Hello everyone,
I don't want to make this post long, but I feel context is important. I am 24 years old and I am now trying to take back my credit. Context: Growing up, I never got talked to about the importance of credit and having good credit (in school or at home). Credit was never a big thought to me until I started seeing people talk about the "glorious" life of luxury with credit cards. I fell victim to depression when starting college in 2020 aka the covid-19 period. Due to being a college student, no lucrative income besides side gigs. I turned to credit cards and pay-in-4s and all of those programs. The first year was great paying it off every month then I fell on bad times (mentally, financially and socially), started falling behind on payments.
To make a long story shorter, after all the late payments and trying to not drown I just gave up completely stopped paying the credit card bills to start paying new bills that I had since leaving college prematurely. Score went from the 600s to 510. In the 6 years, I have 3 collections (1 I managed to pay off), multiple late payments, student debt and credit cards that are maxed out. I have tried multiple credit builders and they have helped but with the weight of the negatives, the effects are muted. Now that I am older, all the things in life that requires good credit are facing me so I am ready to be aggressive and try to fight my way out of debt. (I will say this; I am actively trying to budget myself because my spending is not the best).
I make around 45k a year. My credit score is These are my debts that are on my credit:
Credit Cards:
card1 -$385
card2- $330
card3- $255
Collections: $1,003
collection1- $569
collection2- $434
Student Loans: $23,791
Personal Loans: $120
POS Loans: $536
Total Debt: $27,423
and like 10 late payments. Please help me!
24 with Bad Credit. Help Please!
byu/BunniBandz inpersonalfinance
Posted by BunniBandz
3 Comments
A monthly budget would be helpful to know how much float we are working with.
Generally paying the highest interest first is best, but you need to pay the late payments first to prevent there being new charge offs and stop the late payments accumulation.
Hey OP, sorry to hear about all of this. A couple of years ago I was around your level of debt and it felt like drowning, so I get how hard it is.
What you need to do is follow a system, take the emotions out of paying this off.
1. Start budgeting – you’re going to need to lock in and live as frugally as you can. Budget out your necessities.
2. Small emergency fund – Make sure you have a small emergency fund, at least to cover your OOP expenses for your highest insurance. Getting into medical debt from a freak accident during this will just make the situation spiral.
3. Get your employer match – This is free money, take it while you can. The ROI is probably higher than any of your debt interest rates.
4. SET AUTOPAY TO MINIMUM FOR ALL DEBTS – You need to be hitting this to prevent fees and keep your account in good standing
5. Snowball vs Avalanche debt payoff method – Either aggressively pay off the smallest (Snowball) or highest interest rate (Avalanche) debt first. Avalanche is mathematically a quicker way to do this, but snowball allows for little wins for your psyche.
After these, you need to consider ways to make more money. 45k a year is tough on a single income. Side gigs, going into trade apprenticeships, whatever it takes to upskill and earn more.
Good luck my man, you got this.
Its great that you are starting now.
There are a lot of people who never come to that realization. Id also like to say I’ve also been there, and dug my way out.
There is a snowball method people use to pay down debt, that I used and csn vouch for.
You start paying the minimums on every bill.
You find the smallest amount owed from it all, and you start to aggressively pay that off.
All of your extra money should be going to this one bill.
Once that bill is paid off, you can roll that payment you were making into the next smallest bill.
So on so forth.
It is an effective method if you are serious about paying them all off.