On this blog, I pretty much go in depth discussing what I am doing to reduce our debt. But there are many other options out there that may work for others.
The story I am about to share is from an anonymous reader who hopes his story will help others. He even gave me a sample of the letter he used so I could share with everyone. I will post it later tonight or tomorrow.
“I am in my early 30s, no spouse, no kids, and have never made more than $35k a year… yet somehow I managed to amass over $40k in credit card debt (how does one even get access to that much credit, I don’t know. If I was in a bar I could sue them for over serving me, but alas I have only have myself to blame).
I have been hanging on to that last rung of the ladder for about 18 months. I have kept up with most payments, but have sacrificed a lot to do so. Interest rates on cards ranging from 22-31%. 31%! That should be illegal! I doubt loansharks charge much more than that!My debt came from a lot of things… moving across country, a period of unemployment, irresponsibility, making a conscious decision to take a job that didn’t pay well (but I enjoyed immensely)… and probably, if I am being honest, a drug and alcohol problem. Only a few know about the SIZE of the hole that I dug myself into, and they all counseled me to look into bankruptcy, but I just couldn’t do it… this is my burden; this is MY debt. It didn’t come from a medical emergency or a divorce or anything like that… just my irresponsibility. It is my debt and I will deal with it. I know you understand the feelings that go along with debt… the embarrassment, feeling ashamed, the self-loathing… I swam in that lake for the past three years, but today I stand on the other side… not out of debt, but with resolve and the resources to dig out. (This email was intended to be a happy one, but I thought I should detail my situation for you.)
For the past 4.5 years I have made a conscious decision to work in a job that didn’t pay enough (resulting in my debt ballooning from around 20k to around 40k), but I loved my job, and knew that some day a pay increase was in my future. About a 3 months ago,that day arrived! I received a promotion and a raise of $20k! I feel very lucky… i am deserving, and I have put in my time… not many people would have done what did for as long as I did… not any sane people that is. But even with the raise, I was just breaking even (really a revelation of how bad the situation was)… so I did something about it. I concocted a plan to get two 5-year $20k loans from local credit unions at rates ~12%. With my new income, I could easily make these payments (~$440)… but they turned me down.. and why wouldn’t they, I was a new member, and had a dismal financial outlook. So I wrote them a very gracious letter to hopefully start a dialog that would lead to something other than an adverse decision… maybe me asking for less, maybe me getting a cosigner, electronic debts, whatever would work. What could it hurt, right?
If they gave me anything, I’d be in a better position than I was. So they called and I we talked, and I explained my situation more… and would you believe this, they okayed it as is! They had a good feeling about me, and felt confident that I wouldn’t just take the money and THEN file for bankruptcy. Sure I am in a unique situation, I mean, I know people typically don’t increase their income by ~65%… i am very lucky. But why I was writing, in addition to thanking your for your inspiration, was to point out the value of credit unions. I have always belonged to one, and then I joined another to get access to additional money… but they are so much different than banks. They care. They want to help… it has to make financial sense, but they want to help. How many banks do you know that would overrule their lending guidelines because they “had a feeling”?
I just thought that might be an overlooked resource for your readers… I checked out Prosper too, but for those of us in the sub-D category, those interest rates are killers too. Most (some) credit unions don’t use credit scores when deciding how much to charge in interest.
So that’s me. 60 months of makable payments away from being debt free. Sure I’ll like to pay that down sooner… but for now, just the thought of being debt free has me floating. The rest of my life can start… drug and (mostly) alcohol free and on the road to financial freedom!”
Stay tuned, because this reader also gave me a sample of the letter that was used with the credit union.Â I’ll post it later tonight or tomorrow.
Anonymous, thank you so much for sharing your story with everyone.Â I haveÂ a feeling that you’ll become debt-free sooner than 60 months 😉
I’ll be really interested to see what he said! I’ve been thinking about writing a similar letter to mine after I didn’t get approved for a loan. While I’m not in a great financial situation, I’m in a much better one, and getting better ever day.
Thanks for your blog, it’s being a great source of support.