Haven't paid anything yet. They would get a percentage (5%) of each payment made in the plan. I'll follow your advice and try myself before committing to them.

My credit limit on the USAA card is $7500. I don't think they would approve a limit increase under the circumstances, but I can always try.

So they are raising your rates on USAA (9%) and lower your interest 5% on Chase, then adding 5% in fees? I'm not even going to count your other cards because the balances are so low you can roll them into your existing cards if you wanted (Chase and a little bit in USAA). Call Chase to lower their rates, if you can get them to lower it even 1% you are better off than going with these credit counselors. If they can do it, you can do it. You were a lawyer, negotiate!

Here's a list of cards with 0% APR on balance transfers for up to 12 months. The caveat is that you must never use CC again and pay cash for everything, or else more cards will just add to the problem.

No, the USAA card wasn't part of the deal, but I see your point. Hey, if we were financially smart, we never would have gotten into this mess in the first place.

And there was a reason I was let go from my job as a lawyer . . . I sucked at it (I gave in to everything).

Oops. Forgot the link http://www.creditcardguide.com/balance-transfer.html

Much better..thanks.
I don't know that a USAA limit increase would be the right choice, but when you call, ask them if it's allowed to go over your limit if you're transferring other balances. Let them know EXACTLY how much you're transferring (Paypal, Lane Bryant), and maybe they will make an allowance for you.

I've heard bad things about those credit counseling places. A lot of times, you pay them on time, and they don't pay the creditors on time and the costs continue to escalate.

Now that you've got your credit in place, you have GOT to stop using your cards. Nothing is ever going to get better if you keep charging. Put your cards in ice, or cut them up, and let your wife know that she is no longer allowed to shop at Lane Bryant or anywhere else. Your happiness will be talking to each other, watching tv. and playing with the kid at the park. I hope you guys like whatever it is you bought with credit.

The bank service fee, not the overdraft protection, is also a little weird. Why do you have that?

Sell your things on Craigslist. It's free and fast, and people in your neighborhood will scarf it right up if it's worth anything. You need to start bringing in some extra income. If you know where you're going to travel, post on Craigslist in that area, and sell some stuff while you're on the road. Sell the baby clothes that your wife has been hanging on to (?). SELL EVERYTHING YOU CAN and get a small emergency fund together. Even if it's 500 dollars, it's better to have something than nothing.

It's just required with the type of account we have. I don't believe in paying a bank for the "privilege" of banking with them, so I'm shopping for a free checking account. (I just took over being in charge of the finances from my wife).

Although changing the direct deposits and automatic drafts we have will be a pain, it will be worth it to save $10 a month.

It definitely never hurts to call your cc's to ask for lower rates. Counseling services have no more 'pull' with card companies than you do. The thing most people don't realize is that most cc's dont have the ability to just 'punch-in' a new APR for you. The software the cc's use will determine whether your account qualifies for a lowered rate and there is really no 'negotiation' invloved, it's either yes or no. Now if they CAN lower your rate be sure to ask if the offered rate is the lowest possible they have. They may be seeing a list of lowered rates but will initially offer you the highest of those numbers so here's is where negotiation comes in.

For example, your Chase is at 11.9 so when you call and ask for a lower rate, they will go into a rate maintenance screen and tell you if a lower rate can be offered or not. If there is, they will possibly be looking at a list of avilable rates, say, 10.9, 9.9 and 8.9, but they are going to offer you 10.9 so if you don't ask if the offer is for the lowest available they don't just give it to you.

You may want go start using something like Quicken. This will track ever dollar coming in and going out and give you a breakdown in %'s. No offense meant but when you 'forget' about listing $500 on a tight budget and on others 'don't know balances' then you need a little help disciplining yourself on your budget and where the money is going...again don't take offense to that.

You really need to find a solution to the car notes. Getting rid of at least one of those would let you get the cc's taken care of that much faster. To be upside down on TWO cars when you have more going out than coming in is REALLY bad. Is there public transportation where you are, or someway for your wife to carpool since you have to travel?

While the daycare isn't as expensive as I've seen others, do either of your jobs offer services, or have discounted rates anywhere else? Are the grandparents nearby and maybe willing to be a 'temporary day care' for a few months while you get rid of other monthly expenses?

It all boils down to the fact that if you can't get more money coming in you HAVE to cut expenses somewhere. Selling things doesnt change your income (it just gives you a one time cash influx) nor does it change your expenses unless you have enough stuff to sell to pay off ALL of the cc's or both of the car's) because without doing that you'll still have the same bills every month.

I don't have a whole lot of advice for you. As others have said you need to increase income or decrease expenses or both.

(1) I would cut out any expense that is not survival related (cable, DirecTV, etc.)
(2) Can you become a one car family?
(3) Can you take in a tenant in your home?
(4) I would sell anything and everything that is not survival related. Post on craigslist, EBay and hole a yard sale once a month. Put that money into your emergency fund.
(5) Child support normally comes before other debt and depending on the state you live in your expenses might not matter when child support is calculated. But, I would look into whether or not your child support is calculated correctly. http://www.alllaw.com/calculators/childsupport/.
(6) Cut up the credit cards. You can't get out of debt if you keep adding debt.

unless this credit counseling service is free I don't think you should use it.

I listen to the Dave Ramsey show and people who call in always expose a scam, but then again folks who call into his show are facing financial difficulties so I guess I shouldn't expect to here the story of the couple who went to the credit counseling agency and got out of debt without paying thousands of $.

instead of living in denial, you've identified the problem, the solution may not be in sight but it's coming

Good luck

TJ -

I know what it's like to be in your shoes. I came here some 7 (?) months ago with a very similar story - $4k in bills on $3200 in income, roughly. And my credit card debt is on the order of $30k, to boot.

The people here will give you tough love, but it will work. Thanks to much of the advice I was given, I was able to cut my bills way back, such that now, only a few months later, I actually spend less than I earn when comparing the paychecks to the actual bills - groceries and fuel and other living expenses still have a little bit of difficulty staying on-budget, but I have savings to help cushion now - and I have room to breathe.

They will tell you to cut out luxuries - but it need not be crippling or permanent.

- I cut my Netflix way back to the $5 plan and my GF pays for it, for instance.
- I called DirecTV and negotiated my way to a monthly discount - I was prepared to cancel but my family (GF and 5-y-o) protested.
- I shopped around for auto insurance and saved a bunch there. (AIG Direct)
- I suspended my landline phone temporarily, and found I don't need it at all!
- I spent a few bucks to outfit my house with CFLs and a programmable thermostat; as a result I use 2-300 fewer kWh each month than the same months in 2007
- I changed almost all my banking to ING Direct - your wife may be wary, but it's got the best reputation as far as I know of online banks, and every account you have will make interest, even the checking. Plus, no overdraft fees - any overdraft becomes a small, short term loan, and you pay the interest on your next statement cycle after a deposit brings the balance back above board.

I agree with the credit counseling statements here - they're taking 5% off the top, which is money you could just as easily have sent to the creditors directly - the "rate negotiation" they claim is the same as you making your own phone call. Don't do it, you're paying somebody else's bills in addition to your own if you do.

I also agree with keeping track of your money. Even when I was still in the red every month, for the past couple years I got out of the paycheck-to-paycheck routine by doing things like dedicating a savings account to hold all my bill-pay money until the 1st of the month (so it wasn't spendable readily in checking), and keeping myself a spreadsheet and checking all my accounts at least every few days. I also kept an electronic checking account register in my PDA. (Don't have the PDA anymore, but I still check the accounts several times a week.)

Good luck to you!!!
Dave

Awww, Dave..You've learned so much. *sniff*

This is what I love to see. Everyone passing on what they have learned to the next person.

^5, dude.

I'll ditto the recommendation to shop around for car insurance. I hate sounding like their ad, but I switched to Geico and my annual insurance dropped from $1720 to $880, keeping all the coverages steady. There are plenty of online search sites that will let you compare multiple companies at 1am.

We have also cut out our cell phone (it might be possible to cut the home phone instead, since you have a deal through your wife's job) and really haven't missed it. We might join a family plan with my sister if we decide we need it again as more of a for-emergencies use. We switched our home phone company and dropped caller-id and voice mail (we have an answering machine) and that saved $18/month.