Okay, at this point we have our basic utilities and two car payments that we are paying on--unfortunately after my husbands layoff a year ago most of our accounts are in collections.

I checked my credit and it's horrible- Question:

The book says to start with the EF/ Then the snowball--
Do I line up all bills incuding the ones in collections
or do I concentrate on paying off my two cars first-- I owe $3000 on one and $12000 on another.

I also have student loans--

Thanks! Claudia~

You should start off with your EF, this helps when emergencies occur and you need this money, such as a layoff from work as you mentioned has already happened, then snowball debt... If I were you I would call the creditors whose accounts are in collections and ask them to work with you and to possibly change their derogitory mark on your credit report.

Most credit companies will work with you because they want ALL their money owed and not some or even none, I would make this a priority.

If it were me I would start with the debts in collections (make sure you call them) to pay off first then go down the line to the next and so on, then finish with the car payments, time will fly by and without you even realizing debts will be out of the way.

I am sure others will have great and different advice but I "personally" am CC/debt free except for a mortgage and all this from paying down CC/Car Loan debt and sticking to it.

I agree with Tracy. $1000 in a basic emergency fund, then debts including the ones in collections. I would include the cars wherever they fit in that debt list, unless they just need to be sold or whatever.

It's funny you should ask this as I was listening to Dave today. This very thing came up... . He said to concentrate on the household bills first, keep them current and then take the others 1 by 1 (that are in collections, whatever is most pressing) and concentrate on that one. If you have some that are not so "hot" anymore worry about them last. You can notify all creditors to "cease and desist" (google it and find a form to fill out and mail to them) it's legal and they have to stop hounding you by phone. That will cut you some emotional slack. But do the EF first and foremost, move onto the debts and get things settled down as soon as possible. :hugz: You're not alone in this and you can tame this tiger ;)

I agree with what everyone is saying. get your EF going, start with things that effect you day to day life, like utilities and stuff get everything on track and when you are ready to pay, collections people will happliy setup a set monthly payment you can afford, this is how i did it a couple years ago when i had alot of things in collections. dont worry so much about it being on your credit report, i sitll have some collections listed on mine but they all say paid in full or settled and my score is not wonderful but is high enough that i can get credit with no problem.

Thanks! I listed all my debt and now I have an idea of how much I owe. I don't know if I will ever be brave enough to list it. I want to purchase my first home by 2008. I have a $500 cd that will mature next month- I think I'm just going to use it to start my EF. What do all think?