What would you do? (consumer debt related question)

[No_Regerts]

You should focus on paying off those which have the highest interest rates first.

This seems intuitively correct, but the math doesn't support it. Always pay off the lowest balance first, only using interest rates as a tie breaker. Once the lowest balance is paid and your roll those funds into the next lowest balance, you'll pay off debts much faster.

 

[po18guy]

1. How old are you?
2. Are you in reasonably good health?
3. Get a second or third job and pour 100% of those paychecks into the debt, while living off your normal income. You will have no life for about 6-12 months, but stand the chance to exit with low or no debt.
4. If you owe about what a car costs, consider a 5-6 year loan as you would with a car.
5. I don't like banks, but sometimes it becomes necessary to get my hands dirty with them. Home equity? But control that spending first!
6. Dip into retirement - but that is a double-edged sword.
7. Bankruptcy will shaft your creditors but will more or less give you a new slate.
8. Give your cards to someone you trust and give them semi-authority to withhold them from you.
9. Whatever you do, if your use is medical, there are options for the future. If it is a compulsive thing, the gold standard in OCD/anxiety treatment is thre drug-free Cognitive Behavioral Therapy. "If" this is the case, you may find that you are anxious about much more than money and the therapy can help restore your peace of mind.

Ever notice that those cards we keep in case of emergency often become the emergency?

 

[BSG 75]

The first half of this video has good advice on reducing expenses and increasing income. Use the increased cash flow to pay off debts. But first stop using those credit cards at all. Use a debit card or cash.

 

[leadcounsel]

Debt and interest are wealth stealers so do try to cut back. It requires discipline and living within means.

If it were anything other than guns, I'd say to sell them. But guns are becoming increasingly harder to get on the horizon with the laws. And it's a buyers market. And it's expensive in terms of transaction costs to sell. Selling most guns means you lose money, which is counter productive to creating wealth or trying to get out of debt.

Like others said if you have high value safe queens, C&Rs, or easily replaceable or duplicates, consider selling those. For instance if you have a Python, sell it. It's far over-valued for what it is and could drop overnight. Pure speculative value. Keep the functional AR15s and Glocks. They won't return any money and are in the anti-gunners crosshairs.

Develop a plan to live within your means. That means no splurges, no eating out, no expensive entertainment or gadgets, reuse and stretch your dollar everywhere, shop at Goodwill or yard sales, etc. Use cash where possible and if you don't have the cash don't buy it. Get extra work, overtime, side jobs, etc. and put all that money toward the debt. Be disciplined in the future and don't get in debt again so recklessly.

Swallow your pride too. Food banks can save you 1/4 to 1/2 of your weekly grocery bill. Also if you have any individually massive CC bills, consider a negotiated settlement with them of paying 1/2 or so and wiping it clean - this will damage your credit but you need to get out of the consumer debt cycle anyway so it won't matter IMO. No more new credit for a couple years. Negotiated settlements can wipe out tens of thousands of debt, if you have that much to pay in a lump sum. CC companies are so unscrupulous you should not feel bad about negotiating a lesser amount with them; just make sure it's worth the squeeze and you're wiping out significant balances.

 

[etrain16]

In short, going back to your OP, I would:

1. Get rid of all of my credit cards, save for one, only to be used for emergencies, and, if necessary, put in the hands of someone else so you're not tempted to use it impulsively.
2. Immediately suspend any plans for large expenses like vacations, new (or new to you) car purchases, etc.
3. I would drop everything I didn't need, like cable/satellite TV, etc.
4. I would learn to cook, if I didn't already know how, and figure out how to make meals that are inexpensive, filling and could stretch a long ways.
5. I would only sell off those guns I was confident I could purchase again in the future. That means I'd hold on to things like AR's and AK's that could potentially become difficult to purchase later. Bolt guns, shotguns, revolvers, lever guns, all could likely be purchase later, even with more gun control implemented.

It's entirely doable. I had some debt earlier in my life. Got it paid off, learned better habits, and lived within my means. You can do it, and the reward for doing so is the relief of knowing you're not a slave to that debt. And that is a very nice feeling. Good luck.

 

[Oregonhunter5]

What If you lose your job during a recession? How do you pay your debts?
Liquidate all that you can now.

 

[Pete F]

When I was young, I worked, went to college, lived on my own, drove a fairly new Harley Superglide and a clean 1961 Impala 2 door, 235 ci, powergilide with 42k miles on it. I was making very little money comparably, but did alright. Never used a credit card.

Later in life, I discovered a well paying vocation, got married and ended up in deep debt several times. The wife (who declared bankruptcy prior to our marriage)would run the credit card up to $15K - $16K about once a year with nothing in the bank.

I never had spare money until the credit card was removed from the equation. It was a miracle how fast things turned around when we both watched our spending. Bought a house, new cars, (guns and ammo), etc. House paid off in 17 years. Have credit cards that we pay off every month and are happily and financially sound and retired. Life was tough for a while.

Sold the Impala, but still have the Superglide.

 

[The Heretic]

ROI - Return on Investment

When it comes to debt and expenses, which expenses do you have that will make the biggest impact on your debt and outflow?

For most people, their biggest single expense is housing. If it is possible to reduce that by a significant amount, then that is a good candidate. When money was tight for me, I lived in a duplex for $650 a month, down from a $850 apartment which was even smaller. It wasn't ideal, but when I was unemployed it was a lot better than the $1800 mortgage payment I have today. There are certain lines I won't cross though; I won't live in densely populated areas, and I won't take in roommates - both drive me crazy.

Another significant expense is vehicles. For a number of years I drove a beater - right into the ground, until it wouldn't pass emissions and the brakes were metal to metal - but for those years it saved me from car payments. I would sell a vehicle (I have three, and two motorcycles) before I sold any guns. Cars wear out and steadily decrease in value. Also insurance - no reason to have full coverage on a beater with no loan.

Food isn't that big of an expense, but I cut back on buying prepared foods. When I was unemployed there was no reason to have prepared foods for lunch. I had potatoes and rice and I made my own stir fry.

 

[Velzey]

The best thing we ever did was pay off all our cc debt. I kept a few of the hard to get ones and paid all the cc debt off. Only took a couple months to sell the boom sticks off. While I was at it I had some left over and paid off a vehicle.

 

[arakboss]

Thanks to everyone for the advice. It seems like a pretty good mix of opinions on whether I should sell my firearms or not to pay off the debt, but just about everyone agrees I should buckle down and focus on saving money and direct any extra money towards debt.

As I mentioned in a previous thread, Two month Abstinence of Firearm Related Purchases., I had planned on a two month hiatus from most firearm related spending. I think I will extend the spending hiatus to the end of the year and maybe beyond.

I do have a budget I have been following. No second job for me, I'm barely making it through the 8hrs on my existing job. I will focus extra hard on getting my testosterone problem fixed during the next few months. Kaiser is not being as helpful as I would like. I did join a gym last week and have dragged myself in there to start lifting, we'll see if that helps. I have de-stressed my brain, tried to get more sleep and took a break from the low carb diet. My weight has gone up already but I am feeling a little better.

At the beginning of the new year, if I am not feeling good with the progress I am making on debt, I will start a liquidation process and sell the least used and most easily replaceable firearms in my collection. I may sell or trade a few items between now and then if I need parts to finish the firearm projects I've already started.

If I could get everything paid off before 2021 arrives, I'd be a happy camper.

Thanks again to everybody who shared advice.

 

[Certaindeaf]

I used to have a coworker that would spend $10 per day on his lunch. Either at the deli, a local food stand, or a restaurant. He could afford it, and so could I, but I don't. I feel guilty if I spend more than $2 per day on a frozen dinner for lunch because I don't spend the time in the morning fixing a lunch instead - and some people at work make fun of me for doing eating a nuked frozen dinner instead of buying a $8 sandwich at the deli.

It adds up - $2500 per year for lunch, vs. $500 for frozen food. Oh, and he usually wound up throwing half of it away.

That doesn't include the latte's he bought almost every day.

I was gonna splurge the other night at Wendy's.. woulda been $10 easy and I woulda been still hungry after and aggravated because of the wait and ten other things.
So I went to the store and bought a 10 lb chub of 27% fat ground beef for $18 and some buns and made a couple cheeseburgers at home.
I still have about 9.5 lbs left in the fridge/freezer.
Nums!

 

[Lilhigbee]

I think of it as financial hibernation. Spend only what you HAVE to spend.

As long as you can keep the interest rate at 3% don't sweat paying it off in a big hurry. Definitely work to pay it off, but it is not the crushing debt that most people have with the double-digit interest rates. If there is a difference in rates paying off the higher rates first will save you the most money. However, if there is a small-balance card paying it off is a good emotional boost. You have to decide which is most important to you.

In the big picture, selling your guns now and replacing them later will probably cost you more than the 3% you are going to save. As long as you don't have to sell them to keep current, only sell ones that you don't want and don't have any intentions of replacing.

Good luck, whatever you decide!!

 

[The Heretic]

I was gonna splurge the other night at Wendy's.. woulda been $10 easy and I woulda been still hungry after and aggravated because of the wait and ten other things.
So I went to the store and bought a 10 lb chub of 27% fat ground beef for $18 and some buns and made a couple cheeseburgers at home.
I still have about 9.5 lbs left in the fridge/freezer.
Nums!

Maybe once a week or every other week, I will use a drive thru to get tacos or a bacon burger on my way home, but I also often pickup premade bacon burgers, 6 or 8 for ~$12, at Costco, then all I have to do is nuke it for a minute, slice an onion and put pickles and sauce/mustard on it and I am done - faster than drive thru, but no milkshake.

I can get decent take out Thai food for the price of drive thru. Can't find a good Pho restaurant though - not since moving here from Seattle. The Tran Brothers up there make good Pho - a huge "small" bowl for about $5 (or did).

 

[leadcounsel]

I think of it as financial hibernation. Spend only what you HAVE to spend.

As long as you can keep the interest rate at 3% don't sweat paying it off in a big hurry. Definitely work to pay it off, but it is not the crushing debt that most people have with the double-digit interest rates. If there is a difference in rates paying off the higher rates first will save you the most money. However, if there is a small-balance card paying it off is a good emotional boost. You have to decide which is most important to you.

In the big picture, selling your guns now and replacing them later will probably cost you more than the 3% you are going to save. As long as you don't have to sell them to keep current, only sell ones that you don't want and don't have any intentions of replacing.

Good luck, whatever you decide!!

Agreed. Aside from anomaly guns purchased low and now high (due to collectors premiums) like oddball C&Rs and Colts and 1911s, etc. the OP will actually probably do worse selling guns now to pay 3% interest rate CC debts. Around here, each gun transaction is somewhere around $15-35 or more, on top of losing probably 20-50% of the value of the gun. So every "new" $500 gun he sells for $400 he loses over $100.... plus the time marketing it, selling it, meeting a buyer, the drive to the FFL, etc. I'd factor an average of 1 hour per gun.

So if he sells 8 guns in that scenario he loses over $900 value, and a full 8 hours working day in lost hours. And he's out 8 guns, which cost time and money to replace. Selling your guns in a buyers market in this scenario is a poor idea to generate cash IMO.

Even if the OP is struggling with his single 8hr/day job, he can pick up some side work even a few hours per night or 1 day on the weekend doing something to generate some extra income.

I have a acquaintance who is terrible with money. Never has any, and when he does he blows it. Since the summer, he pawned his SW Shield for $200, then sprung it out of pawn for $280, then had to pawn it again for $200. Friday night he blew $200 on pulltab tickets at the bar where I reluctantly went and watched in dismay... (I rarely go to bars and am reminded why every time).

 

[The Heretic]

I have a acquaintance who is terrible with money. Never has any, and when he does he blows it. Since the summer, he pawned his SW Shield for $200, then sprung it out of pawn for $280, then had to pawn it again for $200. Friday night he blew $200 on pulltab tickets at the bar where I reluctantly went and watched in dismay... (I rarely go to bars and am reminded why every time).

Yup. I know people like that. Married one (and divorced). There is no helping them as they simply do not learn from their mistakes - it is a way of life for them - many of them want to blame someone (or everybody) else for the problems they bring on themselves.

 

[leadcounsel]

Also, you may not have considered it but try selling off easily replaceable non-firearms stuff. Have a garage sale, use Craigslist and Offerup. You probably had a ton of stuff you don't use and can turn that into a lot of cash. Put it all toward your CC debt.

 

[gmerkt]

Lots of good advice here. I read through every post. My opinion, don't sell you guns for all the reasons already stated. One thing I'd add. You are doing well to realize your situation. Whatever you do to reduce or eliminate the debt, stick with it. The cycle of debt accumulation and relief can easily become a pattern. Once you pay it off, have the strength to stay off the cards for non-necessity purchases.

 

[ZigZagZeke]

​

After several yrs of doing this I finally gave-in... sort of.

First thing I did, besides shredding the dozens of CC offers I get every month, was to put a couple Gs on a secured Visa through my bank. It's only a bad move if you don't pay it off every month.. use it like a debit card and you'll never pay interest on your own money.

I also keep a low limit CapitalOne MC on hand for emergencies. I use it now and then just to keep the credit line active, but again, pay it off fully before the due date and there's no interest.

If your current balance(s) equal 20% of your take-home pay, try to dedicate 10-15% of your income (more is better) to knocking those balances down. Having some debt is not a bad thing as long as it's manageable.

When I got divorced I had to take on a lot of unsecured debt, most of it I didn't even know existed. I made the mistake of letting my wife "handle" expenses... I knew it was a terrible idea (found out just HOW terrible in the settlement) but let it go for a lot of yrs because I didn't want to deal with it. I've spent the last 5-7 yrs un-effing that mess and I'm rebuilding now and it feels GREAT.

BTW, I don't know what or where it stems from (grew up solidly middle-class), but I've always had some money anxiety... worried about not having enough, always being broke, etc. Taking charge of my money and managing it has become addictive... get 5g in the bank and now it's a game to make it 8. Then 10. Then 15. And so on. Sometimes I gotta take a bite out of it (home or vehicle repairs, whatever) and that's a bummer, but then I challenge myself to put it back ASAP... no, I guess I didn't really need that DW 1911 after all... maybe later.

Anyway, that's my own personal psychosis, has 0 to do with the OP.

Sounds familiar, brother. About 2 years before my divorce we applied (over my wife's objections) to refinance the mortgage. The reasons for my wife's objections to refinancing quickly became apparent. We had about $30k in credit card debt that I knew nothing about. Well, we increased our loan amount to pay that off, and I took over the budgeting/bill paying. Thereafter, we constantly fought over money (mainly her lack of it), and after a couple of years and a few more surprises we split. Upon filing for divorce I learned of another new $50K or so in credit card debt that had been accumulated in those two years. She had had the credit card statements sent to her work address so I wouldn't see them, and paid the payments out of "her money". No wonder she was always broke and asking for more money.

There was no way to get out from under that amount of debt with her weighing me down, so on the advice of my divorce attorney I filed for bankruptcy so that I could start with a clean slate. That process was a real eye opener. Companies that were my "trusted friends" and "had my back", like Amex, suddenly treated me like I had leprosy. Trying to rent a car from Avis, where I was a "platinum customer", I was treated like a meth head. I quickly learned who in the corporate world really cared about their customers.

As a side note, American Express to this day 25 years later will not issue me a credit card unless I pay them the amount that was discharged in bankruptcy. This is so close to violating bankruptcy law that any hair splitting doesn't really matter. They are crooks, pure and simple. I've found that the world still turns without Amex in my life, however.

Since then I have remarried and made a bit of money in the stock market. I have several premium credit cards that provide cash back or mileage benefits, and I always maintain a zero balance. These days, we have a mortgage with about 50% equity on a high 6 figure property, and we have a HELOC. The HELOC was used to finance a car, so that we could pay 5% interest instead of 17%, and it makes the interest deductible, and I pay double payments on it every month.

The one thing I kept through all of it was my guns. They came from my father, and his father, and his father. No way I was letting any of them go. Last time I looked my credit score was in the 830 range. I'm never going back to the days of having credit card balances, and juggling and worrying about them daily. Life is too short.

 

[dobeman]

I have a substantial amount of credit card debt. The total of my balances is equal to about 20% of my yearly gross income. I also have a relatively substantial gun, ammo and accessories collection. I would fairly value my collection to be about equal to the current total of my credit card debt balances. My balances are almost strictly on low interest (less than 3%) card offers and I juggle them around to keep them that way.

I am considering liquidating a bunch of my collection to speed up my debt repayment and get these cards paid off for good. Then I could rebuild my collection with cash only purchases after my debts are all paid off.

What would you do if you were in my shoes?

Balanced approach. Go on a strict budget. Sell some guns for debt pay off. That much debt means you live beyond your means. Speaking from personal experience.

 

[Member 34319]

@arakboss i can't recall if it was you or someone else that was recently expecting and or just had his kiddo?

If that's the case I'd say sell sell sell and get that debt paid off.