New Member, with nowhere to go,but up!

Question

Hi, No idea where to even start. I found this forum a few weeks ago through a link someone posted in a group I belong in. I sat on here for hours reading through threads. It's a lot to take in all at once. And I am not sure I still understand abbreviations and lingo, even after studying the post for a great while. I will try to give us much information as I can, and hope someone is able to read threw all of it and make some sense. Any advice would be greatly appreciated. I figured I have nowhere to go at this point, but up! My husband and I got married very young and we struggled to raise a child. We relied heavily on a credit card I got before we married, and my husband had made bad financial decisions before we met. Raising a baby on a fresh out of bootcamp salary with debt, we got way over our heads fairly quickly. We turned to my parents for some financial advice and after going everything with us, they offered to help and make a budget for us, as to keep from getting into the same situation again. Things got better for awhile. Paid off the credit card that was in collections, as well as the tmobile account that had also gone into collections. We made it by for awhile. A few months later we got some new credit card offers and thought we had learned our lesson the first time and surely would be able to control our spending this time around. Fast forward several years, 12 new credit cards later, and a couple of loans from a military lending company. We were way in over our heads, and considering bankruptcy. However, do to my husbands career it really wasn't an option. And a bulk of our debt wouldn't have been able to be filed under the bankruptcy anyway. In February of this year we were a month or two behind on most of our bills (except rent and utilities) and about 3 months behind on one of our car loans. We were just trying to hold on until we got our tax refund. Then, we got hit with another big bump and when we went to file our taxes, saw someone had logged in and fraudulently filed our federal return. When we called and spoke to the IRS we were told it could take up to 180 days to get our refund as it needed to be investigated. We had been keeping the car in a garage at our complex and one morning my husband noticed he was being followed by the repo man. Once again my parents were willing to help us out one last time. I had finally hit rock bottom and had had enough living this way. We paid the past due balance and fees and got our auto loan current. By the end of February this year we were able to get caught up on all of our past due bills. It was nice being caught up. However at this time we had 7 accounts that had gone in to collections. A few being there for quite some time. Three out of the 7 were my husbands. I had better credit when we met so most of the credit cards were offered to me. In June we had enough money to pay off the almost 6k in collections debt. I had been receiving several calls a day from each company and ignored them all. As I had read it would be more beneficial to have all of the money set aside, and offer to settle at a lesser amount. I wanted to pay these off, not make payments. We were ready to get serious about digging ourselves out of debt. I was able to settle the debts at about 55-65% of the balance owed. It felt really good being done with all of them! We paid my parents back the money they helped us with in February, in April. So we started July with no bad debt, and an on time payment history since March. I know it doesn't sound like much to most, but for us, it's been a huge relief. I have adopted several of Dave Ramsey's concepts. I have a debt payoff calculator that puts us being completely debt free March 2019 at the very latest. Doesn't include any extra money we bring in, or account for pay raises, tax refunds etc.  As of right now, we have 8 credit cards between us, which are all JUST below the limit. Totaling $19,611. And an account with a furniture store $3707. And both of our cars have $18,761 left.  So a total of roughly $42k in debt. We've paid off just over 10k in the last year. And plan on paying off the furniture next month (it will save us roughly $600 in finance charges) and 3 credit cards totaling $1550. That will free up $295 a month!!! I haven't signed up for the credit monitoring yet. Turbo Tax was supposed to give us free 2 year monitoring after the issues but the code didn't work. So I am thinking about bitting the bullet and signing up my husband and I. But for $60 a month for both of us, I want to make sure it will be worth it! We have credit tracking through Capital One and my score was 537 and my husband a 587. I knew it wasn't GOOD, not even close but I was OKAY with it as it was a start. But our auto company just started giving free fico scores and mine is a 440. Which was a HUGE shock. I knew the one through Capital One was a "fako" score but I didn't realize it was off THAT much!  Anyway, hopefully this all made sense to someone and someone was able to make it through all of it! I appreciate any advice! Thank you :-)

Answer 1

redbeard wrote:
First, absolutely wonderful work on digging out. Its hard, extremely hard, but you have come a long way. Its awesome that you paid back your parents, as a priority.
Make sure you put a bit of money away for a rainy day. Having a few dollars put aside can save a LOT of stress.
Also, unless you are really in need of a monitoring service, put that money towards paying down debt and just use something like Credit Karma for now. It doesn't give actual scores, but right now, you know they are in the tank, so spend some time and work on the reports overall.
In general (tough love style advice), if you recently were close to getting a car repo'd, paying cash for a monitoring service is simply avoidance behaviour. Put the money towards solving the real problem, get the monitoring service once progress is well underway.
Dan
I agree with Redbeard - don't even worry about a paid monitoring service at this point. Put EVERYTHING you can against the CC debt. Use free sites like Credit Karma and Credit Sesame to monitor the contents of your reports, but don't even worry about scoring right now. Use the debt snowball approach to pay the cards down as quickly as possible, and when you've got it (the CC debt) down to around 30% of what it currently is, then you can start looking at scores and see where you are. At that point you can start strategizing how grow your scores. In the meantime, try attecking the derogs on your reports with GW letters and PFD any remaining unpaid items.