BETTER interest rate for student loans in the mid-1990s (Chris) and significant medical expenses from 1999 and 2000 (me) – compounded by interest.

As I mentioned, we have very “good” credit – WITH the high amount of debt we have, we are still in the good-to-excellent range, and earlier on it was even better – so for many years, our credit limits kept going up, then we paid the minimums (before credit reform said that your minimums had to drop the balance if only slightly) and the debt would quickly rise to meet it! In both our cases, this was going on separately before we even met and got married, so we both brought a share to the communal pot!

In my case the only “tangible goods” I bought were some textbooks during my first semester of college in 1999; the rest was medical and day-to-day expenses (groceries, I guess that’s tangible, if fleetingly!) that was charged to credit for a few months after my daughter’s biological father and I split up in 2001.

Sadly, I don’t think any of the high balances were accrued any time after that – just the aforementioned heater loan in 2010 and the card at the mechanic around the same time.

Very unfortunately, we had a couple late payments (one Chris, one me) on our worst cards during an unexpected furlough – that sent the interest rates skyrocketing (again, before some of the more recent reforms) because at the time, we had no emergency fund and each lost two week’s pay – in the same month.

Thankfully, we’re in completely different circumstances now – and in large part we’re actually HELPED in that we didn’t have real reckless buying habits that led to this; that would probably be even harder to change!

I’ll say this – I hope that’s a cautionary tale; we’re paying today for expenses that were accrued, in the case of Chris’s college debt, almost 20 years ago (he’s 12 years older than me, if you’re wondering how that adds up!)

So if you have debt – pay it off NOW, not later!! :)

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David Neff June 29, 2012 at 1:18 AM

Joan,
I commend you for taking responsibility for your debt! So many people would just throw up their arms and raise the white flag. The people who claim bankruptcy and stop paying on their debt are the ones costing all of the other consumers more money. Sure, creditors are a greedy bunch, but there is a reason why the interest rates are as high as they are….because people rack up debt and then don’t pay it. I would imagine if everybody played by the rules there wouldn’t be a need for 24-30% interest rates.

I agree with your whole attitude and mindset, but you have to do something about paying 24% on such a high balance credit card. How motivating can it be to know you are giving BofA an extra $200-300 of your hard earned money each month just in interest?? If I had the extra money I would loan it to you at 15% and still make a nice chunk of change until you payed me back. Just think of all the things you could do with your money other than give it to BofA each month. Trust me, I know. I give a few hundred extra bucks to my creditors each month too! But, I refuse to pay more than 13.99% interest which is the highest interest rate I have on all of my credit cards.

I really think you need to play the Balance Transfer game to get some lower interest rates. This is a game and you are playing it whether you want to admit it or not. The game is to get out of debt as quickly as possible, but also paying as little in interest in the process.

At the end of the day all I care about is that you guys get out of debt ASAP :-) So, keep up the good work and no matter what anybody else thinks (myself included) do what is going to work for you & your family.

Just think how much Scrapple you could buy with all the extra money you will have when these debts are paid off !!!!

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Joan June 29, 2012 at 1:30 AM

David, I appreciate it – and the support!

We have done the balance transfer game in the past, but honestly, it doesn’t do enough to be worth it, again because of the size. Adding a $5000 loan and bringing that balance down to $20K isn’t appealing to me – I get the math, but it’s not “worth it” in terms of what I believe it costs me mentally!

Like I said, if I could get the FULL BoA balance amount from a reputable lender, I might consider it – maybe. The thing is, either way, I’m done with them in two years or less, and as we pay more and more down, that whole interest thing becomes less and less of an issue, so I get less and less motivated to try to dig myself into yet a DIFFERENT credit.

(And, if anyone’s wondering – our BoA interest rate WAS 28.99% at one point, so we’ve made significant progress by torturing them on the phone – you gotta look at the bright side!)

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Bilgefisher June 29, 2012 at 1:03 PM

Joan,

I appreciate your position and reason on which loans you are tackling. We do the same thing.

That said, I have to side with Elliot and David on BoA. All I gathered from your post is 24% is a good motivator and you have tried a couple banks to transfer the loan. $200 a month in interest. $4800+ dollars over 2 years. 1 full months base income. Is that really worth the motivation? I know your far more resourceful than that. You have proven it time and time again in your blog posts with your accomplishments. I am 100% positive you can find a alternate and better motivator.

Forgive me for being frank, as I only intend to help, but it seems you are afraid to leave your comfort zone and are simply using the “motivator” as an excuse. A defensive mechanism to justify paying more and not rock the boat.

Correct me if I am wrong, but paying down debt is part of your strategy to take back your life. You are working to to be financially savvy and to be in control of your financial life rather than the other way around. One solid step towards taking back control is firing BoA as they no longer serve your needs.

As Elliot mentioned Lending Club and Prosper both offer loans. I have a 720 score with a very high debt to income and Lending Club approved me for 11%. They loan up to $35000.

Joan, either way, good luck and happy financial sailing.

Jason

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Joan June 29, 2012 at 4:17 PM

Jason, I appreciate the insight – and the kind words! Of course you know that what you read in any one post is only part of the story – and you probably noticed I didn’t mention peer-to-peer lending in here at all.

The short answer is, I’ve looked into that – and have more research to do – but wanted to get a post out on some of the options based on the banking system in the meantime!

Mostly just wanted to say I always appreciate your comments and support!

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Sadie June 29, 2012 at 6:45 AM

“I’m tired of other companies determining what I can and can’t do with my life.”

I had never thought of it that way before. I love this post, thank you for sharing!

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Joan June 29, 2012 at 4:17 PM

Sadie, thanks so much! I’m so glad that resonated with you :)

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Doug F June 29, 2012 at 7:41 AM

Hi Joan – congrats on the progress you’ve made! I enjoy your writing and think you provide inspiration and insight for others who are in a similar situation. Thank for being so open and honest – your ideas and the discussions that follow are very helpful.

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Joan June 29, 2012 at 4:18 PM

Doug, thanks so much! I am thrilled to be able to spark such interesting discussion – and hopefully to make people think, which is the real key! :)

Thanks again!

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Jennifer from Credit Karma June 29, 2012 at 2:30 PM

Another great post. You’re such an inspiration, Joan!

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Joan June 29, 2012 at 4:17 PM

Thanks, Jennifer! :)

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ju June 29, 2012 at 4:34 PM

Thanks for being brutally honest, you inspire me to focus and act.

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Joan June 30, 2012 at 12:44 AM

Wow, ju, glad to help – thanks!

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Corie June 29, 2012 at 5:53 PM

Wonderfully written post, Joan! You echo my sentiments EXACTLY!

Our family is in a very similar position…January 2009 started our debt snowball at $80k. Today, we have paid off $64k and we can see the light at the end of the tunnel!!! I didn’t know about the Debt Tsunami until recently – love it – we are equal opportunity debt haters – I don’t know if there’s one I hate more than another! haha. We’ve paid off from smallest debt to largest. We have transferred credit card balances just twice, when a huge interest reduction was needed.

As you’ve mentioned, you have to do what works for YOU. Find YOUR motivation and stick to it. *highfives*

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Joan June 30, 2012 at 12:44 AM

High fives back, Corie!! Good for you guys – and keep us posted as that remaining amount goes down even further, we can’t wait to celebrate with you at zero!

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Charlotte@EverythingFinance June 29, 2012 at 7:37 PM

I will have to admit, I cringed at the amount of your debt, but it looks to me like you’re handling it the best way you can. No debt is good and anyway you can work out to get rid of it is a win in my book. Good Luck on you continued success. i look forward to seeing the oist that says “We did it!”

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Joan June 30, 2012 at 12:46 AM

Boy, Charlotte, not half as much as I do – on both the cringing and looking forward to parts!

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Kathy June 29, 2012 at 9:39 PM

Man, I love to see a community of people talking about taking responsibility for their lives! It is just so common in our society to blame everyone else and look for an easy way out. We know someone who has filed for bankruptcy 3 times and then walked away from their house a couple of years ago. They have never had a period of unemployment or any medical bills that caused their debt….they just bought crap.

We had about $40k worth of debt, went to a Dave Ramsey course, and we are down to $6k. Just 6 more to go baby!!! It’s taken us a few years, but what a feeling of accomplishment!

Keep up your hard work and your excellent posts!

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Joan June 30, 2012 at 12:47 AM

Good for you, Kathy!!! And keep it up – we can’t wait to celebrate with you when that $6K become ZERO :)

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Adam Hathaway June 30, 2012 at 6:39 AM

Like you have already stated, while some of your methods dont make “cents”<-See that play on words, psychologically you need to be in it which means do it the way that is satisfying to you. I am glad you are trying the no bankruptcy route first when so many would have gone that route. Keep up the great job!

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Joan June 30, 2012 at 4:27 PM

Adam, thanks!! You got it in one – it doesn’t have to make cents – but it’s sure making changes in the thousands of dollars! ;-)

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John @FearlessMen.com June 30, 2012 at 4:00 PM

Stay in Control and Stay Motivated! I totally agree. Sometimes it may not seem rational…especially when it’s ourselves that caused the debt. But I think that mistake is overcome by the decision to get it under control and stay motivated with it.

Good article!

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Joan June 30, 2012 at 4:29 PM

John, thanks!! I appreciate the support – and the motivation! :)

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linda June 30, 2012 at 5:49 PM

Joan you are the cats meow! Thank-you for sharing your financial life with us. You are a blessing. Good luck to you .

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Joan July 2, 2012 at 12:57 PM

Aw, Linda, thanks! :)

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Dave July 1, 2012 at 9:51 PM

Heck yeah, It was the way I did it when I worked out my debt. I listed my debts and used the debt snowball method and knocked it out. Sure it took 5 years and a lot of work but I did it.

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Joan July 2, 2012 at 12:58 PM

Dave, that’s awesome!! I can’t wait to be on that leg of the journey myself – looking back and saying, “Yeah, that was really hard, but I DID IT.”

Good for you – and thank you so much for sharing your enthusiasm with me! :)

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BryanM July 3, 2012 at 9:40 PM

I think there should be a new lending company that refinances credit card debt at, say 10%, for individuals who just made mistakes while young, but are now 100% financially responsible. It just seems like individuals like you are, in reality, very low risk in terms of defaulting and shouldn’t be forced to pay 20% APR. If I knew how to start that type of finance company, I’d certainly start lending out to individuals at a much lower rate – seems to be a great market and need for it. Good luck on your journey to being debt-free, Joan!

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Joan August 15, 2012 at 9:30 PM

I’m a little late saying so, but THANKS, Bryan! Would that bankers thought that way… ;-)

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Michael July 6, 2012 at 1:12 PM

Your story and reasoning are compelling. I did not read the comments so I am not sure if anyone pointed this out already:
You would not likely qualify for consolidating your credit cards into one payment with a credit counseling organization anyway. The reason is that you would show too much discretionary income left over after an honest assessment of your monthly cash flow.
All of the major banks have an underwriting scheme for credit counseling. Some allow more discretionary income than others. Your largest account happens to allow one of the lowest. Last I checked (several months ago), BoA allowed 150.00 discretionary income to offer the lowest interest rate through a DMP provider. You would have to fib, or the counselor would have to massage the numbers, in order to get your proposal with BoA approved.

I have been around the credit and debt markets a loooong time. I have never seen the BoA analogy tied to the constricting snake that kills and eats its prey. Thanks for that!

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Joan August 15, 2012 at 9:33 PM

I do like the analogy!

One thing I should have specified is that some of these considerations – like NOT doing debt consolidation, etc. – were not necessarily based on our current financial status. So, right now, we have a LOT more discretionary income than we used to. (Thanks to paying off OTHER debts, for instance.)

Earlier in the process, we were in the red every month – and thank goodness for You Vs. Debt, or I truly believe I’d still be there!

But that is a great point and one I hope people will catch – at the place we are NOW, even our potential options would be very different!

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Karen July 23, 2012 at 2:36 AM

Great writing Joan, I really like your style and your story has motivated me some more.

What I find fascinating is that there are a number of commenters who are eager to tell you what you SHOULD do. Debt elimination is tough and I think you should be able to approach it anyway you like, if (and it’s a big if) it works.

Your method works for you, what else matters?

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Joan August 15, 2012 at 9:35 PM

You know, Karen, it’s funny – I kind of like the ideas on what I “should” do, because they give me ideas for what to write about!

It’s one reason I like doing posts like this… because you know, almost no one who reads these posts knows me. And NO ONE reading, except for my husband, has the 100% picture, because there are a thousand things that just have never factored into a post, or even into conversations with our best friends!

So each “should” gives me another slice of myself that I can put out there, to hopefully help people learn more about me and how I make decisions.

That said – I have to tell you how much I appreciate the support on “whatever works for you,” because in the end, that’s what I’m going to do, and that means more than any “I agree with you BECAUSE you’re doing what I would do” line! :)

So it’s fun to get to kind of walk through how I think about things,

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Brian July 24, 2012 at 1:41 PM

You are going to have to do what works for you, but I recently took out a $15,000 consolidation loan that saves me $120 per month and it eliminated all of my credit card payments to just one loan payment per month, which makes it easy to track. I question the reasoning not to get a consolidation loan, save money, and pay things off faster.

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Joan August 15, 2012 at 9:38 PM

Like you said, you gotta do what works for you – and I’m glad that’s made things better for you! Just not our cup of tea!

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Kimberly August 10, 2012 at 7:43 PM

Joan,
I really enjoyed reading your post about why you’re working so hard to pay off your consumer debt rather than go into debt consolidation or declare bankruptcy. As someone who paid of $21k of credit card debt two years ago – and kept it off (kinda like Weight Watchers…lol) – the main reason I was determined to pay it was quite simple. By using those credit cards, I knew – and agreed to – the terms of use, high interest rates and all. I received the benefit of borrowing the money (the dinners out, the shopping sprees, and all the other bad decisions). It would have been dishonest of me not to hold up my end of the bargain and pay for what I bought. Period. I am so proud of you and your family, and I know you’ll get to your debt-free life soon!

Oh, and as an aside, I too tackled my BoA debt first. It made me very uncomfortable knowing those SOBs had so much hold over me. I was worried they’d arbitrarily up the interest rate or do something else equally awful, and I knew there’d be nothing I could do about it since they had me on the hook for $12k.

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Joan August 15, 2012 at 9:37 PM

Kimberly, thank you so much! I fully agree – when you have a “big debt,” you’re much more on the hook, as it were, because it’s not like you can play the I’m-going-to-transfer game. They would laugh in your face – they KNOW no one else would give you that much money, right?!

And you’re exactly right – there is a sense of responsibility that comes into play. I knew the terms. No one deceived me. (Sadly!) And now I’m paying the piper – but the joke’s on them, because when this is done, it’s done for good!

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Stephanie August 21, 2012 at 2:08 PM

Joan,

You can do this!! I am a 27 year old single woman, who started with over $64,000 in credit card debt in 2010, when I hit rock bottom. I decided that I was done with it completely, and I chose to take control of my life. Becoming debt free was the ONLY way in which I would have the freedom to live the life I choose. I have been paying more the $2,000 a month towards my debt and should be debt free in less than a year (At the latest August 1st 2013). I’ve been at this for the last two years, and have done it all 100% on my own. I’m incredibly proud of my efforts, although extremely private about it. I’m so happy I had the courage to share my story on here. I am 100% in support of you. You can definitely do this! It’s the most rewarding thing I’ve ever done and it has allowed me to learn so incredibly much about myself!

Stephanie

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Joan September 17, 2012 at 7:25 PM

Stephanie, apologies that I just saw you comment – but I HAVE to give you a shout-out and say how proud I am to hear your successes so far! I hope you’ll keep us posted when you get all the way – I’d love to celebrate too, especially since you’re “ahead” of my schedule – it’ll really keep ME motivated!

Thank you again!

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Clarence January 28, 2013 at 3:03 AM

Howdee,

Hey love reading down but have gotten to Sept 2007 and the comments have stopped. I personally agree with your motivations and not taking the easy way out by filing for the big B or settlement.
I am kind of a math geek. One thing I could not understand about your situation is that being say $60,000 in debt, and paying $2400 a month would equal $60,000 in two years. You say you will be out of debt in two years. What about the interest? Aren’t you paying about $800 a month in interest alone? So when you say you are paying $2400/month total for your credit cards do you mean $2400 + interest? Maybe $3200/month?

Okay with that being asked I’d love to share my experience in a later post. I have gone from $115,000 to $82,500 over the past 3 years. I see myself paid of in five years. I do play the transfer game and last year I paid 4.2% on my debt. As long as I can pay I refuse to take the easy way out; even tho I will have to put off retirement by at least 5 years beyond what I would like.

Good blog! Keep up the good work,

Sincerely,
Clarence

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Jason November 21, 2013 at 10:42 PM

Website – getoutofdebtfree.org

Dont pay anything back, they never really lent you their money, so why should you have to pay it back, with interest that never has and never will really exist?

The banks commit fraud (pure and simple) on a grand scale everyday….

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greg hatch November 26, 2013 at 9:55 AM

Two questions:

1.) How much is a credit card company/industry paying you for this website?

2.) Am I the first one to ask?

Greg Hatch

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Sue January 30, 2014 at 12:12 PM

I am so glad I found your website through Jean Chatsky’s Facebook page. You sound very much like me in many respects. My debt is much less than yours, but I am single and it is way more than I should have! I am closing in on retirement age in the next 5-8 years, and I sure don’t want to have to be paying all this off on a limited income! I am approaching my debt in much the same manner, and it does feel good to finally be doing something positive about it. But I must admit that it is still pretty depressing. I wish I had even a percentage of the amount you are able to put onto your debt each month. But I will continue, and do the best I can. Thanks for making me realize I am not alone in my situation!

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leslie April 20, 2014 at 11:17 AM

You have a lot to say and seems a lot of anger about an issue you yourself could have controlled in the first place – sorry, but I wouldn’t take your advice about money or debt. You got yourself in debt then blame BOA? lol Just like a crack head blames the crack or a fat ass blames McDonalds.

You enjoyed racking up all that debt, you cannot say you didn’t feel like you were on easy street all those years it took to accumulate such debt and now its simply time to pay the piper – enjoy!

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