20k debt … struggling and need help

Debt Management
1

I’m 26 and make around 80k a year, but I’m barely getting by. After covering minimum payments, there’s not much left, and my credit is a mess. It’s mostly credit cards and a personal loan – not even counting my car loan.

I got a 10k personal loan a year and a half ago to pay down some debt, but the credit card got maxed out again. I’ve been looking into more loan options to try and start fresh.

I feel stuck and would appreciate any tips or advice. Is there hope for someone in my situation?

2

Bankruptcy could be an option, but I wouldn’t recommend it as it’ll hurt your financial future for a long time. A better approach would be to focus on a strict plan:

First, you’ve got a spending issue here. You make 80k but are living like you make 120k. You need to cut back to around a 50k lifestyle.

  1. No more new debt.
  2. Cut any expense that’s not essential – no eating out, no subscriptions, no extra spending.
  3. Try to increase your income. A side job, overtime, or anything to bring in extra money.
  4. Focus on paying down the highest interest debt first while making minimums on others. Once one is gone, use that money for the next one.
  5. Once you’re debt-free, build an emergency fund, then work on savings and retirement.
  6. Most importantly, don’t fall back into old habits.
3

@Pax
I like the plan you suggested. Can you explain why you’d choose the avalanche method over the snowball?

4

Poe said:
@Pax
I like the plan you suggested. Can you explain why you’d choose the avalanche method over the snowball?

I paid off a lot of debt using a mix of both methods. Starting with the smallest debts first (snowball) helped me see progress and feel motivated. Once I had more control, I switched to the avalanche method, tackling the highest interest debts first to save money.

Another thing that helped was building a small emergency fund (about $1,000). It wasn’t enough for big expenses, but it helped avoid adding more debt when small things came up.

5

@Marlo
People often overlook the mental side of money. The best method isn’t always the most logical one; sometimes you just need those quick wins.

6

@Marlo
Good old Dave Ramsey strategies :heart:

7

Poe said:
@Pax
I like the plan you suggested. Can you explain why you’d choose the avalanche method over the snowball?

If the smallest balance has a low interest rate, it might make more sense to focus on the debt with the highest interest. Once you knock out that high-interest debt, all that extra money can go toward the next balance. Snowball gives you small wins, but avalanche saves more on interest over time.

8

@Joss
That makes sense, thanks for breaking it down!

9

@Joss
Plus, if the big balance with high interest is still there, it can be a huge weight. There’s a risk you’d end up reusing a paid-off smaller card out of temptation.

10

Poe said:
@Pax
I like the plan you suggested. Can you explain why you’d choose the avalanche method over the snowball?

Both methods work, but avalanche saves you more on interest in the long run.

11

Bankruptcy is a last resort. Based on what you shared, the problem is in your spending. You’ve admitted to things like eating out and going out of town often. With an income like yours, 20k in debt is something you could tackle in a year if you get serious. Cut out non-essentials, and you’ll start to see a difference.

12

@Kiernan
Thanks, I needed to hear it straight. I appreciate the honesty here.

13

If you’re single and making 80k, you’re definitely overspending if you’re in this much debt. Even bankruptcy won’t solve it long term because you’ll end up back here if you don’t change your habits. Consider a shared living situation, or even moving back with family to cut costs.

14

Consider selling your car and buying something cheaper. Use the extra cash to tackle your debt. Line up your debts by interest rate, make minimums on all of them, and focus hard on the highest-interest one.

No Amazon, no fast food, no extras. Keep it to the bare basics. You’re eating canned soup and sandwiches till this is sorted.

15

A second job could help, and budgeting is a must. Making 80k isn’t too bad, but it sounds like the spending is where the problem lies.

16

Hart said:
A second job could help, and budgeting is a must. Making 80k isn’t too bad, but it sounds like the spending is where the problem lies.

A budget would definitely help. Might not even need that second job if they just track spending closely.

17

@Ira
True, but depending on where they live, 80k pre-tax might not go too far. A second job would add some breathing room.

18

Hart said:
@Ira
True, but depending on where they live, 80k pre-tax might not go too far. A second job would add some breathing room.

That’s true, but I bet there’s a lot of untracked spending here. When I started budgeting, I found way more money than I realized I had.

19

@Ira
It’s a mid-cost area, and I actually make more than most people my age here. My paycheck just keeps disappearing into debt payments.

20

Zinn said:
@Ira
It’s a mid-cost area, and I actually make more than most people my age here. My paycheck just keeps disappearing into debt payments.

It sounds like the spending is really where the issue lies. Hard to say without seeing the whole picture.