I’m $55k in credit card and loan debt, which costs me $2,300 a month. My mortgage and utilities are $1,700 a month. I also pay $325 for my kid’s private school and spend around $500 on groceries. I make $100k a year gross but only take home about $4,800–$5,200 a month after taxes.
I have $30k in my 401k, but I can’t borrow from it again until I repay the loan I already took. Now I need a new vehicle since mine was totaled, which will push my expenses way over my income. I already work 14-hour days, including a night job driving, and I’m at my breaking point as a single parent.
I’ve tried debt consolidation before, but they only approved $5k–$15k, not enough to cover my $55k debt. My options seem to be either borrowing against my home or filing for bankruptcy. I don’t know what to do.
Don’t borrow against your home to pay off credit cards. You’ll turn unsecured debt into secured debt, which could cost you your house if things go south.
@Winslow
You have $5k in Macy’s debt? If you borrow against your house, will that really change your spending habits? Even bankruptcy won’t fix overspending if nothing changes.
Do you live in a rough area? Just wondering because your kid is in private school. I went to private school, but honestly, it didn’t make much difference for me. My daughter went to public school and is now in college, working, and starting an internship soon. She’s doing great without the private school cost.
@Ben
Yeah, the public school wasn’t a great environment. My kid was picking up bad habits and trying to fit in with the wrong crowd. Private school has been better, but I might switch him back to public for high school since he’s matured a lot over the past few years.
Mai said:
Are you current on all your debts, or are you already behind?
I’m current, but in the next 30–60 days, I won’t be able to keep up.
If you can borrow against your home, 12% is lower than your credit card APR. But look at ways to cut expenses first, like cheaper phone plans or internet. Even small savings can add up over time and help you pay down debt.
@Mai
I can borrow $75k against my home, but I’m nervous about putting a lien on it. If something goes wrong, I could lose my house. I’ll check out cheaper phone plans, though—my bill is $90 a month with T-Mobile.
@Winslow
If you do borrow against the house, make sure to fix the spending that got you here first. Otherwise, it’s just a temporary fix. And look into alternatives like Mint Mobile if you’re with T-Mobile. Small changes can help.
First, I’d take the kid out of private school. Sometimes you have to set pride aside and make hard choices. Borrowing from somewhere else won’t fix the problem—it’ll just move the debt around. Work on cutting spending instead.
Sell the ATV immediately and use whatever’s left to get a basic car—nothing fancy. Cut back on unnecessary expenses like streaming services or eating out. Close your credit cards and attack the smallest balance first, then roll those payments into the next card. You can dig out of this, but it’ll take time and sacrifices. I’ve been there, and I’m slowly working my way out.