Trying to tackle my debt… is my plan reasonable?

Discussion
1

I’m 34, just finished my master’s in special education, and I’m making $65k a year, which will go up to $71k in January. I’ve got $51k in student loans and $40k in credit card debt, and I’m partway through a loan forgiveness program.

In January, I’m expecting a $7-8k tax refund, and I want to use it to start paying down my debts by calling each collection agency and negotiating. Everyone’s telling me to just file for bankruptcy, but I’d rather try negotiating and pay what I can.

I don’t know anyone who’s done this, but I’d really like to avoid bankruptcy if possible. Does this plan seem realistic or am I setting myself up for trouble?

2

Wow, a master’s in special ed and you’re making that much? I make more working at Amazon. That’s just wrong… teachers deserve better.

Not trying to put you down or anything. I respect what you do, but it’s messed up that people like you don’t get paid more.

3

@Valen
His starting pay might seem low, but he has the chance to earn a lot more over time. If he can dig his way out of this debt, he could be looking at a house by 40, if not sooner.

Yeah, 40k in credit card debt is rough, but if he tackles that, his options open up. Life can change a lot in a few years if you work hard at it.

4

@Drew
My pay keeps going up every year, and yeah, that credit card debt would stress me out too. But if he keeps working in public service, his student loans could be forgiven eventually. I get anxious when my own credit card debt hits 3k.

5

@Valen
As long as the program doesn’t get changed or canceled, that’s a real possibility for him.

6

@Drew
I don’t think I’ll be hitting 200k… more like 120-140k before retirement, according to the pay chart. I’ve got 15 more years to go, counting the time I worked as a para and now as a full-time teacher.

7

@Drew
Yeah, 40k in debt was from some really bad choices. I was with my child’s father for five years. He’s a doctor, but I ended up supporting him and paying for everything on my para salary and credit cards while he treated me terribly. Nothing to show for it but debt.

8

@Valen
He has chances to move up in his field over the years too.

9

Raleigh said:
@Valen
He has chances to move up in his field over the years too.

Yep, I can get small raises each year. But to get the top pay, I’d have to go back for another master’s and 30 more credits, and I just can’t afford that.

10

@Valen
I don’t think it’s that bad. Warehouse pay is good, but it’s tiring work, and you might get raises based on location or overtime. Personally, I’d take a stable desk job at 55k with room to grow over a warehouse job at 65k.

11

@Valen
Thanks for saying that! I’m not looking for praise, just trying to make things work. When I talked to a bankruptcy lawyer, he said, ‘You make decent money, but it doesn’t go far in New York.’ And honestly, I miss working at the FedEx warehouse.

12

Have you thought about contacting a non-profit debt management company? They could help with your credit card debt.

They might be able to negotiate a lower interest rate with the credit card companies for a small monthly fee, plus a one-time setup fee. It’s usually affordable, and they can be helpful if you need some outside support with managing your finances. Your credit score may or may not go down, but it’s possible.

Check out the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). They offer debt management without loans and can give you a budget plan.

Be careful though… some companies don’t have great reputations even if they are approved by NFCC or FCAA. Look up any company you consider, and check with your state’s consumer protection agency or attorney general to see if they’re reputable.

13

Try setting up a budget and chipping away at the debt. You could look into tutoring to earn extra cash.

14

Jai said:
Try setting up a budget and chipping away at the debt. You could look into tutoring to earn extra cash.

Honestly, I’m burnt out from tutoring. Special ed work is tough, and by the end of the day, I’m exhausted. I work summers and after school every year, but in New York, it’s just enough to get by without real progress.

15

@Jesse
Another special ed teacher here… lying in bed since I got home because my body is done for the day. It’s exhausting work. Best of luck!

16

Are you single or married? How much of the 40k debt is already in collections?

17

Drew said:
Are you single or married? How much of the 40k debt is already in collections?

Single. Pretty much all of it’s in collections, except for $2k on an Apple card and $2k on a Capital One card. They haven’t sent me to collections yet. But no one’s really talking about the negotiation part.

18

@Jesse
Got it. Honestly, your income isn’t the main problem here… it’s the debt. Either increase your income or go all-in on getting rid of that debt.

19

Drew said:
@Jesse
Got it. Honestly, your income isn’t the main problem here… it’s the debt. Either increase your income or go all-in on getting rid of that debt.

Thanks for the quick response. My rent is $2,000 and my electric bill is $400, but in four weeks, I’m moving into my mom’s place. No rent there, so I can start saving. I’m going to try negotiating at least one debt with a collections agency. Worst case, they say no, but best case, I can get them to settle for 25%. If I could get that kind of deal, I might just be able to knock this out.

20

@Jesse
You got through a master’s program, so I believe you can handle this too. Maybe think about finding a way to bring in some extra income as well.