When I was young and stupid, I accumulated more than $100,000 in unsecured credit card debt.
I didn't get into that mess overnight. It took me 12 years and myriad terrible financial mistakes to do it and, in the process, nearly ruin my life.
During the 13 years it took to get out of the mess (I paid back every nickel with no concessions, settlements, negotiations — or bankruptcy), I learned how important it is to deal with mistakes as they happen so they don't turn into major setbacks.
Here are the big mistakes I hear about most often.
It seemed like a swell idea to buy the right to stay at a resort for a week each year for the rest of your life. But now the monthly payments, maintenance costs and property taxes are killing you, and you haven't been back since. You need to unload this, but how?
There are reputable online listing sites, such as RedWeek.com or Tug2.com, where you can pay anywhere from $60 to $550 to list your property. Or you may be able to get out of your timeshare contract altogether by hiring Timeshare Exit Team to dissolve your contract.
Monster auto loan
All you really wanted was an oil change. Instead, you left in a brand-new $58,000 luxury car — together with 72 monthly payments, or worse, a lease. How did that happen?
Whether you've made payments for a few months or a couple of years, it's likely the car is worth less than you owe. That complicates matters. Still, you may have options: refinance, possibly at a lower rate, or sell.
If your car is a late model with fewer than 80,000 miles, you might be able to refinance at a lower rate. Call your credit union or bank, or apply online at sites like Capital One Auto Finance and rateGenius.
If you owe more than the car is worth, you may have to get a loan for the difference so you can transfer the title to a new buyer. But you'll trade a huge car payment for a smaller payment that you'll be able to pay off quickly.
You should have held out for a month-to-month membership, but you signed a three-year deal. Now you have to live with it. Or maybe not.
Read your contract carefully. Look for a cancellation clause or an exit fee. Compare that to the cost of your monthly fee times the number of months that remain. It may be cheaper to pay the exit fee now and stop the bleeding.
Most gym contracts allow you to cancel if you move out of the area, get pregnant or have a serious medical condition.
Home equity loan
It seemed like a great idea to tap the equity in your home to pay off debt, make home improvements or even take the kids to Disney World. But now you're stuck with big payments on this home equity loan (HEL) with adjustable interest rate for the next decade — at least. Ouch!
The damage is done. You're in it now, and the sooner you can get of the HEL the better. Consider doubling up on the payment, if you can. Keep your eyes on the rates and your home's market value. You may be able to refinance your current mortgage and the HEL together into a new mortgage with a much lower rate.
A wonderful forum on the internet may have just the information you need to fix your problem. Go to the National Federation for Credit Counseling website and get started online. Or call 800-388-2227. The NFCC is the credit counseling organization that I trust and recommend. If anyone can help you with this huge problem, these folks can. You can trust them. It's worth checking it out.
The secret to nearly all money mistakes is to quickly face up to the faux pas; fix it; learn the lesson; and then go on — wiser and, hopefully, not poorer for the experience.