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| Fri, 02-13-2009 - 10:40am |
Hello!!!
I need help from a financial counselor, but I cannot afford to pay for one, so I am trying to figure out what to do....I am currently in debt for about 8K with credit cards I have HORRIBLE credit and I just

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Here are some suggested steps:
1. Pay for your housing first - rent
2.
The good news is that you don't need a financial counselor to do this at all. It would be a waste of money. You can get the information from lots of free resources:
1. Here: You will get tons of ideas if you either read other people's posts and the responses or if you would like, you can share some more details and folks here will help you gather a plan. The information that is most helpful if you feel comfortable sharing it is information about your income and then information about your fixed expenses (housing, auto, insurance, things that cost the same month to month and are must haves), variable expenses (food, gas, entertainment, gifts, things that can vary and you have more choice about) and then your debt (balances, min payment, interest rates and any sort of special information like if you have a temporary rate). If you want to share a bit about why you believe your credit to be so bad, there might be ideas of how to clean it up but likely it's just going to take time but the sooner you start the clock, the sooner you can get it fixed.
2. Books: There are 1/2 dozen or more authors that write on debt reduction and their books are available at the library. Dave Ramsey has a plan that might work nicely for you but is pretty 'all-or-none' for me. Many, many people on this board have used it successfully but he does recommend some things, like closing credit card accounts, that can have a short term detriment to your credit rating. David Bach is a more moderate view in my opinion. Suze Orman is particularly focused on women and FICO scores so that might be a good fit. I would recommend reading one or more of them and getting a basic understanding of the issues. You don't have to do any one program in it's entirety. Different things work in different circumstances.
3. Blogs: There are personal finance blogs all over the internet. You might enjoy Debt Hater because she is around your age: http://debthater.typepad.com/debt_hater/ She's out of debt but her old posts are really quite good and she continues to figure out how to spend her money. No Credit Needed is great at boiling down Ramsey's message and has lots of good step by step stuff. http://www.ncnblog.com/ He has an extensive blogroll and you could spend some time surfing those to see if someone has a particularly compelling message for you.
As far as your windfall, here are what my priorities would be:
1. Bring all accounts current. This is the first step to improving your credit score. The month you first bring them all current is the first month of the clock ticking to the end of bad stuff on your report. You have to keep everything current.
2. If you think for any reason you will not have enough income in the coming months to keep all accounts current, save back as much of the $2k as you can to keep things current in light months.
3. If you have $0 savings, I would consider putting at least $500 and maybe $1k in the bank. This sort of depends on what you can use your crystal ball to figure out what's coming down the pike in terms of expenses. Look ahead...do you have auto expenses coming up? Home repairs? Anything like that, should be saved for from this windfall unless you have another plan to pay for them.
4. If the above are all taken care of, I'd pick a card (either lowest balance or highest interest, I don't think it really matters) and apply extra funds to that.
Hope that helps!
Peg
Go to https://www.creditkarma.com/