Financial Friday: My Plan To Get Out Of Debt

DISCLAIMER: I AM NOT A FINANCIAL ADVISOR OR COACH.

Editor’s note: I noticed that I had forgot to include that I owed the IRS money in my last post. I owed them almost $500 and as of yesterday, have paid them off. That freed up $25 every month that is now going to one of my credit card payments.

In my search for ways to get out of debt quick, I found there is no quick way to pay off debts when you work as a substitute teacher, part-time tutor, and freelancer. It’s just not going to happen. Nevertheless, I have created a plan and I have been sticking to it.

  1. In my last post I talked about a personal loan I took out with the bank due to my job at the time not paying me. Because I was so behind on payments, it went to collections. I knew nothing about collections or what it was. It just so happened that I watched a scope about how you can “pay to delete” a debt that has gone to collections. What this means is, you can pay a certain amount, less than what is owed, to have the debt removed. I was elated when I heard this. My loan started at $2500 but was $1500 when it went to collections because I had been paying what I could on it. Anyway, instead of paying the debt collector the entire amount, I ended up only having to pay $876. That’s a little over half of what I owed. This happens because the debt collectors buy the debt for like 10% or so of what the debt actually is. Granted 10% is $150 but of course they won’t let you pay that. They have to make a profit. But $876 is better than $1500. Now, I only have $200 left to pay on it (which will be paid at the end of this month) and that debt will be done.
  2. My two credit cards are maxed out and since I am behind on those payments, the accounts have been closed. I have been paying on one consistently to lower it and pay it off faster. $200 here, $100 there, as much as I can afford to pay without risking going hungry or without a car because I can’t pay for gas.
  3. As for my car, I have been making regular payments only because I am paying so much on my credit card. Once that credit card is done, then the next, my car will be the last thing that I owe my bank. Boy,  I can’t wait for that day.
  4. My student loans are in forbearance for now and they will be until I can get a teaching job to pay them. I am praying that one of these schools calls me soon and I can start paying on them in the fall. I know that after working for five years as a teacher, the loans are forgiven, but um, that is not soon enough.

This is my plan to get out of debt. Come back next Friday to see how to manage your debt.

Love and Finances,

Simply Moniqua

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