(AUS) Need a little bit of advice in sorting out some issues with debt (currently @ $41k... h e l p)

[chefcaleb]

Throwaway for obvious reasons. Forgive me if I'm not posting in the right place.

I've fucked up hard and I'm not sure how I can fix this. As in the title, I owe $41,000 all up.

I earn $68k a year (works out to be around $4350 a month after tax).

As it stands I owe:

• $4,500 in student loans (this is automatically taken out by the government at tax time so I don't really have much say in the matter)
• $7,500 remaining on my car loan (at $663 a month) - I'm not sure what the interest rate is, thanks to dealer shenanigans and me not knowing much about how it all worked at the time, but it's below 7%. This car loan is for a five year term (works out to a total cost of $39k, interest included) and I'll be making my final payment in December. Unfortunately I also get hit by a quite large cancellation fee if I pay this loan out early (as all payments are accounted for).
• Two credit cards, unfortunately both maxed out. One is $14,500 (which I'm trying to pay down as it's a high interest card - 17.99%) and the other is $7,000 (at 13.49%, but has an fee of $59 a year). I used the lower interest card to pay down the higher interest card at first, then it quickly derailed from there, as I had some big expenses come through. I often use the lower interest credit card to pay bills, then put as much money on it as I can, then the whole cycle starts again...
• $9,500 remaining in a loan with my bank. This was originally taken out the year before to pay for moving expenses and purchase of furniture, and also in an attempt to try and consolidate my debt.
• $1,000 overdraft which I regularly tap into...

Expenses (non-loan):

• Rent - $1140 a month. I share with someone else.
• Phone and internet - $170 a month. This is combined, and is required for work.
• Health insurance - $130 a month. I have to have private health insurance - it's used quite often to cover medical bills
• Subscriptions - Netflix, Amazon, gym (works out to about $80 a month all up)
• I do sometimes eat out, have begun planning meals in an effort to reduce this

Savings: none

This is causing me a lot of stress and I just feel shit about it all - it totally does wonders for my mental health (how's this for cruel irony: I ended up drinking a lot more than I did previously), because while I'm servicing my debt (just barely... all it would take is me losing my job and I'd pretty much neck myself), I really, really don't feel like I'm getting anywhere. It's amazing how quickly things can snowball out of control in three years - three years ago I had only $4,000 in loan and CC debt and it would have been paid off completely that year, then I had to move house quickly at extremely short notice (so again, $$$) and then my expenses skyrocketed and I made some very, very poor decisions.

I came to you guys because I really, really don't know what to do next. I'm probably not going to be able to afford to pay any bills when I get paid this month thanks to my poor decisions with the cards.

What are my options here?

 

[resjudicata]

@chefcaleb Dude how the hell did you rack up so much?!

Firstly cancel Netflix, gym, Spotify etc. Use the old illegal methods for a while. Get savings up, get a buffer zone. Try to reconsider your health insurance. It's expensive as fuck and you don't necessarily need it (unless you have medical conditions etc that I don't know about).

Think about selling your car? If that's possible. Buy a beater.

 

[legendsh]

@resjudicata I agree with this user. Sell the car cut up your credit cards and never use them again. Do your best to live on nothing and put as much towards your loans as you can. Also, you need to increase your income either by getting promotions or getting a second job.

This is doable but you need to put as much effort into getting out of that as you put into gaining that debt..

I recommend you look into the Dave Ramsey plan. His it advice isn't the best for everything but when it comes to getting out of debt he's one of the better options.

 

[chefcaleb]

@legendsh

I recommend you look into the Dave Ramsey plan.

Would you happen to have a link to this plan or is it somewhere in the wiki?

Also, you need to increase your income either by getting promotions or getting a second job.

I got a promotion last year but it was barely worth the money it was written on. Looking for a new job at the moment, I'm very underappreciated at work at the moment. Would Uber be worth it for a few hundred extra? Nah?

Sell the car cut up your credit cards and never use them again

Selling the car's not really a good option for me at the moment. I've cut up the larger CC, still keeping the smaller one... for now.

 

[briand1018]

@chefcaleb https://www.daveramsey.com/baby-steps

 

[chefcaleb]

@resjudicata Combination of things - poor decisions (such as helping out a friend with emergency repairs - $600 of which I didn't have). I'm an idiot basically. it boils down to "I. AM. A. FUCKING, IDIOT."

Medical conditions - I need this particular level of health insurance as it covers some treatments that would otherwise cost thousands of dollars out of pocket.

I could sell the car - right now I need it for work though. I've valued the car at about $17k (2013 Corolla) so if I sold it privately I'd be able to reclaim something. IF I manage to get this particular job I won't need the car anymore as I can then use public transport to get to work.

 

[resjudicata]

@chefcaleb No worries r.e. the past, what's done is done.

Fair enough about your medical bills.

So there's no way at all you can do your job relying on public transport or a bicycle? If not, my suggestion would be sell the car, pay off as much debt as you can with that, keep $2-3k aside to buy/register/repair a Mitsubishi Mirage or similar, cheap on fuel, unbreakable, millions of them around for cheap. That seems to be the only thing that you're flexible on at the moment.

That leaves you with the 'entertainment' money, any savings from making more of your own food, and car payments saved per week for you to pay off your debts with. Be committed, make sure of yourself, don't give yourself any 'treats' or 'rewards', you don't deserve them til you're debt free and with a small reserve for emergencies.