|
slap me silly posted:Of course. How about if you use realistic examples instead of the completely hyperbolic $6k and $10k numbers you are throwing around? What is the actual cost of the emergency fund strategy, and what are the actual quantified risks? Well just to be clear, the 6k guy was someone else. A 2 month emergency fund for this guy is like 4k. His average APR is around 21%. A savings account gets you 1%. So the cost of maintaining this emergency fund instead of paying off debt is approx 4k * .2 = 800/year. Not a huge amount of money sure. But it's over a month of rent for him and hey he might be able to keep his internet. Obviously you don't necessarily need a 4k emergency fund. Maybe he can make do with 1k in which case you only save 200/year. But as the fund gets smaller, so does the risk of not being able to obtain that amount of credit. For that 1k emergency fund to be useful, he has to run into the situation where he can't access 1k of credit even though he has 11 credit cards and has been making more than the minimum payments on them. Risks: - Merchants who don't take credit (that you're relying on for an emergency situation): Ridiculously low unless you're dealing with drug dealers or loan sharks - Transactions that get denied: I still don't understand why this would happen unless you're going over the limits in which case the 1k emergency fund wouldn't mean anything anyways. Ridiculously low. - Cards closed by the bank to new charges (meaning you can't come up with the amount you would have had in your emergency fund): Ridiculously low given 11 credit cards. Devian666 posted:One thing that you aren't considering is that when you run up new charges on a credit card any payments to that card go towards the interest free portion first. That's how you maximise the interest. An emergency fund of $1k is not a big deal. The big deal is not charging more to the credit cards, not just for interest rate purposes but for behavioural change. Everyone who runs up large sums has an issue with tracking how much money they have available to spend. We haven't even talked about freezing the credit cards into a block of ice. I'm not encouraging him to keep using the cards, just to aggressively pay them off. The cards are not for daily use. They are taking the place of his emergency fund. Hell he probably should freeze them. So there shouldn't be any new charges, and those issues you describe shouldn't happen. Cash flow problems are a different issue. He can address that with YNAB, envelope method, whatever. I'm just addressing the very narrow topic of whether a person with cc debt should have an emergency fund. If an emergency fund is necessary to address these frequent cash flow problems as you say, then maybe that's a valid reason. But then it's not much of an emergency fund anymore is it.
|
#
?
Oct 12, 2016 07:04
|
|
|
|
| # ? Apr 26, 2024 20:05 |
|
|
Droo posted:I can't pay my gas or electric bill with a credit card. I don't think I would have been able to pay my mortgage with a credit card. I also believe many landlords won't take credit. No need for personal remarks. We're talking about emergency funds here. If you disagree with me that's fine, it's not a big deal. I pay all my rent and utilities with a credit card so that never crossed my mind. If you can't do that then sure you might need some cash on hand. Also, if your cafeteria at work is like mine and doesn't accept credit cards for purchases under $5, then you might need to save some cash for that too.
|
|
#
?
Oct 12, 2016 07:25
|
|
|
Confounding Factor posted:Oh really? Even if I got a Verizon exlusive phone (Droid Turbo)? I just need to find a carrier that does CDMA or no? But that's awesome I can take it wherever, I thought I had to get them to unlock it for me after I got it paid off. You phone is unlocked and will work on any GSM carrier, of which cricket is really good and cheap.
|
|
#
?
Oct 12, 2016 10:35
|
|
|
Confounding Factor posted:I have no intention/thoughts on buying a house or another car now or in 5 years. Even if I didn't have this debt, home ownership is something I have little desire to get involved with for a variety of reasons Now I would even more strongly consider bankruptcy. Get some breathing room and as much debt discharged as possible, and with some self control going forward, you should be alright.
|
|
#
?
Oct 12, 2016 12:22
|
|
|
I think bankruptcy would be a great help for the mental health problems. Without the burden of debt, your mood will be much lighter. Most young people don't have the option of bankruptcy because their debt is mostly student loans, which don't go away in bankruptcy. But your debt is mostly credit cards which absolutely do go away. Without those credit card payments each month you can build up savings to ensure you never get in this situation again. Be careful not to build up credit card debt again. You'd assume that credit card companies would not touch a bankrupt person with a barge pole, but by all accounts, they actually love bankrupt people, because you can't declare bankruptcy again for several years, so you are on the hook for any new debts you build up. Don't get a credit card at all at first, until you are sure you can be trusted. Throw away all the card offers that will start spilling through the door. Credit card companies love people with bad credit because they think of them as suckers. When I got a tax lien on my property (it was a mistake) I suddenly got bombarded by credit card offers. When the lien was removed, the credit card offers dried up, because I was obviously no longer listed as a "desperate sucker in financial difficulties". Beware.
|
|
#
?
Oct 12, 2016 14:46
|
|
|
I've been getting a lot more credit card offers lately. 
|
|
#
?
Oct 12, 2016 14:50
|
|
|
potatoducks posted:I pay all my rent and utilities with a credit card so that never crossed my mind. If you can't do that then sure you might need some cash on hand. Yeah that's pretty unusual. Sometimes complexes will take credit cards, but they will often charge a fee to do so. Utilities, especially smaller ones, don't like to deal with credit cards at all because of fees and PCI compliance requirements. Having even a $1k cash emergency fund is really helpful, and the psychological relief of knowing you have the money for small emergencies shouldn't be ignored.
|
|
#
?
Oct 12, 2016 14:56
|
|
|
Moneyball posted:I've been getting a lot more credit card offers lately. I've been getting mailed offers for personal loans, which is the oddest thing. Do people just take out unsecured loans on a whim these days? Speaking of personal loans, though, is there any possibility that OP could refinance some of his CC debt if he doesn't go the bankruptcy route?
|
|
#
?
Oct 12, 2016 20:13
|
|
|
Vox Nihili posted:I've been getting mailed offers for personal loans, which is the oddest thing. Do people just take out unsecured loans on a whim these days? People open credit cards to pay for holidays and then slowly pay the card off. They do similar things with 18% personal loans as well. Stories I hear from people working at banks is that they don't recommend people do it, but they still want to do it anyway. In terms of debt consolidation the amount of debt and the near 100% utilisation of 11 credit cards will mean no one will want to touch this. Years ago I tried to get some people to go down this route and they were continuously declined debt consolidation loans. It's a possibility a after a couple of years of repayments but these debts would raise many red flags.
|
|
#
?
Oct 12, 2016 23:54
|
|
|
Do we know the OP's credit score? Whatever rates on lending sites they could get approved for (if at all) wouldn't be that much better than his cards. At least it would help avoid late fees.
|
|
#
?
Oct 13, 2016 00:31
|
|
|
potatoducks posted:I pay all my rent and utilities with a credit card so that never crossed my mind. If you can't do that then sure you might need some cash on hand.  I agree that a minimal emergency fund is best, probably 2-4 months of basic expenses would be ok.
|
|
#
?
Oct 13, 2016 00:56
|
|
|
Moneyball posted:Do we know the OP's credit score? Part of the reason I raised the issue was because I noticed that OP already listed a personal loan at 11% interest. I agree that lenders will certainly think twice about giving him another cent at this point, given his utilization ratio.
|
|
#
?
Oct 13, 2016 02:14
|
|
|
Edit
Confounding Factor fucked around with this message at 16:09 on Feb 8, 2017 |
|
#
?
Oct 13, 2016 03:36
|
|
|
Sign up for Credit Karma if you can.
|
|
#
?
Oct 13, 2016 04:32
|
|
|
potatoducks posted:
Literally happened two weeks ago to my friend. Because her card was compromised, she wasn't allowed to use it or access her account until a new card was sent, which she had to go to the bank to activate. Because of the combination of it happening on a Wednesday, and the public holiday on Friday, the new card didn't get to her until almost a week after her account had been locked. She had $60 AUD on her at the time. I'm not saying this is a common scenario, and obviously her situation was compounded by it happening late in the week + public holiday, but to pretend it never happens and accounts are never closed (even temporarily) for fraud and it's never a problem is just silly.
|
|
#
?
Oct 13, 2016 10:11
|
|
|
Confounding Factor posted:Should I wait 90 days or more before I file in order to demonstrate that I'm not using my credit cards and my bank statements reflect the budget I posted in the OP? If I opened a line of credit last year around August, I wonder if the creditor would make an objection in the court not to discharge it. I guess I'm more concerned that filing for bankruptcy might look like I'm committing some kind of fraud. I'll have to talk with lawyer about this. quote:If you don't mind me asking, and I hope I'm not prying, were there any obstacles you both faced after he filed for bankruptcy? Was it less a concern if you both didn't want a house or other big purchases that might involve credit? I'm just curious what, if any, challenges you guys faced. No obstacles, although he was living with me at the time. You get lots of offers for credit after you file, because creditors know that you CAN'T file again for something like 7 years, so they've got you. Don't fall prey to easy credit car loans or whatnot! We actually bought a house last year and his credit was fine, that was 4 years after the bankruptcy but it has never been an issue for us.
|
|
#
?
Oct 13, 2016 16:43
|
|
|
Bankruptcy will be wonderful for your mental health. Just be aware at all times of what got you to that point, and work towards never letting it happen again. Contrary to popular belief, bankruptcy is not the end of the world. It will take 7 years, but you are absolutely, 100% young enough to weather that storm and will still have plenty of life left after it's cleared up. More than anything you're doing more harm to yourself worrying about this debt constantly. It's good to be mindful of it but don't let it consume and ruin your life.
|
|
#
?
Oct 13, 2016 20:22
|
|
|
Edit
Confounding Factor fucked around with this message at 16:09 on Feb 8, 2017 |
|
#
?
Oct 18, 2016 16:47
|
|
|
That's odd advice. I haven't looked at BK stuff in about 10 years, but if you make less than 49.4K a year in PA it shouldn't matter as you don't need to fill out the means test.
|
|
#
?
Oct 18, 2016 17:21
|
|
|
Buy a horse.
|
|
#
?
Oct 18, 2016 17:21
|
|
|
Moneyball posted:Buy a horse. BTW I signed up for Creidt Karma and my credit scores: TransUnion - 594 Equifax - 593
|
|
#
?
Oct 18, 2016 17:50
|
|
|
You can go a lot higher than 6% if necessary. That's only around $1,700 and the max allowed annual contribution is $18,000 Raising your contribution would definitely bring you down, though that is a bit shady considering it's to get your income low enough to qualify for bankruptcy. But then again, taking advantage of legal regulations is yuuuuge. That would be a lot smarter than buying a new car. Confounding Factor posted:
What does the credit factors page say? I guess it won't matter anyway for the next several years if you go the bankruptcy route, but I'm curious. VV Would probably be a 730+ without the crazy utilization. Moneyball fucked around with this message at 19:21 on Oct 18, 2016 |
|
#
?
Oct 18, 2016 19:01
|
|
|
Edit
Confounding Factor fucked around with this message at 16:09 on Feb 8, 2017 |
|
#
?
Oct 18, 2016 19:16
|
|
|
Your expenses right now are not sustainable. When you submit your expense budget it needs to be realistic and not your ultra-frugal budget - as in, you need a clothes shopping budget that isn't zero, an auto maintenance budget that isn't zero, a food budget more in line with the rest of society. If I were you, I would start spending money on things that you have been putting off or things that are going to last you a while. Definitely max out your 401k contributions. Then start buying food for your pantry that will last you a while. Buy clothes that you will need sometime in the next year or two. Buy household supplies. Estimated dental work. You should easily be able to get up to your income with those sorts of estimated payouts (or real payouts for assets that will last you a while). The problem with a new car loan is that if you actually up your monthly expenses so that they match your income, you're going to be in the same paycheck to paycheck problem as you were before. While you could do something like get a car loan planning to sell it and get a cheaper car afterwards, that's pretty much coming close to declaring your intent to commit fraud, and you definitely don't want to do that and post about it online.
|
|
#
?
Oct 19, 2016 00:21
|
|
|
Edit
Confounding Factor fucked around with this message at 16:10 on Feb 8, 2017 |
|
#
?
Oct 19, 2016 01:02
|
|
|
Edit
Confounding Factor fucked around with this message at 16:09 on Feb 8, 2017 |
|
#
?
Oct 19, 2016 06:16
|
|
|
- Use budget 1 - take out emergency costs, that's not an expense, it's savings that you will use for an emergency and that doesn't count. - lump some things together to give you more wiggle room if you need to explain. Gas and Maintenance together. Clothes and oral care and toiletries and cleaning supplies under "shopping". Linen and furniture under "electronics and household goods" - round up some categories. food to $300, laundry to $40, gym to $25. You can spend a lot more on hair care and be reasonable. - It's fine to go over a bit. I would try to hit or go over your income with expenses strictly, then add the 401k/HSA on top of that. You can say that you've been cutting corners for a while now to make ends meet but it's not sustainable.
|
|
#
?
Oct 19, 2016 16:17
|
|
|
Would blowing some money on a regular therapist make you poor enough to get bankruptcy? This would help with the depression, too. Seems very strange that being thrifty would count against you in terms of being a decent risk not to go bankrupt again. Perhaps talk to a second bankruptcy lawyer. This one might have not understood.
|
|
#
?
Oct 19, 2016 16:25
|
|
|
Confounding Factor posted:Right and that's what I'm deathly afraid of that the trustee or judge will toss out the bankruptcy case under a presumption of false pretenses or fraud. I don't expect to start the bankruptcy process right away and probably do it in 3 months but it's whatever lawyer I decide to represent my case says. IANAL but none of this should matter. You make less than 49,500 dollars. You are eligible to file Chapter 7. Period. Done. There is no presumption of abuse or fraud. No one is going to scrutinize your budget. The Judge will look and see the means test doesn't apply to you because you make under the median income and things will proceed. I just looked at the updated figures for Nov 2016 filings and the median income rose to 50.5K in PA. Here's the form that gets filled out. http://www.uscourts.gov/file/18789/download It's real simple.
|
|
#
?
Oct 19, 2016 17:10
|
|
|
talk to some other lawyers besides that first one
|
|
#
?
Oct 19, 2016 18:04
|
|
|
BarbarianElephant posted:Seems very strange that being thrifty would count against you in terms of being a decent risk not to go bankrupt again. skipdogg posted:IANAL but none of this should matter. You make less than 49,500 dollars. You are eligible to file Chapter 7. Period. Done. There is no presumption of abuse or fraud. No one is going to scrutinize your budget. The Judge will look and see the means test doesn't apply to you because you make under the median income and things will proceed.
|
|
#
?
Oct 19, 2016 18:39
|
|
|
moana posted:It's not about that, it's that if your budget shows that you can pay the minimum on your credit cards, the credit card companies are happy to have you paying those minimums forever. Oh how I wish the required courses weren't a joke . Anything you can knock out in less than an hour online for 25 bucks isn't going to be useful. There's hundreds of sites like this http://www.myonlinebankruptcyclass.com/ all that matters is you can submit the certificate. Very few people take anything away from it.
|
|
#
?
Oct 19, 2016 19:08
|
|
|
Edit
Confounding Factor fucked around with this message at 16:11 on Feb 8, 2017 |
|
#
?
Oct 19, 2016 19:29
|
|
|
That seems a bit high for a straightforward and very basic Chapter 7. My experience is that most BK firms do these things on a flat rate. I'm not saying go find the craigslist lawyer offering a $498 special, but maybe look at someone else.
|
|
#
?
Oct 19, 2016 21:57
|
|
|
I agree, get a few other quotes before deciding and try to find somewhere with a flat fee.
|
|
#
?
Oct 20, 2016 03:09
|
|
|
For what it's worth I think you're making the right decision for yourself short and long term on this one.
|
|
#
?
Oct 20, 2016 23:02
|
|
|
Edit
Confounding Factor fucked around with this message at 16:11 on Feb 8, 2017 |
|
#
?
Oct 20, 2016 23:22
|
|
|
Confounding Factor posted:Just got done meeting with another lawyer today. The consultation went well, he's a younger guy who has been practicing bankruptcy law for 5 years. He's seen cases like mine all the time and as you all were saying its a pretty straightforward bankruptcy. His retainer fee is 1500 + bankruptcy fee. I'm a little concerned with his lack of experience though and his mind seemed to be at 10 different places at once which I get since he had a ton of cases it seemed like scattered on his desk. Five years is plenty of experience and the fact that he struggles to focus on each thing is unsurprising for an in-demand professional. Although most can focus during a meeting. Value your assets but a lot of them have little value. Just check the way you have and surely they will be under the threshold. If you are going for bankruptcy then it is probably time to stop paying as you need to be able to pay the lawyer's fee. This will also clearly establish your desperate financial position. You should note that I am the last person that would say to stop paying bills as I prefer people recover from their position, but your situation is dire given you budgets (yes I know they are geared for a purpose but the numbers are completely reasonable). The general advice that a lawyer would give is not to share anything with anyone at all, that is always the best advice. Especially given your dire financial situation and that Chapter 7 is entirely appropriate it's best not to unintentionally mess this up. If you need to discuss something specific some posters may volunteer to communicate via PMs.
|
|
#
?
Oct 21, 2016 01:18
|
|
|
Edit
Confounding Factor fucked around with this message at 16:10 on Feb 8, 2017 |
|
#
?
Oct 21, 2016 03:50
|
|
|
|
| # ? Apr 26, 2024 20:05 |
|
|
Droo posted:Maybe understanding that you still need the ability to essentially write a check sometimes in life is one of those full-blown adult things that you don't really experience until you are one? Hey now, I can pay utilities and rent on credit. I've never not been able to put 100% of my cost-of-living on credit. In fact, the only thing I don't run through my card is rent because the surcharge exceeds the cashback rewards.
|
|
#
?
Oct 30, 2016 00:39
|
|