Hey everyone, I’m in a bit of a pickle. I owe $5,000 on my Amex, $2,000 on my Best Buy Citi card, $4,200 on my Discover card, and $6,100 on my Apple Card. I earn $75K a year, and I have a car loan of $600 a month. I tend to buy things thinking I can manage the monthly payments, but I realized last night that I’m drowning in high payments. I could really use some strategies to turn this around. Any thoughts?
Stick to buying just what you need to get by. Cut out dining out and consider selling your car for something cheaper. Focus on paying off each credit card one at a time.
The interest is really piling up. You need to break the cycle of borrowing.
- Stop taking on more debt.
- Cut unnecessary expenses. If you struggle with this, share your spending and we can help you figure it out.
- Find ways to boost your income, maybe through overtime or a second job.
- Pay off your debts starting with the highest interest. Once that’s cleared, move on to the next highest.
@Tal
If he wins, those of us living paycheck to paycheck might not get overtime next year.
Blair said:
@Tal
If he wins, those of us living paycheck to paycheck might not get overtime next year.
Really? Is that one of his policies? Sounds concerning.
Blair said:
@Tal
If he wins, those of us living paycheck to paycheck might not get overtime next year.
Really? Is that one of his policies? Sounds concerning.
Yes, and he’s already denied overtime to workers. If he gets back into office, he could do it nationwide.
@Blair
I looked into this since it was new to me. I read he doesn’t pay overtime to his employees. But I’ve seen articles saying he wants no taxes on overtime pay. Isn’t that a good thing?
Blair said:
@Blair
I looked into this since it was new to me. I read he doesn’t pay overtime to his employees. But I’ve seen articles saying he wants no taxes on overtime pay. Isn’t that a good thing?
Nothing he does is good. He never kept his promises in office, and it’ll be worse if he gets another chance.
@Blair
I never said he was great, but I was just curious about his overtime policy. Let’s not turn everything into a political debate.
Check out Dave Ramsey’s snowball method. It helped me pay off all my debt and my house six years early. Now I pay cash for everything.
Try having a couple of no-spend months where you only buy essentials like fresh veggies, fruits, and meat if you don’t have a stocked freezer.
You might want to think about lowering your car payment. $600 a month? What are you driving?
Stop wasting money and focus on paying off your debts.
Take a look around your home. All that stuff you bought is what your credit card debt went towards.
Now you’re stuck with payments and interest. You want to earn interest, not pay it. The way to get rid of interest is to make big payments, and here’s how:
- Cut expenses and cancel subscriptions.
- Sell things you don’t want anymore.
- Try to make more money with a better job or extra hours if you can.
Pay off the debt with the highest interest first. Transferring to lower interest cards can be costly, so only do it if it makes sense. You can charge purchases to the lowest interest card and use that extra cash to pay off the highest interest card. Just don’t keep buying things that dig your hole deeper.
Make a budget and stick to it, don’t overspend, and save for big purchases instead of charging them. If you have a car loan, keep that car until you can pay it off. Once it’s paid off, save that money for your next car or at least a larger down payment.
Don’t pay interest, earn it and invest.
Living within your means is the way to go. Good luck and make smart choices.
If you have to make payments, really think about whether it’s worth it. The best feeling I had was paying off $28K in stuff I didn’t need. Never again with credit card debt.
All this advice is solid. You might also want to look into family means debt management. I was able to lower my minimum payments and ended up with just one payment, cutting my interest rates in half. You should still aim to pay more than the minimum, but this helps with the interest drain.
Everyone has shared great advice. I also set up automatic payments to pay off my credit cards faster, and that really helped me.
Take your credit cards, put them in a ziplock bag, and freeze them. Use cash for everything.
You didn’t mention other bills like rent, utilities, and car insurance. Once we know those, we can see what’s realistic.
If you pay $1,500 for rent, $200 for car insurance, and let’s say $500 for utilities and internet, plus $400 for food, that’s $2,600 gone before you even touch those credit cards.
With your $75K salary, you should be taking home about $5,100 a month, which would leave you with $2,500 if those expenses are correct.
Having multiple high-interest credit cards is tough, especially if you can only afford minimum payments. That won’t help you pay them down.
If the interest rates are similar, I suggest tackling the smaller balances first. It will feel like you’re making progress, and then you can apply what you were paying on those to the remaining debts.
If a personal debt consolidation loan isn’t an option, maybe a balance transfer to a card with 0% interest for 18 to 21 months could work. Just make sure to pay it off before the promo ends to avoid deferred interest.