This week Gail announces the second set of 20 winners of a book on improving credit and reducing debt. Last week's winners are announced here:

Dear Friends,

I am overwhelmed by the hundreds of you who wrote in response to the two columns that appeared early this year and dealt with getting control over your debt. A main source for those columns was the book “Deal with Your Debt,” by Liz Pulliam-Westin.

I read every single email. Most were heart-felt pleas for advice on reducing debt and improving a battered credit rating. Many of you got into trouble because of unexpected medical bills. Others blamed a spouse (usually now an [ex]-spouse) who couldn’t control his/her spending. For a number of you, credit problems started in college and compounded at graduation when payments on your student loans kicked in. There were individuals whose dreams of owning her/his own business turned into financial nightmares.

For more on Debt, visit our Debt Management page.

The predominant emotion I sensed in your emails was one of despair. In letter after letter you described how hopeless and trapped you feel by the tremendous debt burden you have amassed. You used words like “struggle” and “stress.” Several individuals expressed frustration that, despite making an earnest attempt to reduce what they owe, they can’t seem to make any progress. Several of you have gone through bankruptcy—some more than once.

Clearly, the debt explosion in our society cuts all ages, affecting people ranging from their twenties to well into their retirement years—civilians and military personnel; men and women; all races and ethnic backgrounds.


I am grateful to the publisher for increasing to 40 the number of books we are able to give away. Half of you will receive “Deal with Your Debt,” and the remaining 20 will receive “Your Credit Score: How to Fix, Improve, and Protect the Three-Digit Number That Shapes Your Financial Future,” also by Pulliam-Westin. Please be patient; the books are being sent directly from the publisher.


Under federal law, every American is now entitled to a free copy of her/his credit report once every 12 months [from each of the three credit reporting companies]. Rather than order all three at the same time, consider spacing out your requests so that they are four months apart. The advantage is if there is a mistake or you’re the victim of identity theft, you might be able to catch it sooner.


There are dozens of websites that sound as if they are offering you a free credit report, but to be sure you won’t get sucked into paying for additional services, I recommend you use this link:
http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm. It will take you to the federal government’s website that explains how to obtain your credit report and includes a link to the absolutely free way to get this. Remember: you are under no obligation to buy anything from these providers!


Please note that this does not entitle you to a free copy of your credit “score.” That is something you have to pay for. Each of the credit agencies has its own formula for arriving at your credit rating. [Click here to read more about a recent agreement reached by the three major agencies to simplify the scoring system.] If you’re dying to know your FICO score, Pulliam-Westin recommends you visit www.myfico.com, where—for $45—you can order all three of your credit reports as well as learn the rating you have been assigned by each credit bureau.

If you feel as if you are drowning in debt, do yourself a favor and read the letter below. Rob is clearly someone who has “been there”—and then some. Despite two bankruptcies he is now debt-free and close to buying his own home. There is hope. You can do it.

Keep the faith,
Gail

Dear Ms. Buckner,
I am an active duty Naval Officer who has 45 people ranging from age 18 - 51 working for me. It seems a week or two doesn't go by when I don't have one of my sailors in my office with some kind of financial problem. After over 20 years in the Navy, I have seen many people retire and have nothing to show for their efforts, except a pile of bills which never seems to get smaller. The challenge though, is that each of these cases are different. Many times I help solve these problems with a dose of common sense or refer them to an expert. In all cases I remind the sailors that their failure to take care of their financial responsibilities will have a negative effect on their military career. Unfortunately, my expertise ends here.

If I am lucky enough to win one of these books I will use it to counsel the people who work for me. Additionally, I would utilize these books in the training sessions I periodically provide. I’d like to see these folks have something to show for their years of defending this great country.

Brent

Hi, Gail-
I am a U.S. Marine who was forced to retire early due to medical conditions. As I had expected to remain on active duty for several more years, my financial situation was not fully prepared. My wife and I are making payments on a home and two cars. We have accumulated $12,000 in credit card debt and student loans while I pursued a teaching degree.

As I am about to graduate and hopefully begin teaching. I’m looking for the guidance and strategies I need to quickly get out of debt.

Thank you,
Chris

Dear Gail,
My husband and I are trying to pay down our debt and improve our credit score. He's in the Army and will be retiring in five years. We want to return to our home state of Florida, buy a house and send our four little girls -- currently ages 7, 4, 3 and five-months -- to private school.

We currently are paying off college loans and credit card debt. We do not buy fancy clothes, our cars (paid off) are both older than our children, our vacations are all to visit family in Florida. We thought we were doing the right thing working to pay off our cards and then closing those accounts, but since reading your column I think we may be doing more harm than good.

While the house would not be our first, it definitely would be one we will be living in for a number of years. After renting or living in base housing all these years, we are willing to sacrifice to buy something nice. Please help us stop flailing and flopping around like a missile without a guidance system and focus our shot.


Sincerely, Elizabeth


Hello, Gail-
I just turned 25 years old. It’s been over a year since I graduated from college. The trouble is, while I was in college I was really stupid about using credit. Let’s just say I messed myself up as far as my credit goes. I recently got my free annual credit report and was surprised my score was not as bad as I thought it would be. Still, it’s pretty low.

Since I'm just starting my professional career I really want to get a handle on my credit debt and not have it linger while I try to advance myself professionally. I think the biggest reason I want to clear up my credit as soon as possible is that I really don't want to have it around when I eventually get married and eventually have kids. I don't want to drag my kids down because of my stupid decisions with credit while I was in college.

It’s funny that, in a way, making those mistakes with my credit has made me more responsible with my money.

Thank you,
Eliezer

Hi, Gail,
I need help managing my debt. I’m 28 and have just under $7K in credit card debt and about $21K of college debt that I’ve been struggling with for years. I don’t own a home (I don’t have any money to put down to purchase one either), so most banks are not willing to lend me money to pay off my credit cards. I do have a 401K, and have considered taking a loan out against it to pay off my cards, but I’m not sure how that would affect my future financial situation. I would really like to “grow up” financially & become responsible with my cash, but I feel overwhelmed by my crazy debt.


Julianna


Ms. Buckner -

I would like a book that would help me in figuring out this whole credit/debt thing. I know my first priority is lowering my consumer debt and I’m in the process of doing that by paying more than my minimum balance. The credit card is now out of my wallet (after I moved this summer it got ugly and is now at about $14K). I’m probably going to have to buy a car in the near future, because my current car is 10 yrs old and has 170,000 miles on it. Money is tight, but I still have a little wiggle room.


I am frequently frustrated in understanding credit, interest payments, etc., but I know it is a necessary evil to purchase a car, a home, etc. I have a full time job that is fairly secure, but at the low end of standards of living in the Washington, DC area. With a salary in the mid- $40s I can only afford rent. Basically, I'm just staying afloat and would appreciate some advice as to using my money well and getting a fair deal.


Thanks,
Alison


Dear Gail-
Recently, my husband and I sold our home and could not qualify for another mortgage, no matter how many companies and methods we tried.

I had a number of things on my credit history stemming from when I was the executrix of my parents estate. My husband had a number of medical bills from an automobile accident.

At one point, we missed qualifying for a less-than-desirable mortgage using my credit alone for 2 points on my score!

We have settled the automobile suit, the estate, and now I want to clean up our credit as quickly as possible so we can buy another home.

Thank you.
Angela


Gail,
I am nearly 30 and my husband is 44. We got into credit card trouble nearly six years ago when he got sick, and we used our credit cards to survive until he got better. He never did. Rheumatoid arthritis changed our life.

After struggling for a year to make minimum payments on our seven credit cards, I gave up and tried to hide my head in the sand. The result was the addition of thousands of dollars in late fees and non-payment fees. Finally, I realized I had no choice but to try again.

I contacted a debt consolidation company, which we prefer to filing bankruptcy. We want to pay our debts.

However, recently I reviewed the progress we’ve made over the past three years and it was pretty discouraging: after paying roughly $7000, we’ve only reduced the principal we owe by less than $1200.

I talked to the bank in November, but I was afraid to put up our 3 bedroom home and 18 forested acres- which has no loans against it- in exchange for a home equity loan.

This month I canceled the debt consolidation company, contacted each of the collection companies, (five of the seven accounts are charging 25.9% interest), and began sending my payments directly to them. My plan is to pay everyone the finance charges and a little principal and began eliminating creditors one at a time.

I want to improve both our credit rating, because I want us to have a clean record. I have been focused on educating myself, but there is a lot of information available and it doesn't always seem accurate.

Angie

PS~We do not have telephone service, it was one of the things we thought we could live without.

Hi, Ma'am...
At 42, am over midway through my life and have gotten myself buried under a pretty big mountain of debt. Although never late with any payments, I imagine my ratio of debt- to-paycheck is laughable. I manage to get by and am slowly learning (late in life) that not everyone in my life needs everything they ask for. That not every animal on the side of the road can be rescued by me. That I can't afford to spay and neuter every homeless pet in America. And that I can't possibly save every Katrina dog or cat. I really need to deal with my debts...and could use some good advice.
Thanking you for your consideration.

Connie

Gail-
I would appreciate a book so I could understand how to correct my mistakes. I've never owed so much money in all my life and I'm tired of worrying. I'm thinking of withdrawing my retirement money to pay off the high credit card bills I have. Before I take this drastic and costly step I'd like to see if there might be another way.

Lona

Dear Ms. Buckner,
I really can use some good advice and practical knowledge about credit. My wife and I have gone through bankruptcy recently and we are currently seeking financial and credit counseling. We want nothing more than to own our own home, so we need some education on how to bounce back from our fall and to re-build our credit scores. Wish us luck. Thank You.

Thomas


Gail,
I'm a displaced Katrina victim, now living in Georgia. I could no longer stand to look at the devastation, so we relocated. My credit file is so screwed up I can't make heads or tails of it.

I'm 5 years out of bankruptcy. I had a construction company that did several million dollars a year in business. It went under after I refused to pay graft to a politician and he, in turn, held up payments on state contracts that were owed to my company. I am trying desperately to clean up the mess, but without much luck so far, even after hiring a lawyer.

Thanks for any help you can provide.
Sincerely,
Stan

Hi Gail
Our family has a huge amount of credit card debt. I estimate it at over $45,000, plus another $10,000 in a second mortgage. For a time, each Christmas would see at least one credit card maxed out, and the following year we would use one of those low-interest ads to transfer the balance, resulting in more cards to pay each month, and max out the following December.
As a result, my wife and I both work full-time plus a part-time job.

We’re slowly making some progress but could use some advice.
Wayne

Hello Gail;
A couple of years ago my FICO score was over 700. It now is about 560. This happened after I was diagnosed with cancer in 2001. I am now a three year survivor.

We were just getting caught up from that when I had to have open heart surgery in early 2005.
We wound up living off of our credit cards for awhile. We now reduced the balances on these but our FICO score is still below 600.


Thank You,
Tom



Dear Gail,

I am currently managing a lot of debt. Rather, it is managing me, pretty well dictating where I live and what career I've chosen and making it impossible for me to save for retirement. I have school debt, an auto loan (to be paid off November), credit card debt, and 0% interest payments for hospital expenses that came up unexpectedly this year. (If I hadn't had health insurance, I'd be bankrupt now.)

I'm making all my payments on time and I have a fairly decent FICO score (I think), but I'm pretty much living paycheck to paycheck. I know I can do better than that.

I want to eliminate "bad" debt this year so I can begin saving to buy a house and to provide for retirement.

Rebekka

Gail-
Before the end of 2005, I convinced my husband to cut up all but two of our credit cards. We currently have approximately $50,000 in credit card debt.

We have already experienced the increase in the minimum payments on credit cards, and have begun to do balance transfers. In addition, several have increased their rates, with one going from 7% to 27%. This is the year we get serious about getting out of debt.

Neither of our jobs are secure at this time. We own an older mobile home and a 2000 vehicle. That's about it. We owe so much that it scares us to think we will be in this mess
forever.

But we are trying to cut down on expenses by car-pooling, not buying our lunches, not going out to eat but cooking at home, and only traveling when we really have to. We are trying to pay more than the minimum on the cards, and even though it took us 5 years to get in this mess, we are
hoping to get out of it in two.

Cutting up the cards was the first step for my husband, but now he is not so sure that was a good idea, but I love the fact we did it.

Sherry

Dear Gail,
I am a 37 year old cancer survivor (Hodgkin's stage IV) with plenty of dreams for a better life. I am a counselor to victims of domestic violence. My husband is an officer in the Navy (he is a nurse).

I survived cancer only to face brand new challenges: After my cancer went on remission my husband told me he wanted a divorce. I have some debts that I have acquired through the years, such as my student loans, and some credit cards. I love my job, but since I work for a non-profit, it doesn’t pay that much.

I have NO savings whatsoever. Even though I have always paid more than the minimum on my debt on time I don’t seem to be making a dent.

The women I try to help with counseling are warriors- they face the demons of violence every day. Many of them leave with just the clothes on their backs. I want to continue to help them with my advice and also have the peace of mind that comes from knowing I am practicing what I am preaching.

The good thing is that I finally have what money can't buy: MY HEALTH, and with that I am sure that I can keep fighting through my divorce and the current hardships. I just need a little bit of help. Thanks for reading me.

Sincerely,
Shelly

Hello Gail,

I have had a problem with debt for quite a while. I am a corporate pilot and my career has had its share of "let's get rid of the airplanes because times are tough" type of turns.

Throw in bone marrow disease for my wife, a liver transplant for me 3 years ago, and a few other things like helping a son who stopped making the payments on the car loan that I co-signed with him.

We have been through the wringer, have done the debt consolidation thing and got back into trouble again. We don't have a lot of credit card debt right now but we are still paying for our son's car that was re-possessed.

Johnny


Hi! I would love to receive a book.
My husband and I have big dreams for our family, but also big obstacles to overcome. We are a young-ish couple--he's 27, and I'm 34--with two kids, ages 2 and 5 months. We faced some serious financial challenges a few years ago, and despite our best efforts, we ended up filing bankruptcy. (We did seek out help from Consumer Credit Counseling Service first, but because our circumstances were so bad, they actually were the ones to suggest we get to bankruptcy court ASAP.)

Now, but it's on our credit records. We're trying to dig out of the mess, but we've added a few more black marks to our record this year. First we had some high medical expenses, but no health insurance. Then we ran up our credit cards. For the most part, we used the credit cards because we had to--for things like snow tires, auto repairs, etc.Some of our accounts have gone to collections.

However, my husband just inherited $17,000 from his deceased grandfather. The gift was intended for education, but it is not restricted and we may use it as we please. Obviously, this is a golden opportunity for us and we don't want to screw it up. Our thinking is to pay off our credit cards, period, pay off the medical bills, and then assign the remainder to savings. But we also want to buy a house (preferably build a small one) for our family. We live in a two-bedroom apartment, and now that we have a family of four, things are getting tight in here.

Are we totally out of the running for a house, given our situation? My husband is a veteran, and is eligible for a VA loan--does that help us out?

Melinda


Hi Gail -
In 1975 I divorced my now "ex" husband basically due to his abuse of finances over the entire 17 years of our marriage. He not only cost me my dream home, but drove a viable small business into bankruptcy, and almost cost me my inheritance. Not to mention various humiliating incidents of trying to buy groceries & being told that the store would not take my check because he had bounced several without my knowledge. We also experienced two re-possessed autos and having the heat cut off in the middle of a brutal Dallas winter.

As a single woman with 3 kids to raise and no recent job experience I set out on my own - much more difficult in 1975 than 2005. I was shocked to learn when applying for my very first credit card in my name, that my application was rejected "due to a lack of credit history". Sort of like, you need experience to get a job and you need to get a job to acquire experience. Huh? Every time I applied for credit, they looked at "the little woman" and asked "and how much is your husband's salary?" After working a couple of years, I was finally able to buy the rental house my children & I were living in and began slowly establishing my own credit history.

After what I’ve been through I'm a bit fanatical about my credit score. I'm not honestly sure why, it's just a prideful thing I guess, but it's of utmost importance to me to have the highest possible credit score.

Also, I want to advise my daughter, whose finances are in terrible condition. She is a teacher in a rural school making only $29,000 a year and owes $50,000 in student loans and has just gone thru a horrendous divorce. Her ex-husband is committed to ruining her credit with a $30,000 truck borrowed in her name.
Thanks so much,

Ruth

For more on Debt, visit our Debt Management page.

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.