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  #1  
Old 11-16-2010, 04:33 PM
musicman musicman is offline
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Talking Establishing my new Budget

Hi! I'm new here and I thought I would like to get some financial advice as to how to pay off the debt I have and manage my money.

I'm 23 years old and currently am not enrolled in college. I just started a part-time job as a caretaker making $8.50 an hour. I get about 25 hours of work each week. (Hopefully I will get more hours.)

So we are looking at about $200 a week.

This is my debt:

Medical: $1,510 (4 bills total)

Student Loan: $9,800 (Currently in deferrment until I get at least 30+ hours of employment a week. May start paying next month before deferment ends even though I don't get full-time work yet.)

Car: $1,800 (My parents are contributing $100 a month to this. I took this loan out from a relative.)

Positives: I paid off my credit card and closed the account down in July.

Negatives
: Two of my medical bills are currently in collections...I am making monthly payments of around $10-20 for each of my 4 bills.

Goals: I would like to of course pay off my debt, but I would also like to establish a good system for creating good credit and putting money aside for savings and an emergency fund. My mom thinks I should set aside 10% of my income to savings. (?)

Advice I have received: One of my relatives uses their credit card to pay medical bills. If I did this I might be able to get out of the whole collections thing, but then I would be paying interest on those bills, so I guess I would rather not pay the interest even though having some of this medical debt seems to be hurting my credit. (By the way, I have contacted these collection agencies and try to work things out with them but some of them want unreasonable amounts each month.)

One last thing...I am considering going back into school, but I am just to the point of being disgusted with adding any more student loan debt, and would prefer if there was a way to pay for school as I go. I was a music major...

Any advice will be helpful. Thanks!
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  #2  
Old 11-17-2010, 12:45 AM
cjscully cjscully is offline
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Default Re: Establishing my new Budget

You should start by listing out and tracking your expenses. Are you living at home? How much for gas, insurance and maintenance on your car? food? etc. It's much easier to work out what to do with the debt once you have the complete picture.
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Old 11-17-2010, 08:55 PM
musicman musicman is offline
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Default Re: Establishing my new Budget

I live at home and pay no rent. My car insurance is about $135.00 for three months. Gas probably runs about $20-30 a week. Food...I don't pay for except when I eat out and I do that several times a week so maybe $10-20 for food each week. I change oil maybe twice a year and that's like $20-30.

That's about it.
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Old 11-22-2010, 02:55 PM
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Mr Nice Guy Mr Nice Guy is offline
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Default Re: Establishing my new Budget

Good luck sounds like you have your head screwed on tight.

-Think about paying the higher interest debts off first if possible
-Also, think about re-opening a credit card, and being RESPONSIBLE with it. Revolving credit plays a big part in figuring your credit score.

If you have Windows operating system, Microsoft Excel has an EXCELLENT template for a budget spreadsheet. Learn it, Customize it to your needs, and make sure to add a shortcut to your budget file on your desktop, so you have to look at it all the time!!!!!
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Old 11-22-2010, 06:42 PM
musicman musicman is offline
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Default Re: Establishing my new Budget

Quote:
Originally Posted by Mr Nice Guy View Post
Good luck sounds like you have your head screwed on tight.

-Think about paying the higher interest debts off first if possible
-Also, think about re-opening a credit card, and being RESPONSIBLE with it. Revolving credit plays a big part in figuring your credit score.

If you have Windows operating system, Microsoft Excel has an EXCELLENT template for a budget spreadsheet. Learn it, Customize it to your needs, and make sure to add a shortcut to your budget file on your desktop, so you have to look at it all the time!!!!!
Thanks for the advice...I do have Microsoft Excel so I will look into that.

As for the credit card I am kind of torn between. I think I can be responsible with it, but I think I end up spending more than I really need with it. What about getting one and locking it it up somewhere aside from my wallet? Maybe use it once a month or something?

The only bill with interest is my student loan.
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Old 11-22-2010, 07:20 PM
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Mr Nice Guy Mr Nice Guy is offline
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Default Re: Establishing my new Budget

Yeah at least use it once a month to buy gas or groceries, but some experts say you should use it even more than that. Something like 20%-30% of the limit i have heard???? But don't quote me. I also know that it is safer to carry around a credit card as opposed to a debit, because in the event of a theft, the bank will have an easier time reimbursing you than with debit.

Keep it locked up if you don't trust yourself, but the fact that you care enough to even have the foresight to keep it out of your reach tells me you are responsible. Try and think of it as a credit building tool, more than a piece of plastic that has currency connected to it.
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Old 11-22-2010, 11:12 PM
musicman musicman is offline
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Default Re: Establishing my new Budget

Is it really necessary though? My aunt told me that you can build credit in many different ways. Like paying your rent/mortgage on time or car payments, etc. She seems to think that it is really a matter of what we have been told and not what REALLY is. We have been per-say "brain washed" to believe that we need a credit card to build credit.

Sorry, I'm not trying to fight you.
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Old 11-22-2010, 11:32 PM
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DavidBibby DavidBibby is offline
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Default Re: Establishing my new Budget

Music man.. you do not NEED a credit card to build credit. You can build credit with ANY type of loan, secured or unsecured, including your mortgage.

Your credit score is comprised of many factors. The types of credit used is a small portion of the total information needed to calculate your score. The better indicators is your payment history on the loans you DO have.. and the age of your accounts.

Here's the breakdown of the factors used to calculate your score:

35% Payment History - having no late payments keeps this part of your score high.

30% Debt Ratio - This is the amount you owe vs your maximum available credit. You are hurting yourself if you are near max on your credit cards or other revolving credit accounts

15% Credit Length - People who are constantly switching cards and closing accounts hurt their score. Having a couple of credit cards that remain open for a LONG time helps.

10% New Debt - Your score actually lowers a little bit when you open a new credit account.

10% Types of Credit - Having multiple types of credit, such as installment loans, credit cards, a mortgage, etc. shows that you are trusted by more than one type of lender. This is a SMALL percentage of the score, so one should not take on unnecessary loans just to raise their score a little bit.

There you have it. You don't need a credit card to build your credit and have a better score. They are convenient to have, but can lead you into trouble if you allow it.

I personally, don't have any credit cards and don't plan to ever have one again.

I will deal with the potential hassles having a debit card. It reminds me that I want to use my money differently than everyone else.

Good Luck!
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Old 11-23-2010, 02:43 AM
musicman musicman is offline
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Default Re: Establishing my new Budget

Thanks for the information. So by ANY loan...that would entail the student loan, too? That's really the only loan I have at the moment besides a personal loan to my sister for my car...which probably won't do anything for my credit...lol

Also, I guess the whole credit length would be a problem for me. lol I am 23 and have already had like 3-4 credit cards which I have used, paid off, and closed. The longest I kept one is probably a year. So I have this feeling I might be denied if I apply for a new one, or that it would not be smart.
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Old 11-23-2010, 12:43 PM
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Mr Nice Guy Mr Nice Guy is offline
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Default Re: Establishing my new Budget

Well if I where you I would try and secure a credit card. It looks like that will be your only way to gain credit at the moment. I am in your exact same shoes. Car paid off, no rent. There is no way I am in a position to take on any liabilities yet, nor would I want to unless I have assets doing the work. That leaves a credit card to build my credit...
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Old 11-23-2010, 02:20 PM
musicman musicman is offline
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Default Re: Establishing my new Budget

Well, I just tried to apply for one and got denied because I have 2 medical bills in collections.
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Old 11-23-2010, 02:35 PM
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DavidBibby DavidBibby is offline
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Default Re: Establishing my new Budget

Ah.. that is unfortunate...

It will be hard to build credit until those negative marks are gone.

Are the medical bills something that you can take care of quickly? Or are they huge sums that would take a decade or two?
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Old 11-24-2010, 12:17 AM
musicman musicman is offline
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Default Re: Establishing my new Budget

They total about $1500. Which isn't bad compared to how some people have it, but the good news is that it is going no where but down since I am not seeing any doctors or anything recently.

Depending on how much I can contribute I might be able to get rid of it in a year or two.
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  #14  
Old 11-24-2010, 04:13 PM
cjscully cjscully is offline
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Default Re: Establishing my new Budget

In terms of getting out of debt while also rebuilding credit I would suggest making the payment of your collections the priority in your budget. Focus on the oldest medical bill first, get it paid off, then the next, then the next.
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Old 11-24-2010, 08:50 PM
musicman musicman is offline
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Default Re: Establishing my new Budget

My newest medical bills are actually the ones in collections...lol. The other ones have been very patient and accept the monthly payments where as the others demand the full amount at once. But they get what I can give them.
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