I’m 31, married, and feeling really stuck. We’re buried under $60k of consumer debt. Some of it came from medical issues and mental health struggles, but honestly, a big chunk was just poor choices. I already know where we went wrong, so I’m not looking to be reminded of that. I really need advice on how to move forward.
The debt is spread across 12 credit cards, which makes it harder to manage. I’ve been hesitant to close them because I’m worried about hurting my credit. Some cards are paid off, but others have balances with either low interest (0%) or really high rates (up to 31%). Back in graduate school, I had to file for bankruptcy because of a tough financial situation. I don’t want to go down that road again, especially since we might make too much for Chapter 7, and Chapter 13 would leave another bad mark on my credit.
Our combined annual income before taxes is $130,650, and we take home about $7500–$7600 each month. Our monthly expenses are $3600, and we pay about $2200 toward debt. Consolidation loans have been hard to secure because my credit score is only 669. We want to buy a house eventually, but right now, the goal is just to pay down this debt. My husband works extra hours, and all that extra income goes toward the debt. We’ve made changes to our spending habits, but it’s still overwhelming. Any kind and actionable suggestions would be really appreciated.
Debt consolidation and debt settlement often get confused, but they’re very different. Consolidation involves taking out a new loan to pay off your existing debts. Settlement, on the other hand, is when you negotiate to pay less than you owe, which can ruin your credit for seven years.
I recommend looking into a Debt Management Plan (DMP). These plans help you pay off your debt with much lower interest rates and no lasting damage to your credit. You can find a good nonprofit agency through https://www.nfcc.org/. Be careful when considering debt relief services—there are many shady companies out there.
@Ira
Thanks for sharing this info again! I’ve seen your comments before, and they’re always so helpful. It’s frustrating that people downvote you for being honest.
I’m in a similar boat and working hard to pay down my debt. My parents are letting me stay with them, and I’m putting $3100 toward a personal loan every month. It’s tough living with this burden, but I try to focus on the progress I’m making. You’ve got this—just stay committed to the goal.
Write out all your expenses and cut anything unnecessary. Then, list your credit cards with their balances, interest rates, and minimum payments. Focus on paying off the highest-interest cards first, and don’t use the cards until the balance is zero.
Put the cards away. Keep one for emergencies only. Review all your subscriptions and cancel anything you don’t need. Cut back on dining out and consider picking up a part-time job to speed things up. It’s all about cutting costs wherever possible.
Focus on paying off the small balances with high interest first. Once you’ve cleared those, use the freed-up money to target the next set of debts. With your income, you should start seeing progress quickly if you stay disciplined.
If bankruptcy doesn’t feel right, look into nonprofit credit counseling. They can help you lower your interest rates and combine your payments into one monthly payment. It does affect your credit, but it’s not as bad as debt settlement or bankruptcy. Worth checking out.
The first step is to build a budget and stick to it. Cut out all non-essential expenses and focus on paying down the debt. Make minimum payments on everything, then start targeting the smallest high-interest debts. Once those are gone, tackle the bigger ones. You’ll get through this with discipline.