$47828 in Credit card debt- looking for ideas

[resjudicata]

@skelly I don't agree that bankruptcy is the best option at all. If you declare bankruptcy, it will severely impact your credit score and you won't have the ability to buy a house, car, or any leasing assets until your 40.

I know that this seems like the end of the world but it's actually easily fixable.

Step 1: Go to therapy or a Anonymous meeting group to break the habit of whatever got you in this position (AA, gambler's anonymous, etc). The most important thing is that you change the root of the problem as soon as possible.

Step 2: once that's done, fixing the financial problem will be the easier part. Live at your parent's house. Boom $1500 of monthly expenses cut out right there. Also be sure to help around the house, do errands, etc. don't be a burden for your parents to have around the house.

Step 2: end your car lease. If you need transportation for work bike for now or carpool. Another $403.

Step 3: At this point make a budget. You likely have additional expenses such as groceries that you aren't including. Include EVERY expense and the amount you wish to budget. I use mint personally and like it a lot.

Step 4: dedicate any of your savings to paying off your cc debt. Let's say you will bring home $2000 and this is very conservative considering no promotions from work. You will pay off your debt in less than 2 years! It's gonna be hard work not being able to go on trips but that will be very short compared to the rest of your life. You'll be proud of yourself and you will be able to use your new saving skills to invest and build real wealth by the time you're 40 or 50.

Don't give up OP. Definitely don't apply for bankruptcy and develop your plan. You got this!

 

[mary4mom]

@skelly Visit your local credit union, their apr is less than your credit cards!

 

[andrewryan]

@skelly Maybe try getting a consolidation loan at a credit union.

 

[george1295]

@skelly Not trying to be funny but am interested in the details of the failed business portion

 

[avengeusa]

@skelly Get rid of the car and move in with ur parents or go somewhere cheaper until these debts are paid off. U gotta live way below ur means now. No more going out or eating out except only once or twice a month. U need to live like you're completely broke for at least a year.

 

[stephenie46]

@skelly Anyway you can move in with family for a year and throw all that money into your credit cards? That’s probably your best option at the moment honestly.

 

[carry]

@skelly I am surprised that nobody has suggested Dave Ramsey. Start listening to his podcasts and/or YouTube because if nothing else, it will inspire you and make you feel it CAN be done! And think about how much you an accomplish once you have NO debt!

Dave Ramsey goes by the Baby Steps:

First of all, stop ALL investing. Including your 401k, even with a match. His theory is that it’s only going to take you 18-24 months to get out of debt and then you’ll have much more money to invest.

1. Have a $1,000 emergency fund. You have $3,000 - that means that $2,000 of your savings needs to go against your lowest debt
2. List your debts smallest to largest. Interest rates don’t matter - you want to start knocking debts off to feel the momentum. Throw everything you’ve got at the smallest debt. Once a debt is paid off, you’ll have that payment to add to the next lowest debt.
3. After all debt (except your mortgage) is paid off, build a 3-6 month emergency fund.
4. Save 15% of your annual income for retirement
5. Save for your kids college
6. Pay down your mortgage
7. Live and give generously

Stop using your credit cards NOW. Do not incur more debt. Find a 2nd job - for a season, at least. With the holidays coming, you could pick up seasonal work at any retail shop or UPS/FedEx. My son has started doing some work with Shipt on his way home from work and is averaging $20+!

 

[05klekha]

@carry Totally agree, went through these myself, the snowball isn't the most efficient method mathematically, but is very effective! the 2k left over would pay off Amax Blue, PNC, Petal, Chase Sapphire, Citi Bank1, and half of the Amex Platinum. You also need a written budget assigning every dollar you make a category (groceries, gas, etc), I'd also consider getting rid of the leased car if possible and buying something used to help get you by while you work through this. With your income and low expenses, this is definitely doable without Bankruptcy. Good luck!

 

[sealedfilm]

@skelly Curious about the business credit cards. If it’s under a separate legal entity can’t you declare bankruptcy on those without it affecting you personally?

 

[sulyap03]

@skelly That’s not a lot debt conceder you are making 85k a year. It’s not worth to get bankrupt. You have starting cutting down your spending and consolidate most the credit debt to 1 or 2, 0% apr credit cards. And start paying high apr card off if those can’t consolidate.

 

[julioalmeda219]

@skelly

1. Consolidate cc debt into lower interest loans- lendingtree/club etc etc. This will reduce monthly payments so you don't feel like your drowning.
2. Build up a small emergency fund, maybe 5k since you already are at 3k.
3. Everything after 5k goes to paying off that loan. Only purchase essentials only until that loan is paid off.
4. Minimize expenses- 1500 for housing is a lot for a 28 year old. Get a roomate and cut that in half. Car lease could trade into buying a 10k car and save you 200. Combined that could be almost an additional 1000 a month to pay things off faster. This would drop you from 24months to pay it off to maybe 15 months.

Look at it like this: next year won't be much fun bc you need to pay off this debt, but you have to do it so you can move on.

My money issues were sort of solved when I started buying property. Money invested in assets grows, while money spent on 'stuff' just disappears. Not sure what area you are in but you need to get your junk paid off and look at buying a house vs renting.

 

[seattlevideo]

@skelly Just came in here to say I'm holding 40k of CC debt myself, though half is in home equity and most of the rest is on 0% promotions. But I know the weight that's on your shoulders right now. I'm rooting for you.