Digging out of debt

[Tenbatsuzen]

I know a lot of us have car or house payments, but outside of that, in these financial times, how are you controlling your credit card spending?

Back in the day, I got myself into a pretty deep hole. It came from overspending and only paying the minimum, plus not paying attention to my APRs and not realizing how high they were.

Since early last year, I've kept my credit card spending to a minimum. I've only used it when I HAD to use it, usually for rental cars or buying big-ticket electronics so I'd get a warranty extension, then promptly paying it off.

In the past year, I've reduced my CC debt by about half, and I'm going to set up a strcutured program so I can get rid of the rest of it in about 2 years with fixed payments (while still saving up and buying a house).

This isn't a credit counseling thing - this is just flipping the debt one more time on my own and paying it off with a low APR.

Are you working your way out of debt?

[MadMatt]

In my case I DID use credit counseling, but my ex-wife had F-ed everything up so much that I needed somebody that could negotiate on my behalf (things were REALLY screwed up - long story - that bitch).

April marked the end of the road - my very last payment! It took almost 5 years, but all of my credit card debt is gone. I still have a boatload of student loans, but they will dwindle slowly but surely. My car will be paid off by the end of July.

It has taken some serious financial planning (and patience), but things are finally looking up. :smile:

[thepaulo]

Isn't it easier to just stop sending the bastards money and ignoring their phone calls?

[underdog]

I only have one credit card that is still usable (with a 23% interest rate!), as I was so bad that I maxed out every other card (and never paid it). Now I'm so far behind all of the maxed out ones that it doesn't matter if I pay them off or let them run the full 7 years, so I'm just letting them go.

[Thebazile78]

Isn't it easier to just stop sending the bastards money and ignoring their phone calls?

Then they start calling your 16-year-old daughter on what was supposed to be her personal phone line and questioning her faith in God and telling her she's going to Hell because she's got to be covering for her dad.

(True story. Bastards.)

[Thebazile78]

I only have one credit card that is still usable (with a 23% interest rate!), as I was so bad that I maxed out every other card (and never paid it). Now I'm so far behind all of the maxed out ones that it doesn't matter if I pay them off or let them run the full 7 years, so I'm just letting them go.

Did you get a settlement?

[drjoek]

I know a lot of us have car or house payments, but outside of that, in these financial times, how are you controlling your credit card spending?

Back in the day, I got myself into a pretty deep hole. It came from overspending and only paying the minimum, plus not paying attention to my APRs and not realizing how high they were.

Since early last year, I've kept my credit card spending to a minimum. I've only used it when I HAD to use it, usually for rental cars or buying big-ticket electronics so I'd get a warranty extension, then promptly paying it off.
In the past year, I've reduced my CC debt by about half, and I'm going to set up a strcutured program so I can get rid of the rest of it in about 2 years with fixed payments (while still saving up and buying a house).

This isn't a credit counseling thing - this is just flipping the debt one more time on my own and paying it off with a low APR.

Are you working your way out of debt?


Not trying to sound like a prick about this but if you still have credit card debt big ticket electronics should not be on your buying list. Just an opinion

[Freitag]

Not trying to sound like a prick about this but if you still have credit card debt big ticket electronics should not be on your buying list. Just an opinion

There's a difference between MANAGEABLE debt and UNMANAGEABLE debt and also getting a good deal.

The "big ticket electronics" I was referring to was a 700 dollar HDTV that I got as a discontinued floor sample which ended up being close to a 50% discount, so I ended up getting a 32" inch high quality HDTV for 350 dollars.

So that's a one-time opportunity that was a good investment. As opposed to wanting and buying a Wii, which I know I can't buy right now because the money is better spent paying down debt.

[drjoek]

Fair enough.
My interpretation of "big ticket electronics" was not what is now stated, a nice price on a reasonable item. Most people will not deny themselves these things they feel they can't live without. So they go into debt to have them. Then they can't figure out why they never get a head. The topic broached was how to dig out of debt So I made a suggestion. Im no genius but I have always kept a firm grasp on controlling spending between need/want
Good luck digging your way out the rest of the way to debt free. Then take what ever you were spending on debt service and pretend the payment has not gone away. Put it into savings every month. You're doing it now,just act as if it did not finish.Saving accumulates quickly too just like debt.

Wait Tenbatsuzen is really Freitag :laugh:

[Jujubees2]

I guess that I was lucky to grow up in a relatively poor household. My parents had no credit cards and didn't even have a checking account until I was in high school. My mother would pay cash or get money orders to pay bills.

When I graduated from college and got my first credit cards I only used them when necessary and paid off the bill in full every monthly. And I still do that today. My debts include a mortgage, a home improvement load (new kitchen) and two cars but what is staring to kill me now is orthodontics. I've got two kids who are in the beginning stages of getting braces. Damn DrJoeK, what's up with the orthodontic prices?

[drjoek]

I guess that I was lucky to grow up in a relatively poor household. My parents had no credit cards and didn't even have a checking account until I was in high school. My mother would pay cash or get money orders to pay bills.

When I graduated from college and got my first credit cards I only used them when necessary and paid off the bill in full every monthly. And I still do that today. My debts include a mortgage, a home improvement load (new kitchen) and two cars but what is staring to kill me now is orthodontics. I've got two kids who are in the beginning stages of getting braces. Damn DrJoeK, what's up with the orthodontic prices?

Orthodontics is a market driven pricing structure not really based on actual cost. BUT you do get value for your buck IMHO. Compare say getting your wisdom teeth out ~ $5000 in one shot. for $6000 here where I am you get treatment for 2-21/2 years and all the service etc. It seems like it Ortho is WAY higher in the city then out here in the burbs. While regular dental care is pretty close both places
Shopping around doesn't seem to help much since you and your kids got to spend alot of time with the guy. At least most will let you pay over the length of treatment right? That should help. It isn't easy when you have more then one in treatment at a time I feel for ya Bro.
Everyone NEEDS a beautiful Smile!!!

[walking joint]

i have never activated a real credit card. i've had Best Buy or Sears Credit Cards, but only so I could get one of the 0% interest for 12 month type deals. and i usually paid those off in about 2-3 months anyway.

i never liked the idea of spending what i didn't have (outside of my car/house). so if its not in my bank account, i'm not buying it. i actually won't spend the money unless i have a certain amount still in the bank after i purchase the item. and that reserve amount has gone up as the years go on.

[Jujubees2]

Orthodontics is a market driven pricing structure not really based on actual cost. BUT you do get value for your buck IMHO. Compare say getting your wisdom teeth out ~ $5000 in one shot. for $6000 here where I am you get treatment for 2-21/2 years and all the service etc. It seems like it Ortho is WAY higher in the city then out here in the burbs. While regular dental care is pretty close both places
Shopping around doesn't seem to help much since you and your kids got to spend alot of time with the guy. At least most will let you pay over the length of treatment right? That should help. It isn't easy when you have more then one in treatment at a time I feel for ya Bro.
Everyone NEEDS a beautiful Smile!!!

Yeah, I don't remember how much my parents paid for my braces but for the first stage for each of my kids it was about $2400 and now the oldest one has started the second stage which is running me another $4400. The payment plan they have is 1/2 at the first appointment and then a monthly payment after that. But you're right, it's worth it for straight teeth and good smile.

The older one got his top braces on last Monday and wasn't all that happy when all he could eat was oatmeal and yogurt for a few days. Though the braces are a lot different than the ones I had 30 years ago.

[Mike Teacher]

i have never activated a real credit card. i've had Best Buy or Sears Credit Cards, but only so I could get one of the 0% interest for 12 month type deals. and i usually paid those off in about 2-3 months anyway.

i never liked the idea of spending what i didn't have (outside of my car/house). so if its not in my bank account, i'm not buying it. i actually won't spend the money unless i have a certain amount still in the bank after i purchase the item. and that reserve amount has gone up as the years go on.

This is the sanity and logic the credit cards companies are hoping people dont have.

Its not that hard to not have a credit card. Yeah yeah I know about the MUSTS, places that require blah blah, but its not that hard to spend Zero. Or actually pay off the entire balance monthly.

Credit card are legalized Usery. And we fall for it. I owed $25K at one point. Fuck them. I had to go massively frugal and sell a bunch of shit but fuck them I'm not going there again. Lives ruined; friends who had a Wall Street jobs and NY condos back living with parents coz of little rectangles of plastic. Good times !

=

I figured out what my daily Net takehome pay was. If it was, say $300, then the $1500 thing I want, I think of it as 5 days of work to pay for it. Many $1500 things dont seem so appealing and/or necesary after that. For me.

[Thebazile78]

i have never activated a real credit card. i've had Best Buy or Sears Credit Cards, but only so I could get one of the 0% interest for 12 month type deals. and i usually paid those off in about 2-3 months anyway.....

That's like what I did when I signed up for my Macy's card ... I only signed up to get rewards points on the registry items and any gifts I might have purchased for my bridesmaids (like the MAC mascara I gave everyone because I love it so much) ... the points I "earned" ended up being enough to buy myself a carry-on suitcase, which is something I had wanted, but wouldn't buy on my own dime.

I don't know if I get any points or whatnot I get now, despite all the coupons I get in the mail (and perfume samples .... ewww......) ... but it's nice being able to have hassle-free returns and free gift wrap on stuff I buy there, even if the APR is 25%. (Ouch.)

I pay 100% of the bill using my bank's online bill-pay service as soon as I get my e-statement in my e-mail account and rarely use it for purchases I can't pay off immediately.

[SouthSideJohnny]

Budgeting and living on less than you make is the key. I strongly recommend a book called the Total Money Makeover by Dave Ramsey. For anyone trying to get out of debt, it's very helpful and motivational. I have a degree in finance and still found that the book was very helpful in changing the way I look at debt.

I have a ton of debt, due mostly to private grad school student loans, starting my own business, and some commercial real estate I own. I never even really thought that I would ever be debt free. The book changed my thought process entirely, and being debt free is my goal. I made a huge dent in my debt last year, and I am still working towards it this year but it will take another 2 or 3 before we're totally debt free.

One caution about the book. The author is a Christian and some of that comes through in the book. I'm open minded about religion, but when I saw a few religion references in the book, I put it back on the shelf and didn't think it was right for me. About six months later, my wife picked it up in a store and said she wanted to buy it. Once I read it, I was very impressed and it really did change the way I look at my financial life. I point this out only because I know there are some on this site that will have the same the same thoughts I did and put it back thinking it's for the hayseeds. Give it a chance and I think you'll be happy.

PS - The author is on XM 165 on weekdays; I think its 3-6, but I'm not sure. He's also on Fox News weeknights from 8-9 on cable tv. Again, another warning. The author / host is from Tennessee, so he definitely sounds red. At first, I had a tough time listening to him and frankly thought he was a douche. After a few nights of hearing it while my chick was watching him, I starting getting into to it and now watch most nights.

[angrymissy]

That's like what I did when I signed up for my Macy's card ... I only signed up to get rewards points on the registry items and any gifts I might have purchased for my bridesmaids (like the MAC mascara I gave everyone because I love it so much) ... the points I "earned" ended up being enough to buy myself a carry-on suitcase, which is something I had wanted, but wouldn't buy on my own dime.

I don't know if I get any points or whatnot I get now, despite all the coupons I get in the mail (and perfume samples .... ewww......) ... but it's nice being able to have hassle-free returns and free gift wrap on stuff I buy there, even if the APR is 25%. (Ouch.)

I pay 100% of the bill using my bank's online bill-pay service as soon as I get my e-statement in my e-mail account and rarely use it for purchases I can't pay off immediately.

Macy*s Credit Card is worth it, simply because you get very good coupons in the mail. 20% off entire purchase, $20 off $75. I just put it on the card then pay it off right at the register.

[Thebazile78]

Macy*s Credit Card is worth it, simply because you get very good coupons in the mail. 20% off entire purchase, $20 off $75. I just put it on the card then pay it off right at the register.

Can you get them to stop sending perfume samples in the statement? Those make my asthma go wacky because they're inevitably for something that is P.U.

[Freitag]

Budgeting and living on less than you make is the key. I strongly recommend a book called the Total Money Makeover by Dave Ramsey. .

I'm ambivalent about Ramsey. He came in to the show a few months ago and gave some advice which, quite frankly, would be bad for my situation. He advocated cancelled CC accounts as soon as they were paid off, which, in my case, would hurt my credit score.

I'm sure if you had no financial strategy whatsoever, Ramsey works for you, but I already have a strategy and Ramsey's ideas counteract that.

[Team_Ramrod]

I have 2 cards, my wife has 2 cards.

We use them and pay them off within the month. We used to live maxed out, paying minimum payments (at best), shuffling bill payments, negotiating the delay of cut offs... it sucked.
I went away from home for work and it didn't solve anything. I made 3X the money, had the same bill troubles... but had nice things showing up around the house.

It went like that for a year of me working away. Finally I had enough. I relieved my wife of all her financial 'control' responsibilities in December and by the begining of March had a nice sum saved up in my account, had no credit card debts, all my household bills were paid in full or with Credits.

All I did was sat back, looked at what we needed VS what we wanted. I cut out the want for 3 months and now we are fine.

I have developed a greed complex however; I've spent so many years depressed over not having the money to live nice or spoil my wife and kids that now I have the money and ability to do so but I want to see my account grow. I do projections that will outline the income and the bills month by month and I use the $ value to motivate me to say no to my wife for stupid shit (something I've never been able to do).

Although I shit the bed this past week at home... I bought my wife more shit than I should have.


There's a lot of luck that goes into getting out of debt, it's not all motivation and hard work.

[underdog]

Did you get a settlement?

They've already tried to settle, so its passed that. They all show as closed in bad standing or whatever on my credit report.

[angrymissy]

Can you get them to stop sending perfume samples in the statement? Those make my asthma go wacky because they're inevitably for something that is P.U.

I actually think you can, if you call them up. I don't get the statement in the mail, I get an estatement. THe coupons come separately with no perfume.

[Crispy123]

Credit and debt aren't neccesarily bad things. The difference between the rich and poor is that the rich usually have a handle on financial matters, using credit as a tool to make more money. I think you would be hard pressed to find average people in America with any kind of "life" that is tottaly debt free.

[SouthSideJohnny]

I'm ambivalent about Ramsey. He came in to the show a few months ago and gave some advice which, quite frankly, would be bad for my situation. He advocated cancelled CC accounts as soon as they were paid off, which, in my case, would hurt my credit score.

I'm sure if you had no financial strategy whatsoever, Ramsey works for you, but I already have a strategy and Ramsey's ideas counteract that.

I don't remember Ramsey being on. I think you might be confusing him with Larry Wingett. I've read his books also. There's some helpful information, but it didn't give as much of an overall plan in my opinion.

Ramsey also advocates closing cc accounts once paid. They both teach that for a reason - most people run their balances right back up after paying them down. I did it myself a few years ago, but fortunately I didn't get them back up anywhere near what they were initially. I do alot of real estate closings, and I repeatedly watch people take out a HELOC to pay off credit cards. In most cases, the card balances returned in full within a year, but now the person also has HELOC debt which could result in them losing their home. When interest rates were low, and home prices were soaring, I watched a few people do this more than once.

If you're disciplined enough, keep the accounts open but don't carry the cards with you. That's what I do now, and my cc's are almost completely paid off. Ramsey argues against worrying about your credit score since he doesn't want anyone to borrow money, for any reason (actually, he isn't against borrowing for a house but only a 15 yr mtg). I personally think it's unrealistic to think that most people will ever be able to save enough to buy a house for cash. For that reason alone, I think its important to preserve my credit score, but his point is that some banks will manually underwrite a loan where they don't really take your credit score into consideration.

It sounds like you have a plan in mind, so stick with it. Sometime, when you're in a bookstore, read the chapter called the "Debt Snowball." It may give you some more ideas. Good luck!

[Thebazile78]

I actually think you can, if you call them up. I don't get the statement in the mail, I get an estatement. THe coupons come separately with no perfume.

I get both an e-statement and a paper statement, which is kind of irritating.

I get the coupons sans perfume, but, on occasion, the statement will have perfume samples in it. Inevitably, it's for something my grandmother would wear ... potent and stinky.

[Bulldogcakes]

Isn't it easier to just stop sending the bastards money and ignoring their phone calls?

Note to self- Don't loan Paulo any money.

[K.C.]

Like most, I'm finding out the hard way the negatives of card debt.

Thankfully, I don't have too much, and I cut up both cards I have, so it'll paid off in a few months.


I was talking to an Economics professor of mine who gives incredible lectures on personal finance.

Basically, my plan is to pay everything off, and close my accounts. Then shop around for a 0% APR, and pay everything off at the end of the month.

Rebuilds the credit rating and keeps the APR non-existant as long as I don't carry a balance. If that means being a cheap bastard and not buying nicer things for a bit, so be it...I'm fortunate to not be in a situation where I have to live off my cards.



Then I'm diverting my a percentage of my paychecks and parking in a an ING Savings for a little bit (pretty favorable percentages). Once I get a nice tidy sum, I'm moving that into a Money Market, and going to use that as my all purpose account.

[Jujubees2]

I don't remember Ramsey being on. I think you might be confusing him with Larry Wingett. I've read his books also. There's some helpful information, but it didn't give as much of an overall plan in my opinion.

Ramsey also advocates closing cc accounts once paid. They both teach that for a reason - most people run their balances right back up after paying them down. I did it myself a few years ago, but fortunately I didn't get them back up anywhere near what they were initially. I do alot of real estate closings, and I repeatedly watch people take out a HELOC to pay off credit cards. In most cases, the card balances returned in full within a year, but now the person also has HELOC debt which could result in them losing their home. When interest rates were low, and home prices were soaring, I watched a few people do this more than once.

If you're disciplined enough, keep the accounts open but don't carry the cards with you. That's what I do now, and my cc's are almost completely paid off. Ramsey argues against worrying about your credit score since he doesn't want anyone to borrow money, for any reason (actually, he isn't against borrowing for a house but only a 15 yr mtg). I personally think it's unrealistic to think that most people will ever be able to save enough to buy a house for cash. For that reason alone, I think its important to preserve my credit score, but his point is that some banks will manually underwrite a loan where they don't really take your credit score into consideration.

It sounds like you have a plan in mind, so stick with it. Sometime, when you're in a bookstore, read the chapter called the "Debt Snowball." It may give you some more ideas. Good luck!

Isn't that one of the things that got us into the current mortgage crisis?

[Thebazile78]

Isn't that one of the things that got us into the current mortgage crisis?

Yes. (http://www.slate.com/id/2189576/)

Watch what'll be the next thing to go...

[Jujubees2]

Yes. (http://www.slate.com/id/2189576/)

Watch what'll be the next thing to go...

That's just crazy.

I remember when my wife and I were applying for our mortgage the credit union was questioning the down payment since it came from my wife's bonus check that year. We had to supply numerous documents concerning our salaries and employment history.

[reillyluck]

watch the documentary "maxed out"

If you have netflix, you can watch it instantly there. I watched it last night. Pretty interesting information about credit cards.

[Snacks]

Yes. (http://www.slate.com/id/2189576/)

Watch what'll be the next thing to go...

my brother is a mortgage broker and told me that a lot of loans are no doc or stated. i always found that funny because banks would let you lie. the best is when people really make what the state but cant prove it because they work under the table or dont claim eveything they earned.

[Knowledged_one]

my brother is a mortgage broker and told me that a lot of loans are no doc or stated. i always found that funny because banks would let you lie. the best is when people really make what the state but cant prove it because they work under the table or dont claim eveything they earned.

That is a big problem with waiters and waitresses they dont claim all of their tips and then cant get loans for anything because their tax records dont match up

[JPMNICK]

That is a big problem with waiters and waitresses they dont claim all of their tips and then cant get loans for anything because their tax records dont match up

i fight about this all the time with my friends. they can not have the best of both worlds then. either claim all the money you make like everyone else who has a normal job, or then pay the price later down the line when you have trouble getting a car or a house.

[Knowledged_one]

Yeah to some being able to flash cash makes them feel like big willy's but in the end they get crushed because of it.

[Melissa the Accountant]

Besides all the ridiculous mortgages that were handed out to anyone with a driver's license, I think students are often encouraged to go into debt to pay for college, before exploring other options. When I went to DeVry, those jerks told me a bunch of garbage about how I'd be able to pay off my student debt in just a couple of years. When I think about how stupid I was as a dumb little early-twenty-something, it just makes me sick. I mean, hell. It's humiliating to be in so much debt when I have a degree in accounting. Granted, I did this before I got that degree.

Sometimes I just feel suffocated by the stupid student loans and the stupid expensive school I chose. I've thought so many times about how I would do everything differently if I had the chance to do it all over again. But I keep plugging away. I'm not behind on anything, but I guess more than anything I just hate it that I was dumb enough to get myself in this hole in the first place. I have never had trouble managing my debt. I just hate having it because I feel like it's not financially healthy and I wish I could have those payments going into a fund or something instead. At this juncture, there's not really any point in investing, since I wouldn't get back enough to even offset the interest anyway.

I'm hoping that in a couple of years I'll be making a lot more money and that I can then afford to double up on my payments and start wiping this stuff out.

[Thebazile78]

Besides all the ridiculous mortgages that were handed out to anyone with a driver's license, I think students are often encouraged to go into debt to pay for college, before exploring other options. When I went to DeVry, those jerks told me a bunch of garbage about how I'd be able to pay off my student debt in just a couple of years. When I think about how stupid I was as a dumb little early-twenty-something, it just makes me sick. I mean, hell. It's humiliating to be in so much debt when I have a degree in accounting. Granted, I did this before I got that degree.

Sometimes I just feel suffocated by the stupid student loans and the stupid expensive school I chose. I've thought so many times about how I would do everything differently if I had the chance to do it all over again. But I keep plugging away. I'm not behind on anything, but I guess more than anything I just hate it that I was dumb enough to get myself in this hole in the first place. I have never had trouble managing my debt. I just hate having it because I feel like it's not financially healthy and I wish I could have those payments going into a fund or something instead. At this juncture, there's not really any point in investing, since I wouldn't get back enough to even offset the interest anyway.

I'm hoping that in a couple of years I'll be making a lot more money and that I can then afford to double up on my payments and start wiping this stuff out.

Not exactly.

Student loans are really a different type of debt. They hurt from a "well, I never had debt before and now I do" perspective, but because they are an investment in your future earnings potential, they are rated differently by the credit reporting agencies and can, in some cases, improve your credit rating.

Mine are government subsidized loans from the Department of Education. I have paid one loan off in full and the other is in repayment with a very low interest rate, so most of my direct-debited payment goes towards the loan principle rather than towards interest.

They were still in deferment when I started working because it took me almost a year after graduation to find a job, so I called the DOE and requested a deferment form. As soon as I felt stable enough to start repayment, I called them again and sent my first check.

I have about $14,000 in student loan debt from a four-year college and I lived on-campus all 4 years. I was fortunate enough to have had parents who made up the difference between what my financial aid covered (and this included scholarships, grants and loans) and what I still owed, except for one semester when I had to max out my credit card in order to register for the next semester's classes. (Long story; lots of bitterness, details are irrelevant to this story.)

I know it's different for every situation; I was actually lucky. I went to an in-state school right out of high school, qualified for both need-based and merit-based aid, graduated in four years going full time. It's harder if you're going back to school because you're sick of minimum wage jobs (or whatever) or if you come from a different economic background than I did. Again, I was lucky.

Based on your story, I think your school's financial aid department optimistically misrepresented the effort it takes to repay student loan debt, especially if you had to borrow enough to cover the entire cost of your tuition because you didn't also have grants or scholarships coming your way. You will work your way out from under your student loans, but don't let it make you crazy. If they are unsubsidized loans, you may qualify for loan consolidation, which can lower your payments and allow you to repay them faster. Definitely look into it.

[Knowledged_one]

or declare bankruptcy which more and more people are turning to to try and rid themselves of the debt

[Jujubees2]

or declare bankruptcy which more and more people are turning to to try and rid themselves of the debt

Yeah, but didn't the government recently make it more difficult for a person to declare bankruptcy?

[Knowledged_one]

yeah they did because people were doing just what i said

[Snacks]

yeah they did because people were doing just what i said

i remember when bush passed the bill the media and all the talking heads were saying it was one more thing to help the banks and big business while screwing the other guys. i dont know how i feel about bankruptcy, it helps people and screws the bank. but then again people shouldnt spend more then they can but the banks shouldnt give out loans and credit so easlily. its a catch 22.

[SouthSideJohnny]

Isn't that one of the things that got us into the current mortgage crisis?

No. The article linked by TheBazille78 is the opposite. Manually underwriting a loan is different from stated income or no doc. Stated income and no doc loans invite fraud because nothing is really verified. They're great for people that have a difficult time proving their real income, but they're also great for fraud.

Manual underwriting is where the bank (or credit union) actually investigates the numbers on your loan application. They ask for proof of paychecks, where the deposit money came from, bank balances, etc. . . That's the way loans used to be made. The reason they are necessary is that you can be a a great credit risk, but if you haven't borrowed money in ten years, you either don't have a credit score or you have a really low one. In the last few years, lenders stopped underwriting loans this way and went to "desktop underwriting." That's what helped allow so much of the fraud to occur.

The headaches you describe in a later post are what takes place in a manually underwritten loan. It's a pain in the ass, but it really cuts down on fraud. Alot of credit unions still make loans this way; that's why they are generally not caught up in the "sub-prime" mortgage mess like some banks are.

[Thebazile78]

or declare bankruptcy which more and more people are turning to to try and rid themselves of the debt

Some types of debt are not "erased" by bankruptcy. Like student loans. (http://bankruptcy.lawyers.com/Student-Loans-In-Bankruptcy.html)

[Melissa the Accountant]

Based on your story, I think your school's financial aid department optimistically misrepresented the effort it takes to repay student loan debt, especially if you had to borrow enough to cover the entire cost of your tuition because you didn't also have grants or scholarships coming your way. You will work your way out from under your student loans, but don't let it make you crazy. If they are unsubsidized loans, you may qualify for loan consolidation, which can lower your payments and allow you to repay them faster. Definitely look into it.

That is a good point. I guess, looking back at what I wrote, I made it sound like I think student loans are evil. In reality, without them, I wouldn't really have had as many options and definitely wouldn't have been able to get my bachelor's as quickly as I did. So I'm glad I had access to them. I think my main mistake was that I told the school I could not afford to take too many hours at once because I had to work full time, and they advised me to borrow extra to cover the gap with my living expenses, so I could take a heavier courseload and graduate faster. If I had it to do over, that is the thing I would avoid taking their advice on. I would have found another way to do it.

I am just really looking forward to getting them paid off and having disposable income again!