Debt Reduction

Adventures in debt

I have a lot of debt to tackle myself. Can you elaborate on the debt management program you completed? I am interested to hear about it.

I got this question from Funny Honey the other day and thought that I would do my best to answer: Like I said before, most of my credit card debt accrued during my last year of college and the years immediately following. I honestly don’t think that I bought anything worthwhile with my credit cards and used it for a lot of stupid purchases (clothes, CDs, etc.), as well as relying on them for gas, groceries, etc.

Fast forward to July 2006 – I had about $11,000 worth of debt spread over five credit cards and had missed enough Mastercard payments that I was getting regular calls from their “customer service” department and there was no way, short of winning the lottery, that I was going to cover the $6,000 that I owed in past payments and service charges I had incurred.

I’ll be honest – in all of the stressful situations I’ve found myself in over the years, I don’t think there’s anything that compares to the hounding sensation one gets when you pick up your cell or work phone and hear that delay indicating that your phone number is on some automated dialer and you were stupid enough to pick up a call from a “Caller Unknown.” And even if I didn’t disconnect the phone call immediately, actually talking to these agents was worse: “May I ask why you’ve missed payments?” “Uhhhh … uhhhh???” (You really can’t tell someone “because I suck at budgeting.” Well, maybe you can, but if they hadn’t figured that out by now …)

There were too many of those phone calls, too many times where I’d open up my credit card statements and wonder what I could juggle or what I could skip for just this month to feed my creditors and keep them at bay for another month.

I can’t remember what my thought process was or what kind of due diligence I did (I think I called my friend Deb who used to work in the financial industry to find out what that would potentially do to my credit score), but slightly desperate and looking for a way out that would still hold me responsible for my idiot debt, I chose to enter a Debt Management Program (DMP). And at risk of sounding like an advertisement, I work with CareOneCredit. I don’t know how I found them, I don’t know why I picked them – but I remember it was a relatively painless process that I was able to set up online. Another bonus? Until recently when I decided to pick up the pace on reducing my debt load, I really haven’t had to think about CareOne, except to remember to keep about $300 in my checking account near the 20th of each month. They charge me about $40 as their “processing fee,” negotiated lower interest rates on all of my credit cards and facilitate payments to my creditors.

Today I have $5,500 in credit card debt and I’m trying to utilize Dave Ramsey’s “snowball” approach to tackling my remaining debt. I don’t care if it’s $20 leftover here or there in my checking account or $200, I have all of my credit card information programmed into my banking website’s Bill Pay feature and make payments whenever I can – regardless of the size of payment.

I hope this goes without saying, but I’ll say it: This worked for me, I don’t know if it will work for you. (And if I did, I would be selling books like Mr. Ramsey and trying to capitalize on the wisdom I so sorely lack.) I’ve paid over $800 over the past two years in fees to CareOne, but the peace of mind I’ve gained – again, worth it to me.

And if people haven’t figured this out by now – I’m kind of lazy when it comes to my finances. What I like about CareOne is that I can do most of my transactions (removing creditors from my portfolio, requesting a change in payment date, etc.) from the comfort of my computer. And if I’ve had to pick up the phone, their agents seem courteous and knowledgable.

So, Funny – there’s my very long-winded answer. I hope this helps!

4 thoughts on “Adventures in debt

  1. I like the idea of paying $20 or $200 – whatever you can…whenever you can. I think that’s a good tip that I’ll start to use too.

  2. I congratulate you on your road to becoming debt free. There is certainly no better feeling in the world! It is good to hear of your success with the company you used. Believe me your situation is more exception than the rule when using outside companies to help you with debt problems. Take this from someone who has in the past dealt with this very subject and now work with many people like yourself in finding financial freedom. I applaud you!

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