KingsGambit
Caldari Knights
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Posted - 2009.10.30 15:45:00 -
[1]
When asked about debt, I always respond with how my early 20s were ruined by debt. I overspent on credit cards and brought about ú6k of student loans over from finishing my degree. Multiple cards meant spreading payments quite thin and the monthly interest was a killer. Not working for a couple of years right after uni didn't help. But on starting my first and still current FT job, apart from the first month where I went a bit crazy, I started sinking every spare penny into paying it off. Transferring balances all into one place really helped. Psychologically, I saw a difference each month, and financially I was finally paying more of the balance along with the interest.
It took me close on 18 months of this to pay off the credit cards, at which point I cancelled all but one. That was a memorable and immensely satisfying day, especially when they tried to convince me not to! Meanwhile I was paying the student loans back in monthly payments, and saving what before was going on to the cards. Once I had enough saved, I phoned up the loans company and asked them "If I wanted to send in a cheque to totally clear my balance with you, what number would I have to put on it?". I sent it in and to this day have the letter that confirms I owe them nothing. I've since managed to stay debt free and have even built up some healthy savings. I feel for you/your friend, debt is a killer.
A friend of mine here in the UK got into trouble too. I don't know exactly how much but it was way more than he could handle. After struggling for a long time, he phoned up a company that basically got in touch with all his creditors. With each they had approximately the same conversation...our client is struggling financially and cannot handle this much debt. Will you agree to write off part of it if he agrees to pay the rest as best as he is able, under the terms of a contract? The choice they had was to accept this, or have him declare himself bankrupt and they get nothing. All of them took it...a lot of the debt was written off and he has since had to make regular payments at a manageable level. There's regular reviews, and they take part of any bonus income and overtime...basically he's allowed his (provable) living and travel expenses, an agreed amount extra and the rest goes to this company. He'll be debt free within the next year or two.
I would consider having your friend look into something along those lines. Short of declaring bankruptcy, which is a life and soul destroying thing, particularly in your 20s, it will be a horrid life for many years unless he can find an extraordinarily well paid job. He *needs* to speak to either a debt management company if such a thing exists in the US, or his creditors. He needs to tell them he cannot cope with the current situation despite best efforts and something needs to change or he'll have to declare bankruptcy and the creditors will get nothing.
At worst, nothing will change. At best, he will have a large portion of debt written off, and the rest made much more manageable (f.ex 5-6 years at $500 or so with regular reviews to see how much he needs to live on, how much he can afford to pay, etc). Most likely, he will get an arrangement made to curb the interest and at least part of the balance written off. If he has to declare bankruptcy, he'll struggle for the rest of his life to get any credit which will make buying a car or home almost impossible.
So have him look for companies that help people in serious debt in the first instance. Failing that, have him speak to his creditors and to make sure he says he simply cannot manage that level of debt and they need to negotiate something manageable. American students have it pretty bad in regards to debt, I suffered greatly because of mine and it wasn't even remotely close to $80k. My good friend is in her final year of law in Conneticut. Her undergrad studies cost her $40k/yr alone, no idea what the professional school is costing. -------------
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