Counseling and bad credit

Question: Our credit score is in the mid-400s. We are in debt for $5,500 at payday loan stores; we stopped making the payments since we got behind our other bills. We live paycheck-to-paycheck, have no savings and don't have much left over each month. We don’t eat out and movies are once a year. We got our Nissan Xterra in August. We’d like to sell it, but no one would buy it with $18,500 balance.


Answer: Run, don't walk, to the nearest Consumer Credit Counseling / Money Management International office, MoneyManagement.org, 866-889-9347. You need a team to help you evaluate your living expenses and negotiate with your creditors.

Please don't be offended, but it sounds like no one has ever taken time to show you how to manage your money or make carefully planned financial decisions. You're not alone; many people are in the same boat. You need to start making decisions based less on emotion and more on research and the money you have on hand.

People don't realize the advantages of communicating with their landlords or other creditors, whose penalties and extra interest charges generally are a small fraction of what payday lenders charge.

For additional tips, read our first book America's Cheapest Family Gets You Right on the Money (check it out from the library); — we wrote it for people who want to start controlling their money rather than their money controlling them.