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Author Topic: PLEASE ADVISE --- how to handle massive credit card debt  (Read 9377 times)

greengrl

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #50 on: July 11, 2006, 01:54:44 AM »
aeryn-fwiw, I hardly think you are coming across as cranky-you clearly have experience with paying debt and if you read pretty much any of my posts you will know that I am the most debt adverse, fiscally conservative person in the world. i'm going to have to go with you and queencruella on this one--OP, i KNOW you dont' want to defer, but consider this:

1. all it takes is missing one minimum payment.  and with minimum payments DOUBLING, regardless of consolidation, you are looking at a really hefty minimum payment.
2. you're living in a very expensive city--even if you take out the maximum in financial aid for living expenses you might very well need to supplement that income with credit cards and/or be tempted to do so (based on your spending patterns, which i'll get to in a minute). this will only compound the problem.  if you were living somwhere cheaper, MAYBE--but this is NYC.
3. a lot of us are talking about working during law school, queencruella and myself included. but the difference is that we know that if things get too tight then we have the option to cut back--if i can't handle it then i'll stop working. you won't have this option--now, you're working 20 hours a week to make minimum payments on your credit cards, which is interferring with your ability to network and perform well in school. sure, you're graduating from Columbia but please don't make the mistake that so many people on this board make in assuming that just b/c you go to a good school you can guarantee a HUGE six figure income right out of school....even assuming that you do land that dream job between your CC debt and your law school debt your standard of living is going to be really low. for five, maybe even ten years. Is that worth what you feel you might "lose" by deferring a year???

Life happens--I get that. When I moved to Chicago I was so poor and so afraid. I had $3.28 in my checkbook and had to live off of buttered noodles for more weeks than I care to remember. I would never judge. What concerns me, however, is your attitude/relationship with money and spending. Not to go all Dr. Phil on your butt but consider where that CC debt is coming from. Learning to live on a budget takes time and practice. If budgeting is an issue, big deal--you can learn that behavior. If you want help, ask. Sometimes learning how to estimate what things cost and how long they take to pay off isn't easy and it's sure as hell not intuitive.

You want to hear: go to school! you're going to make so much freaking money when you graduate that taking a year off is just a waste!! live life, carpe diem blah blah. but darlin'--life's not that easy. what we want is rarely what we need. please please please consider deferring. talk to the school--yes, you really should have gotten this stuff in order a lot earlier. but don't allow yourself to make a poor decision b/c you feel that it's too late to make a wise decision.


baytostay

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #51 on: July 11, 2006, 03:22:03 AM »

You want to hear: go to school! you're going to make so much freaking money when you graduate that taking a year off is just a waste!! live life, carpe diem blah blah. but darlin'--life's not that easy. what we want is rarely what we need. please please please consider deferring. talk to the school--yes, you really should have gotten this stuff in order a lot earlier. but don't allow yourself to make a poor decision b/c you feel that it's too late to make a wise decision.



TITCR

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #52 on: July 11, 2006, 02:08:08 PM »
of course u should just go to columbia. take the cc hit, u will prob make 145k when u get out of law school. even with 3 years of interest accumulating on the debt making 145k the first year is going to be way more money than the 40k plus plus the interest u will have to pay after law school.
Attending: OU

sck

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #53 on: July 12, 2006, 11:37:30 AM »
I'm another one who fell into the stupid spending trap. I absolutely RUINED my credit while in college. My debt weas never quite that high, but I had times where I wans't making my payments at all.. and it quickly escalated.

It's been a very hard five-6 years worth of work, but I've gotten my credit very respectable again, and that was after most of it was paid off. I had an apartment back out on me three days before I was supposed to move in because of it, once!

I've got about 2K worth of debt now, and I just did a balance transfer to a no-interest card to help. I'm going to pay it all off before I start school (because I know I have some other big expenses coming, and I also have to use my cards to charge wedding planning things so I can then transfer money and pay the expense.)

But seriously. Don't fall into the trap of being too broke because of loans to make your payments. Just a few mistakes will haunt you for years, and regardless of youyr salary, the escalating debt can make things very difficult. Paying the minimum is one of the worst things you can do, credit-wise. Always pay more, and pay more than the interest rate would bring it up.

Like some others have said -- I'd defer, or find another way to minimize it first.
LSN
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Laurenrae52

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #54 on: July 12, 2006, 01:01:44 PM »
I know that most student loans have conditions saying they aren't to be used for things like car payments or cc debt - but my question is, how would they know?  I mean, if you get your loan check in the fall after your tuition is paid, and you're living on that loan money - how would the loan company know how its being spent if they just cut you a check?
Harvard Law School, Class of 2009

queencruella

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #55 on: July 12, 2006, 01:10:36 PM »
I know that most student loans have conditions saying they aren't to be used for things like car payments or cc debt - but my question is, how would they know?  I mean, if you get your loan check in the fall after your tuition is paid, and you're living on that loan money - how would the loan company know how its being spent if they just cut you a check?

I think it's federal guidelines that dictate you can't use student aid for consumer debt/car payments, but I don't know how far schools go to check where your money is spent. Most student budgets require that students live frugally, so it's probably going to be really hard for a person to manage paying $400+ a month on credit cards when they're only getting $1K a month to pay for living expenses.

Laurenrae52

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #56 on: July 12, 2006, 01:24:08 PM »
Oh yeah, I know it would be really tough to pay off debt, but I mean, if the OP formulated a really really tight budget (not really possible in NYC), then maybe they could swing it. 
Harvard Law School, Class of 2009

greengrl

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #57 on: July 12, 2006, 01:31:42 PM »
Oh yeah, I know it would be really tough to pay off debt, but I mean, if the OP formulated a really really tight budget (not really possible in NYC), then maybe they could swing it. 

My concern with the "tight budget" argument is that we're not completely sure what the OP's spending behavior is. If that 20k on credit cards is careless spending then learning to live on a tight budget in NYC probably isn't going to happen. Budgets are hard, having lived on both sides of the spectrum it's hard to go back to being frugal after not having to be. You just forget and buy the five dollar latte..it's habit

alexis

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #58 on: July 12, 2006, 04:04:08 PM »
My two thoughts:

I know a guy who just graduated law school and the forces that be won't let him take the bar in GA because of too much debt (not sure how much it was, but $20K would probably be in the ballpark).  So, you'll want to check the state where you want to practice ahead of time.

Someone mentioned taking out additional private student loans to cover the $20K.  It's my understanding that you can only take out student loans up to the maximum budget allowed by your school, regardless of whether the loans are public or private.  If you want to take out more than the budget, your school has to raise your maximum.  Of course, $20K in debt may persuade your school to raise the maximum.  But then again, whoever said you can't use your student loans to pay off past debt may be right.  Definitely something to check on.

That's actually not true. You can take out private educaiton loans from a handful of lenders that do not require school certification (Chase Education One loans come to mind, but there was a list floating around on here a little while ago with more of them) and do not use 'cost of attendance minus financial aid received' to cap how much you can get. they have a maximum amount, yes, but i think Chase's was 40K.   http://www.educationone.com/foryou/graduate.html

These loans are pretty much separate from your financial aid, your school's Financial aid office has nothing to do with them and you can use them for any education/living expense you want. The rates are definitely not as good for these, but it's still worth a shot since they are most likely lower than the interest rates on your CCs and they are deferred just like any other student loan...


i posted the original link to the loans that dont require school certification, here it is

http://www.finaid.org/loans/privatestudentloans.phtml

best of luck with whatever you decide. and next time, if you dont have the cash, dont buy it. unless it was for a medical emergency in which instance, these things happen, and dont beat yourself up over it.. just dont let it happen again.

drklahn

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Re: PLEASE ADVISE --- how to handle massive credit card debt
« Reply #59 on: July 13, 2006, 12:30:30 PM »
I'm much in the same boat as the OP. I have about $12k in CC debt. I've got some money saved up that I can use to make minimum payments for about two years. Yes, bad way to get by and making minimum payments isnt going to help me much, but it's the best I could do. Maybe you have a stash of cash (401k, etc) that you may be able to access?