I ruined my credit, now what?

Hello! My name is Michael. I am married with 2 kids. I have a lot of back debt and I don't know where to even start paying it off. I don't make that much. About $19 an hour and I messed up my credit when I was in my 20's and fought it in my thirties. I am 41 now. I need a plan that involves putting my debt all in one pot and paying one payment or something. I don't even know who all I owe. I also do not have a retirement plan... or savings. My wife is at the moment looking for work so I am the only breadwinner here. It's been rough... I just need direction to get my credit back in order and better my family's situation. Thanks!

Hello Michael and thank you for your question.

There are a lot of people in your position, trying to clear up past debts and improve their credit. I think you should get a copy of all three of your credit reports to see what is out there and make sure that you know everything that you owe.

You also said you wanted to make one payment. I would not advise doing a consolidation loan if you can help it and do not use one of those debt services that promise to handle your debt payments for you.

Sit down and figure out how much you can afford to pay. Then start making phone calls. If you have creditors that you have not paid in a while, they may be willing to work out a settlement with you. For example, if you can afford to do a payment of $500.00 per month for everything and you have five bills, then try to pay each bill $100.00 per month so you are still within what you can afford.

So here it is:

>Get a copy of all three credit reports so you can find out what you owe.

>Figure out what you can afford to pay toward this debt every month.

>Start calling the creditors and work out a payment plan with them that you can afford.

Also, when your wife finds a job (fingers crossed!) a portion of that money can go towards the debt as well and if you are getting a tax refund this year that is a great way to jump start debt reduction because you will have a lump sum that you can use to set up payment plans.

Understand that this will be a process and that it will take time, but it will be worth it. Being debt free and having good credit are the best steps that you can take for your family. After this is completed, the money that you were putting towards the debt, immediately start putting in a savings account for a rainy day.

The best thing that you can do is start saving money after the debt is cleared up and see if your job has any sort of retirement plan that you can start investing in now.