All Topics / Help Needed! / HELP !!!!!!! WHICH BANK ???

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  • Profile photo of COLLECTORCOLLECTOR
    Participant
    @collector
    Join Date: 2005
    Post Count: 2

    HOW DOES THIS PERSON GET OUT OF THIS MESS?
    $45,000 IN CREDIT CARD DEBT @ 16.5%interest
    2 small kids.non working wife.no assets just car furniture.pays rent$265 p/wk
    he does have an ok job $46000 per yr.+ OT.+pay revewse every 6 to 12 months.
    possible in laws as guarantors (possible ?)
    My thought is a line of [email protected] 1/2 the interest rate .all incomes to be placed in this account reducing the loan faster.
    But which bank, broker, someone legitimate
    can help???
    THIS PERSON NEEDS A GOOD KICK IN THE BUT FOR DOING THIS .
    I REALY WANT TO HELP THIS FAMILLY OUT. CAN SOME ONE PLEASE HELP ME TO HELP THEM.ALL SUGESTIONS WILL BE GREATLY APPRECIATED.
    MANY THANKS.

    Profile photo of WylieWylie
    Member
    @wylie
    Join Date: 2004
    Post Count: 346

    Hi, whatever steps you advise these people to take, I would suggest that if they have run up $45K in credit card debt they definitely should not look at a line of credit. As to what type of loan they could consolidate into, I’ll leave that to the better qualified people on this forum, but I wonder if it would be possible with no house to offer the banks as security?

    First thing they should do is cut up the credit card. I would imagine even an unsecured personal loan would be better than a credit card debt.

    I hope they can work through this and that they WANT to get out of this mess enough to change their habits (as opposed to you wanting them to change).

    Regards, Wylie

    Profile photo of hellmanhellman
    Member
    @hellman
    Join Date: 2005
    Post Count: 109

    Okay the object here is to pay off your CC debt.

    The first thing you need to do is get rid of those cards – but keep one ONLY! Get that card and put that one in a container, add water and put it in the freezer.

    Now the second thing you need to do is to find out the most efficent way of paying off that debt.
    Get a blank piece of paper. Make a large box for every Credit Card you have. In the box put the CC name, put the total balance and then the monthly balance. You then create a space for the pay off ratio. To get the pay off ratio divide the total balance by the monthly payment. So for example:

    Debt Name: CC Debt – NAB
    Total Balance: $20,000
    Monthly Payment: $1,000
    Pay Off Ratio: 20

    Now after you have worked out the pay off ratio for all your debt, find the one with the smallest pay off ratio. Put a big 1 on the right/left hand side of the box. That will be the first debt you will pay off. Do the same for the rest of the boxes.

    After you have done that add as much extra to the debt with the number 1. Don’t try and share it around all the CC. It dosen’t work. You have to focus on one debt ONLY.

    Now after you have paid off that CC debt add all the monies you put towards that credit card plus the new money you have freed up and put it to work aginst number 2 on your list.

    If you do this you will be debt free (cars, personal, credit, house) in 5-7yrs. And no I’m not joking. I use the same system.

    The last step is to go and buy ‘Money Secrets of the Rich‘ by John Burley. And look up Chapter 23.

    ThHe important thing is to do this. Thats it. If you run the plan you will not only be debt free you will have the discpline to become a powerful investor. Good luck and let me know if I can help.

    Hellman

    Profile photo of hellmanhellman
    Member
    @hellman
    Join Date: 2005
    Post Count: 109

    As for the suggestion for getting this indvidual a loan with a lower interest rate, it is a good idea, but I question if a lender will lender him further funds with that high debt level (and with no real assets), even if the stated purpose is to decrease the interest rate.

    As for in-laws going guarantors, it would be better for them to lend the money direct (and consider it worse case scenario as a gift). As if the in laws go guarantor and this family spends more money, the in-laws could get taken down too.
    Anyway these days banks lend on the strength of the borrower not guarantors.

    I would avoid a LOC as people who have bad finacial habits will be able to withdraw all their income away, and the lender may increase their credit limit (meaning they can borrow more).

    The best way is to make it as easy as possible. So either just a standard loan (and apply all the repayments they make on their CC to their loan) or follow the advice suggested above.

    Hellman

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Assuming they want to make the necessary changes and sacrifices, success is theirs for the taking.
    They have probably drifted into the current position by not managing their finances.

    Firstly, they must clearly want to climb out of the hole. Otherwise, don’t bother.
    Then they need a clear method of establishing their true financial position right now, and again on the same day each month, in order to prove progress and the success of the plan.
    Then they need to apply themselves to a progress plan with clearly defined successive goals.

    Suggested changes :
    1. Increase the income by converting the wife from a dependant to an income earner, using day-care, child-minding, whatever.
    2. Reduce expenditure to a minimum. There are volumes written on this. They must learn it and apply it.
    3. Reduce the interest burden by consolidating the debt by switching to a succession of honeymoon rates credit cards, while paying down the debt.
    4. Eventually, the deficit will become a surplus, and the plan must cover what to do with this surplus, otherwise they’ll spend it. While a small celebration would be in order at this neutral point in time, this would also be the time to start investing the surplus to save for a home. Don’t forget the FHOG. The financial record of this transition from deficit to surplus is the record of financial ability which the lending body will use to show the serviceability of a housing loan.
    If they have the persistence, it is only a matter of time from buying the first home to buying the first investment property.
    They need a financial planner as well as a friend like you.
    good luck
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
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    Profile photo of Endless SummerEndless Summer
    Member
    @endless-summer
    Join Date: 2005
    Post Count: 62

    Also, I wonder if they can make payments via Automatic Direct Payments. Either directly from their daily operating accounts on the same day (or next day) that their wages are deposited into that account.

    These used to be called periodic payments when I organised them for myself years ago. (This is how I saved for my first house deposit) But the system works just as well for paying off debt as it dose for saving a lump sum.

    Or alternatively, could the employer split the wages payments? – a percentage into their everyday operating account and the rest into the credit card account (although I am not sure if they can deposit into a credit card account – even if they can into another savings account).

    I worked with a lady once who requested her employer pay her monies directly into her home loan account – her pay slip on one occasion showed $16.00 pay for 2 weeks.

    The point is if you do not see the money in the first place then you cannot spend it (especially if the only operating credit card you have is frozen litterally – a good suggestion I thought!)

    Either way, if they are $45K in debt on the credit card there is likely to be a huge issue there not likely to be solved quickly.

    Has something happened to rack up this debt or is it just the age old ‘keeping up with the Jones’s’ scenario without considering their own budget. If it is the later, then no amount of tinkering the with $ will help them.

    This is a life issue around accepting the lifestyle that comes with your own salary parameters. If that penny does not drop, then consolidating the loan into a lower rate product may create the situation of having that debt plus additional credit card debt later as other ‘neccessities’ come up.

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    You cannot use a guarantor unless you are buying property. That does not seem to be the case here. If the in-laws are willing to go guarantor and qualify, would they consider just borrowing the money and using it to pay all the debts and then ‘YOUR FRIEND’ can make the repayments to their loan?

    All the other information here has been excellent. I love the credit card in the freezer trick. I am going to do that!!! I have to order a new card first though because I have memorised all the numbers on the existing one.

    TMA


    http://www.email4money.info
    Investor Links
    First Home Buyer Website


    Profile photo of xenaxena
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    @xena
    Join Date: 2005
    Post Count: 12

    Collector,
    Can I suggest your freind call lifeline (131144 if they are in sydney) They will be able to put them on to a financial counselling organisation, who would be professionals trained to deal with the situation. There are options rather than going bankrupt.

    There are 2 problems here: your friends spending habits (which created the situation in the first place) and the immediate crisis they are in. I had a freind that worked for lifeline, and they got these type of calls all the time.

    Hope this helps

    Cath

    Profile photo of grossrealisationgrossrealisation
    Member
    @grossrealisation
    Join Date: 2005
    Post Count: 1,031

    may be worth a stab.
    He’s on 45,000.00 and employed.
    I have organised before (the company would have to like the person and this case they did)the company pays out the cards
    ( she tried to commit suiside for her debt) she pays the company back out of her wages at a reasonable rate ( hers woz zero)(she has been with the company 7 year currently and alot happier worker).

    This will not work unless the person gets help( she did) and they throw all cards out (she did) and only uses the money in the bank at that time not even shop charge cards and in the agreement with the company that is part of the terms and conditions of the company loan.

    worth a try but its hard work and needs a outside the square looking company who needs this emplyee.
    she also is still a good friend and when I go to this company I always get a nice cup of coffee and a bicky

    here to help

    Profile photo of foundationfoundation
    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153
    Originally posted by grossrealisation:

    here to help

    That’s great, but I couldn’t understand a word of it. Probably best to read over what you’ve written before you hit the ‘Post New Reply’ button.

    In regards to the question, I think some such people (debt junkies) are simply beyond help. I wouldn’t get involved unless it was a close family member. Letting financial Darwinism run it’s course and the family learn their lesson may be the best approach.

    Cheers, F.[cowboy2]

    Profile photo of xenaxena
    Member
    @xena
    Join Date: 2005
    Post Count: 12

    Foundation,

    I beg to differ on your second point.

    You can still be a good friend to someone in dispair without getting involved.
    Ie. make a suggestion such as mine, offer practial help (eg. help them move house if they are shifting)
    BUT they still have to navigate their own way out of the pickle they got themsevles into.

    Its in situations like this that you really find out who your real friends are (a friend in need is a friend indeed!), even if they did create the problem for themselves.

    Cath

    Profile photo of grossrealisationgrossrealisation
    Member
    @grossrealisation
    Join Date: 2005
    Post Count: 1,031

    hi foundation
    two things.
    first I like the financial Darwinism approach unfortunately a lot of the very successfull businessmen I know would probably be living in hyde park with a bottle of claret had I followed you idea but it is an idea all the same.

    As for the concept of a company paying the debt of an emplyee, this I think would not be uncommon, it would be the same as gross realisation lending is an uncommon financing procedure currently put very achievable.

    as for not understanding the post I will have to check my grammer and spelling but as dazzling would say I don’t give a rats.

    here to help

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I had a friend who had $130,000 owning on credit cards. Her husband was not aware. I help her reduce this down to about half of that and told her to cancel her cards. Told her husband to make sure she does too.

    The next thing I know she has come back asking for help again as she had gone and bought her daughter a new car, bought another property and taken a trip to America.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of COLLECTORCOLLECTOR
    Participant
    @collector
    Join Date: 2005
    Post Count: 2

    Thank you all for your input .I allways say if i can learn one thing a day ,it was a good day .After reading all your emails i picked up 3 new things.this is trully a fantastic day.first prize has to go to the cc card in the freezer.if a person cant do this simple thing to change things,it leads me to the second lesson. you can lead a horseto water but you cant make it drink .i so badly want to help out that im now qestioning does he want help badly.(no charge , no commisions no selling no nothing )and lesson no 3 line of credits.you are right,if already a credit junkie the hole would only get bigger.
    thank you all
    collector

    Profile photo of blossomozblossomoz
    Participant
    @blossomoz
    Join Date: 2004
    Post Count: 9

    I would go further & say no credit cards. Work out a budget with someone & write down every cent that they spend & add everything at the end of the month. That way they become aware of what they can cut out/reduce. By paying cash they become more aware of what they are spending.

    No friends or family should lend them money; this doesn’t help as they spend that & are in the same position again. I have seen this happen.

    One can be a guarantor on a car purchase. Don’t go guarantor for anyone. My husband trusted someone & came unstuck. It can mean the end of the money & the friendship, one can lose both. Say no, it saves trouble down the track.

    Sell anything on ebay that they don’t really need.
    Cook meals from scratch, there are some great budget recipes sites on the net & a huge amount can be saved, or use the library for cookbooks.

    I have been told more than once that I couldn’t have what we have on our income. Even the bank told me I couldn’t do what I was doing. He asked how long I had been doing it – I said 5 years so he agreed.

    I live in a nice house in a nice area & we always look nice. It can be done. Make a temperature chart thing like they show when they are trying to raise money. Fill it in as they pay it off.
    Look at it rather as a challenge than a terrible chore; it will make it easier. Put the chart somewhere, say inside the wardrobe door – then it isn’t there for everyone to see.

    If the children are old enough it should be explained to them what has happened. I’m not suggesting that they be told how much is owed; unless they are well into their teens. Small children blab. Just say that we are going to have a game of saving money. Have a treat every now & then when X has been saved, but make it cheap; like a picnic or whatever.

    Sadly they have to want to change. It isn’t what one earns, it’s about what one spends & what the money is spent on. Some people on $100,000 can’t make ends meet.
    It is a big challenge but not impossible & being young they have a lot of time ahead of them. Sometimes one has to be cruel to be kind – the kids can’t have what they want & it’s good for them to learn early that money should be earned,; it doesn’t grow on trees.

    I hope for their sake that they change but it starts with them, it is their choice.
    blossomoz

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