The debt collectors have stopped harassing me about $25,000 that I owe, but how can I control my money?

Dear Dave,

I lost my job a few years ago. As a result, I ended up with about $25,000 in credit card debt and a consolidation loan. Now I have a great job that pays me more than ever before, plus a car loan of about $13,000. Older debts have gone to collections, but I’m not hassled by collectors at this point. I want to take control of my money and do things right, so how do I manage things?


Dear Mike,

Well, being bullied isn’t the problem. Morally, you owe money. You took money under agreements that you would pay it back, which means you have to pay it – both old and new debts.

I would start by running two debt snowballs. Let’s do one for the car and any other active debt you have first since collectors don’t sue you about the old dead debt. Then, from smallest to largest, start eliminating the debt that is in collection. As for these guys, contact them and get a written agreement detailing exactly how much you owe and monthly payment amounts. Remember, don’t give any of these people direct access to your bank accounts.

There is no advantage in not paying what you owe. It’s a matter of integrity, it’s a matter of law and it’s a matter of credit. Did I mention it’s an integrity issue, Mike?

You want this stuff out of your life. If you don’t take care of it, I guarantee it will come back to haunt you somewhere down the road!

— Dave