Consolidating Plan vs. Debt Management Plan

What a week of financial headaches!
Last week, I mentioned taking the route of consolidating my debts.
I decided to go a different route and instead, sign up with a company that helps create a debt management plan.
The reason for that is because the agent that I spoke with about consolidating debt was that ALL of my debts would have had to be calculated for the loan.
The goal is to build my credit score and I’m always hearing different things about how to build it and I wanted to keep control of my payments rather than going through them to pay all my debts off and then paying them only.

I’m not sure if that makes sense but I mostly wanted help with my loan payments and by signing up with a debt management company, I was able to do exactly that.

But going that route had it’s own set of learning curves.
As I was finalizing my plans there were a few things that I learned:

You have to call the individual loan companies to cancel your automatic payments.
When you do that, they no longer work with you but through another third party company.
This means that if you miss a payment, they won’t be the ones working with you but the third party collections agency will.

From my experience, most loan companies will work with you whether it’s pushing your due date back, giving you a lower interest rate, deferring a payment, etc.

Not only do you lose their customer service but you also lose your business with them. Meaning if you hit another financial snag and need a loan, you can’t loan from them again.

The lady I spoke to with one of the loan companies I borrowed from also said it’s similar to filing bankruptcy because you’re paying such a low balance (for example, $10 month) for a longer period of time.

So I went back to my notebook and crunched some numbers again.

Initially, these were the loan companies I had added to my debt management plan:
Advance America
Check into Cash
Speedy Cash
Money Tree
LendGreen
Golden Valley Lending
Blue Trust Loans
AmerAssist

(I know.. it’s a lot >.< )

After what I’ve learned, I revised it to just these three:
Golden Valley Lending
Blue Trust Loans
AmerAssist

The reason is because Golden Valley Lending and Blue Trust Loans has ridiculously high interest rates and I don’t mind not being able to loan from them again.
Like seriously, grateful for the loan equivalent of a cock block.
The amount they offer is seductive but I always regret it in the long run so I’m fine with cutting ties.

With AmerAssist, the pay off amount is high. I don’t believe there is an interest rate and I got to set my own payment plan but I figured I’ll just add it to the debt management plan (DMP).

With my initial plan, it was $699/month. I admit I was sort of hesitant to go with it but it was lower than what it would have been if I paid all my loan payments separately.

After adjusting to just the three that I mentioned, my monthly payment is now $353/month with the last payment date being February 2022- much more doable and less anxiety-inducing.
I am also able to pay more than the amount due without any fees or penalties so that is also a relief because I plan on putting in some extra fund when I do have them into the plan.

So what about my other loan payments?

I have budgeted enough for the month of December to get by for those payments.
Money Tree
I skipped a payment in November for Money Tree (with their approval so there’s no late fee or anything) and paying both November and December this month.
After that, I have one more payment left – no reason to cut ties with them by putting them through a debt management plan, especially if I need to borrow from them again.
Their interest rate is reasonable and I get a decent amount from them.

Check into Cash
Same thing here as Money Tree. I also recently refinanced with them so my payments are lower as well so the payments are doable but I do have about 4-6 months before I am done paying them off.

Speedy Cash
Speedy Cash lets you borrow up to $500. I took my child support off as a source of income so I only qualify for $200 but the payment is low and the interest rate is reasonable. I also have a couple more payments to go with this company.

Advance America
I qualify for the most with this place and the payment plan is not bad at all.
Interest rate is pretty low for the amount that I am borrowing. I had a few payments left before this was paid off as well but I got it refinanced – November was a tough month.

LendGreen
LendGreen is a loan company I wouldn’t mind cutting ties with either. You get a large amount to loan but the interest rate is high. I would say it’s not as bad as Golden Valley or Blue Trust Loans but it’s right behind them.
I was tempted to add them to the debt management plan but I am two payments away from paying them off and there is no need to extend my payments any longer than necessary by paying less through the debt management plan.

The Game Plan

The pay off amount for Money Tree and Speedy Cash are reasonable (ranges from $150-$250) so ideally, I’d like to pay them off in December by driving for Lyft.
After paying them off, I want to implement Dave Ramsey’s snowball effect and pay off Check into Cash by January.

After that, I have Advance America and LendGreen to worry about but by then, LendGreen will be paid off in February anyway and I’m not sure what I would owe Advance America during that time so it’s something to revisit in February.

I could technically implement the snowball effect into my debt management plan since there is no penalty for more than the minimum amount but I live on a paycheck to being-in-the-negative-until-my-next-paycheck basis and I don’t really like driving for Lyft more than I have to so I kind of want to just cruise along with my payments there on.

I’ll only pay extra if I get extra money or if I had the motivation to drive for Lyft.

But what about your credit card debt?

Because I am trying to build my credit, I did not want to include my credit card debt into my debt management plan. Paying them through a debt management program, I’ve learned, does not help your credit score. Like I said in the beginning of this post, you are paying less than the minimum amount due and it’s similar to filing for bankruptcy in that sense. No thanks.

I’ll keep my credit card debt and chip away at them and raise my credit score.

On that note, that was my experience with setting up a debt management plan, what I’ve learned about consolidating debt, signing up with a debt management plan, and what my thought processes were as I was setting mine up.

I hope this was helpful to anyone who was thinking about getting a debt management plan!

Financial Tracking for the Week of December 1st, 2019

Blegh.
I always dread the first week of any month because it’s time to pay rent.

I cheat the system

Here’s the sad truth – I never have enough to pay rent.
Rent is due on the first (at the latest, the third) but I get paid on the tenth.
Since I don’t make a lot of money to begin with, I never have enough for it.
Not to mention the fact that my hours cut so it makes things even harder.

So how do I pay rent? I put myself at a negative. I make sure I have some money in my account (I usually do) and use that to pay rent. But I can’t do partial payments so I pay the whole $1200 ish and I’m at around -$900 until I get paid.

Estimations for the week:

Monday 2nd:

  • Wells Fargo Payment: $63

Tuesday 3rd:

  • Rent: $1135

What I have in my account:
$348

At this point, I don’t due further calculations.
It’s just a risky waiting game hoping that I didn’t forget any other bills or payments.
For the most part, I’m on top of things, but I’m human and sometimes, I forget one or two things.

Estimated pay that I will be receiving is $1600 but I also have lots of payments going through on the day I get paid (that’s how most personal loan payments work – they are automatically withdrawn on your payday).

Ideally, if I was smart and not lazy, I would drive for Lyft just to help myself financially but I don’t like driving for Lyft unless I absolutely HAVE to.

Anyhow, that is all for now!

Financial Tracking for the week of November 24, 2019

I find it sad (on my part) that my debt has become so severe that I have to look at what payments whether it’s for loans, credit cards, or bills, are coming up each week and having to plan for it to ensure that I’ll have the funds for it…. otherwise I wont.

This upcoming last week of November is kind of a breath of relief because it doesn’t tail off into December, which means I don’t have to factor in rent and other “beginning of the month” payments..at least not yet.

This is how my week is going to look financially:

Sunday 24th:

  • Speedy Cash: $86
  • AmerAssist: $150

Monday 25th:

  • Golden Valley Lending: $699
  • Blue Trust Loans: $525
  • Advance America: $300
  • Plasma donation: $32

Thursday 28th:

  • xcel bill: $114
  • car payment: $361 (x) – will not be paid on time
  • Plasma donation: $45

Friday 29th:

  • Lyft goal: $200

Total needed for this weekend:
$1,410

Total coming in:
$902 (does not include Lyft amount because it’s variable)
What I have in my account:
$597
How much I need for the week:
$0
What I will have left over:
$125

So here’s the sad deal.
I already applied for a new loan yesterday and qualified for $525 to help cover Monday’s payments.
I also plan on refinancing an already existing loan on Monday and they said that I’ll be able to receive $300. I plan on using that to pay off another loan in full because the interest rate is higher.
But if I’m going to do that, I’m going to have to pay my car payment late.

The reason why I am choosing to go this route is because I had asked to defer the payment for this particular loan. Different loan companies have different rules. Some will add a month to the end so everything is just pushed a month back, some don’t. This particular loan company adds your payment to the next which would come out to $350 on my end with two more payments to go. The current payoff amount for this loan is $295.

When I weight it out..$350 payment + 2 more payments (and pay my car payment) of $116 OR pay it off in the amount of $295 and use the otherwise $350 payment towards my car payment…?
I choose the latter.

I am also going to call someone that I had connected with on Saturday to consolidate some of the personal loan debt that I have.

I don’t know too much about consolidating debt and wondering if it’s a good idea or not.
The plan that he gave me is definitely a lot more doable than the payments that I would make individually so I’m leaning towards the side of signing up for the service.

But we’ll see.

Oh, and because I’m aiming to buy a house in 3-6 months, I am also working on building my credit (minimum 620, ideally 725).

Currently, it is 614 (when I first started, it was 512).
For the month of December, I want to bring it up to 635 by paying $230 on one credit card and $45 on another (recommended plan by a service I had signed up for).
That is an additional $275 that I need to factor in.

Anywyho, that is all for now.
Have you guys tried consolidating your debt? Did it help you? What was your experience like?

Peace and Love, Fam! ❤

Why I’m Blogging This

Between growing up with a diary, falling in love with journaling, sharing my weight loss journey (and starting over) on social media, and making YouTube videos for fun, I think I’ve gotten to appreciate documenting any type of journey and being able to see progress is motivation in itself.

Growing up, my family didn’t have much. After getting pregnant at 19 and rushing marriage, my 20’s was living a lifestyle of low-income.
And here I am, entering my 30’s, divorced, single, raising two kids in a state that’s high in cost of living, I’m barely making it, or a term that I learned in one of my classes – living in absolute deprivation. At least that’s what it feels like.

The stupid part? I made it harder on myself because I wanted a quick fix.
Because I couldn’t afford rent, food, gas for my car, bills… I pulled personal loans.
Which means I created more payments to keep up with that I couldn’t afford to pay in the first place.

That led to working odd jobs on top of my regular job, pulling more loans, putting most, if not all, of my tax refund towards debt – it got old.

We all reach our breaking point and I’ve reached mine.

Tired of living paycheck to not even the next paycheck.
Tired of sacrificing time with my kids, my weekends, my free time trying to make money just to scrape by.

I already know that the beginning of any journey is the hardest and there’s a lot of obstacles to get over but I have big financial goals from buying a house to being able to put my kids in extracurricular activities, having emergency funds, being able to travel, and paying it forward.

I want to document my journey for accountability, tracking, reflecting, and sharing with others what’s been working for me and what hasn’t been.

On that note, I hope that this blog will be both enlightening and inspiring.

Peace and Love, Fam ❤

The Journey Begins

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton

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