Debt

Dear Pud,

I’m $25,000 in debt. I’ve got to get out of it.

I’ve got around $10,000 in cash. I don’t want to go bankrupt, but I see no other way out.

Help me!

Kathy
32 years old
Orange, CA

Kathy,

Firstly, cut up your credit cards. Remove them from your wallet right now and destroy them. I am taking away your credit card privileges. Use your debit card instead. That way you’ll only be able to buy stuff you can actually afford.

If you think you need a credit card for emergencies, get an American Express. They make you pay the full balance each month and don’t charge interest.

Secondly, call your existing credit card companies and tell them your situation. Many of them will let you settle your debt for less than you owe (i.e. give them your $10,000), or they might give you a much lower interest rate.

That said, it’s not so terrible to owe money. It’s nice to spend other people’s money. Most people are in debt, including rich people.

While walking past a homeless man outside one of his buildings, Donald Trump once told his daughter, “technically, that man has more money than me.”

Pud

5 Responses to “Debt”


  1. 1 Adam February 20, 2007 at 11:17 pm

    Borrow some money from Prosper.com to consolidate your credit cards.

  2. 2 Anonymous February 22, 2007 at 9:19 am

    Pud is right, call the credit card companies and they will work with you. As mush as you don’t want to go bankrupt, they don’t want you to go bankrupt. Few years ago I had 40k in combined credit card debt on 5 different cards (I had a lot of fun). Working with each of the companies they let moved the debt to a low interest for life, which reduced the payment and made it more managable. Since each cards interest rate was slightly different, I paid minimum on all but the one with the highest interest rate. Then I was able to pay the one with more interest down first, and then move that amount over to the next highest. After three years of working on this I am on my last 5k and will be done by this summer.

    Good luck

  3. 3 Anonymous February 22, 2007 at 3:25 pm

    thanks Pud, how long will my credit be shot for after i settle?

  4. 4 Anonymous February 28, 2007 at 5:56 am

    Credit card companies aren’t nearly as eager to cut you a deal nowasays, ever since they managed to con Congress into changing the bankruptcy laws in their favor a couple years ago. Remember when that happened? Of course you don’t.

  5. 5 RE.Agent March 4, 2007 at 7:43 pm

    Financially sophisticated investors are starting to leverage their debt to buy housing. You can’t lose- homes never go down in price, and they aren’t making any more land!

    It’s a new paradigm, and everybody who doesn’t buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

    Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

    This asset bubble is different than all of the others – it will never slow down, or pop. The gains are permanent.


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