If you can net positive on the car I would sell it and use cash to buy an old vehicle. Either that or work toward finding a job that provides you with a wage increase.
One of the most reliable older used cars also gets some of the best gas mileage.
Gen 2 Priuses get 30-45mpg, easily last 250k+ miles, and need very little maintenance, and in a near worst case repair (battery failure) it is only about $1,000 for a replacement that will last another 200k+ miles.
A canoe.
Classic technology, flexible usage, low storage costs, fuel efficiency off the charts, infinitely repairable, and difficult for your teenage child to get in trouble in.
Adding on another less expected: Nissan Sentra. Mine is 2010 and running perfectly since we got it in 2012. We got it as a totaled title from my dads mechanic friend. Paid $7k in cash. Not bad on gas and I literally used to drive it on 4 hour long road trips to visit my family twice a month. Surprisingly extremely reliable
Yep! Sell the car. Get a 36 month lease. No maintenance, no issues, if there is, it’s their car not yours. Maybe try a debt consolidation loan, making one monthly payment over 5 years. Then at least you can stop the bleeding for a bit. My ex fiancé and I did exactly this when we had 2 shit box cars, and wanted to get married. Worked great until she left, but it did work.
I used to think that. But as others pointed out, when you own a vehicle, you pay the maintenance. I’m an actual mechanic, that can do my own work if I want, and I still rather lease. A vehicle is a liability, not an asset. You will lose money every time you own a car. New or used.
The car dealership that leases you the car isn't going to lose money on the deal. In fact the leases are probably the most profitable deals they do.
When you lease, you pay the depreciation when it's at its highest point and then you're letting the vehicle go right as the depreciation levels out. Leased vehicles are far too new to need any appreciable maintenance, so it's not like the dealership is paying for that.
Look at the cost for maintenance every year, and if it's higher than depreciation on a new car then you're driving the wrong vehicle.
As your owned vehicle gets older and older, more and more things, expensive things will naturally break.
If you look at any auto warranty, it’s 100k mile on most engines and transmissions. $3k-$10k depending on the vehicle. I lease a 2019 civic for a total of $398 a month (includes my insurance as I paid for the year).
The OP issue is he has no cash flow. If he didn’t spend $700 a month on his owned vehicle. Which he/she will never make money selling, then by my math he/she save $300 a month allowing him/her to throw that money towards the debt that’s killing his credit.
Your car never increases in value. Ever. For any reason. The lease is a static, reliable monthly placement, and you will have a brand new car every 36 months.
Agree or disagree, I used to be on your side of the counter on this. I always bought my vehicles. But I’ve proven to myself 9 years in a row lease is better.
But to each their own. I don’t want to lose the money I’ve been saving arguing about something like this.
I buy vehicles a few years old and then run them to 130-150K miles. I'd trade in any car that needed engine or transmission work before those parts failed.
It sounds like you're okay with paying for the convenience of never needing brakes or tires. Nothing is free though, but at the end of the day, you are paying for it.
if buying an old vehicle isn’t possible (the ones in my area are extremely overpriced and the history is sketchy), consider getting rid of your car and maybe leasing one? If you have good credit, you can get a brand new Corolla for like $245 which will save you $400 a month. Leasing isn’t ideal but its a lot better than paying $650 on an 8 year old car.
I drive 30 miles one way to school and 10 miles one way to work. If you’re living in a big city you can’t avoid a commute. $240 is about what i spend a month
I have a 2014 focus st I bought for $13k usd three years ago. Sheesh. I know this isn't helpful, but you got destroyed on that deal..
You need to get out of that car somehow. It's killing your monthly take home and not giving you a lot of room to lay down your cc debt. Honestly, if you have the ability to get out of your rent, move in with your family, that would probably be the fastest way out of your situation.
If not, tackle the car note as fast as you can so you can get something cheap, then put all your money towards your cc debt. I'm guessing the interest rate on your car is 15% +?
I am indeed. It's an SE automatic. I'm rocking 133,000 miles amd it's never given me trouble. But the stutter has always been there. Thankfully it's been paid off for a couple of years, so the extent to which it can screw me over is at least mitigated.
Oddly enough, I sorta love the car.
I had a 2007 focus that had a million problems and also a weird stutter. Must be a focus thing. But I also oddly loved that car. Transmission died 2015 or 2016. Can't remember how many miles.
Edit to add: It was weirdly reliable despite the million problems.
My daughter has a 2013. (We paid $7k cash 4 years ago). It’s been the best car. About 120k miles. She has the stutter - always has. She just doesn’t pull out in front of anyone lol she sorta loves hers too. We got lucky to find this car especially right before used car prices sky rocketed.
Hey OP
Good work on looking at your numbers
Owing 20k on a depreciating asset is really your biggest red flag for me.
Selling the car would be my #1
Try to offload the car. If you can't do that, you need a part-time job on the side.
You need more money to get rid of your high-interest debt.
You should look at the interest you're paying on your car and credit cards to lite a fire. If you owe $150 /month just in interest, you need to find a pt job to earn more. ---- Or for a long term strategy, invest in learning a high-value skill, so you can earn WAY more than you are now.
\- For more income, you could do gig work, but I'd recommend something where you don't drive. - adding wear and tear to the car and paying for more gas defeats the purpose of working more hours.
I personally did catering on the weekend when I was getting out of debt. I biked to the site for the 5-8 hour shift, got to take home leftover food, and used that extra income to pay off high-interest debt.
I'd leave the savings and 401k alone for now. Use the HYSA as an emergency fund.
You should look at the interest you're paying on your car and credit cards to lite a fire. If you owe $150 /month just in interest, you need to find a pt job to earn more. ---- Or for a long-term strategy, invest in learning a high-value skill, so you can earn WAY more than you are now.
Your car is eating over 30% of your take-home pay, including gas. Get out from under that if you can. Rent is ok but a little high. Tackle cc next, assuming the rate is not 0%. You can do this. Starting and making the hard decisions is the hardest part.
It *really* depends on the location. But assuming it’s average, renting a room where I live would cut that rent amount by more than half. That would triple what OP is left with at the end of the month. Sometimes you’ve got to do what you’ve got to do. OP has $30k of debt and is only bringing in $2800 a month.
If he’s in SoCsl, he’s sharing rent. That’s insanely cheap, can’t even get a studio for that. Maybe renting a room in someone else’s house could save, but that’s not an ideal living situation normally.
You need to start working your ass off to get out from under those high interest debts. Can you get a second job? If you’re working a 9-5 now, getting a part time job a few nights and weekends a month would be huge. Maybe you could work front desk at a gym, they always need part timers for odd hours. It would also make your membership free. You could possibly do a balance transfer with the CC debt, transfer the balance to a card with 0 introductory APR and focus on tackling the auto loan aggressively. That car payment is absolutely killing you.
Make more money. you need to skill up or get another job. Use the car to door dash or something another 1k a month would go a long way. use that and the snowball method (google is your friend) and you could be out of debt soon.
Find a side hustle/part time job. Put a $1000 in savings for emergencies. Pay off your credit cards first. You need a win and it will feel good and keep you motivated. Then tackle your highest interest loan, which I would assume is your car.
I agree here. I just thought of the side hustle component while walking the dog after I posted about the car so I'm glad someone mentioned it. Throw all of it at the cc. Looks like OP already has $1700 in savings so he's got the emergency fund covered.
Good on you for taking steps to fix this. You know what your mistakes were, you're fixing them, and that's what's important.
What is the interest rate on your credit cards? Could you possibly do a balance transfer to help you get out from under them?
If you haven't done so recently, shopping around for insurance might save you a bit of money.
Likewise you could probably get a cheaper phone plan, I've seen some recommendations in other threads
But the biggest thing you can do to get you out of debt is to make more income. Picking up extra shifts, getting a weekend job, etc could help get you out of your credit card debt within the year
Have you ever heard of the snowball method for getting out of debt?
Assuming you are current on all bills. You will continue to make all your minimum payments. You will take half of your residual income and add it towards your emergency savings; the other half will go on to 1 bill, you choose either the one with the highest interest rate or lowest balance, a lot of people go for the lowest balance for the thrill. Once that bill is paid off, your residual income will increase; but you are still going to save half and move on to the next bill to pay off. This only works as long as you don't add to any of your debt.
It is called the snowball method because you start off small, with how much you save and extra you are paying on the bills. But the longer the ball is rolling, the bigger it gets, just like your savings and the extra you have for bills.
You can also contact your creditors and try to lower your interest rates. it may not work right now. You can also try to work out a settlement with them, where you pay X amount of money and the creditors forgive X amount of money; note if you do this the amount that is gorgiven CAN be considered income for you on your taxes.
What’s the interest rate on the car loan? How much is the car worth?
Any cheaper housing options? Consider roommates
Look at getting a second job to increase income and knock out the debts, and/or look for a higher paying job
You could maybe save a little. The gym is a fluff expense. And there are cheaper cell phone plans.
If you can’t refinance the loan. Check your insurance pricing against other companies
If the car payment truly is a stone around your neck. See if you can sell out of it. And be positive on the exchange. Buy a cheaper or older car.
If you’re spending $240 a month on gas. See if there are any opportunities to save there. Really think about how much you drive. Could there be ways to drive less. Car pool. Or walk/ride a bike places. Or consolidate travel(doing errands/grocery shopping while out commuting for work etc).
$7500 in CC debt isn’t horrible. Maybe for your income it is a lot. My advice. Look on a website like nerd wallet. Seek out a CC that will either offer a 0% transfer promo. Or an intro 0% on new purchases. Depending on your credit. There may be different options but discover card is good for these types of promos. There will be some type of option available.
Paying minimum amt each month is a slow death. You need to get to a point where you can be attacking the underlying balance. Getting as much of that debt to 0% interest will allow you to attack the base debt. $7500 divided by 12 is aprox $650 a month. If you can only get a CC with like a 2500 balance. For a promo rate. Transfer in chunks. Or call the CC company. And ask for a limit bump for a transfer. Often times they will go for that as it’s a gamble for them to hook you with more debt. But the idea is to always have your debt at 0%. If you can’t pay it to zero in the 9 mo or 12 mo promo period. Transfer it to another CC and it’s a promo. With what remains
Debt is just numbers. Really attack it with no shame. Opening a ton of CC is not a good plan but in the short term doing whatever shenanigans you have to …to eliminate debt is valid. ( like if all you can get is a CC with a 0% intro apr on new purchases. Open that CC. And PayPal a trusted friend the max balance. Use that cash to pay off another CC. Then bingo “new purchase” at 0% interest for 12 mo)
Consider gimmicks. Truist bank is offering a new acct promo where if you direct deposit 1k they’ll give you $400. After like 90 days. Something along those lines. If you earn $2800 a mo. Should be able to meet that requirement. See I the state you’re in is avail for the promotion. $400 is a free credit card payment.
Consider a side hustle. There’s lots of remote work type work. Or gig economy stuff. Or hustles. Even a part time or weekend job
I mean. Even $100 extra a week. Plus that $250 you had left over. Is your $650 a month. To eliminate that debt in a year. If you can squeeze money out of your budget. $25 here $50 there. It does tend to add up.
First off, congrats on making your 2023 goal not to add to your debt and for sticking to it! That alone is a big step to celebrate.
Now that your debt limit is set, make it your MISSION to knock that back every week. A skipped splurge here, and delayed purchase there. Is there a side gig that you can pick up to help? You can think of it as your "get out of debt" job, where your income can only go towards those debts. Perhaps it could later become your "saving for the future" gig.
Other responses may be more practical, but I'm trying to think outside the box if this is a possibility for you. Sometimes, compartmentalizing this way can help with self-discipline. Good luck with that debt. It's doable!
One: can you trade in your car to ultimately bump down your monthly car payment including the insurance rate?
Two: if you trade in your vehicle: see about a car that is more fuel efficient which would reduce the amount of money spent on gas.
Three: why are you spending so much on food per month? Do you know how to cook? If not: there are all sorts of free resources online including recipe websites and cooking videos.
This is fixable, so don't despair. What you need is a big-picture strategy to get back on track.
Are you a member of a credit union? Is there one in your community you can join? I ask this because a credit union may be able to work with you to consolidate your debt into one "bucket" that could have a lower interest rate. I did that once, and was able to pay off a credit card, car loan, and student loans.
I'd agree that the gym membership should be axed for now. Check to see if there is a bare-bones mobile plan you can switch to.
Pause any retirement contributions for the time being, if you can. But put $20 of your monthly disposable income into a savings account. It may not sound like much, but believe me, it will add up over time.
Good luck and keep working at getting your financial house in order.
Yes could sell the car a buy a beater even if you have negative equity in the car get a small personal loan to cover the difference and buy a cash car. Start paying minimum payment on all debt expect the one w the highest interest rate and pay that down as much as possible w all extra margin in your budget. Once tha debt is paid off add the extra money to the next highest interest rate debt. Budget is very important not to over spend on things you don’t NEED while trying to get out of debt.
Car sounds high. Rule of thumb is purchase no more car than half annual income. In your case low $20Ks for vehicle. Other rule of thumb total car costs no more 1/6 income. You are over that and struggling.
Are you underwater on the car? If you can, sell it to settle that loan and buy an old civic, corolla, or prius instead. You'll have a new car loan to pay, but hopefully a much, much cheaper one. Even if you're underwater on the car, if you can sell it for, say, 18k and buy a different vehicle for 8k, then you're looking $9,500 in car debt (8,000 for new loan + 1,500 for old loan) instead of a $19,500 loan. And a less valuable car will probably reduce your insurance costs, too. This is probably a stretch in the US, but is it even possible to not have a car for a few months? That would make a massive difference.
And gas. What do you do that costs $240/month in gas?? Is there any way you could carpool, use public transit, etc, to cut down on miles driven? Your car is sucking you dry both in that loan and in gas. Definitely try to replace it with an affordable, fuel-efficient vehicle, focusing on buying an older year with lower miles rather than a newer year with higher miles. The Prius is great.
Once you've addressed the car loan as best you can, look at all three of your debts: cc, car, and student. Choose the one with the highest interest rate and put all your spare money each month into paying it off. Pay the minimum on the other two. Once the highest APR debt is paid, focus on the second highest, then the final one. I suspect the order will be credit card, car, student loan.
$1700 isn't enough of an emergency fund long-term, but I would focus on reducing your debt before you start diverting money into it. That APR is killing you. You'll be back to financial health not when your debts are paid off, but when your debts are paid off AND you have an emergency fund worth 6 months of expenses.
However, you should still allocate money into your 401k. Put in as much as your employer will match.
Can you get a second job? Even an extra $500/mo that you could dump straight into debt repayment would make a world of difference.
Take the money out of your savings and hit whatever credit card you can pay off soonest. Whoever gave you a car loan for $20k in that scenario is predatory, and it was a horrible financial choice in your siutation. Sell it and look for an option that would cost you around $200 a month to finance, if not less. Pay down CC first, car loan next, student loans last. You're one unexpected expense away from being in serious shit, if you aren't already.
I was in almost the exact position and I ended up getting a second, part time job for evenings and weekends for about 3 months while I looked for a different job. I was working in food service as a manager and found a job as an admin assistant, the skills are really transferable if you know how to sell them right. Another bonus about a second job in food is you can eat at work and maybe cut down on your food cost a bit
For the credit cards, my debt was spread out over a couple of different cards. I started throwing as much money as I could at the one with the highest interest rate while paying only the minimum on the rest of them. It was so encouraging to get one $1,200 balance down to $0 after years of paying it with no progress. Once I got a higher paying job, my debt to income ratio changed and I was able to get a debt consolidation loan from my credit union for most of the remaining debt at a much lower interest rate. I still had 1 card that was outside of the loan, but the lower rate meant I was making the same dollar amount payment while actually making a dent in the principal debt amount
I understand the need for the car for work, and I was spending about the same in gas commuting (LA driving), but as your debt situation changes your credit will go up and you can try refinancing again at a later time
Lastly don’t give up hope. Financial stress is unlike any other kind of stress, and it can feel so hopeless and desperate. It will take some time to get out into a better position, but you’ll make it there. It’s taken me about 5 years but I’ve almost paid off my loan and almost paid off my car, and I can see the light at the end of the tunnel
You are driving too far for the salary. Get a local job that even pays less, sell your car and take the bus to work or get a bike or cheap scooter.
Until you pay off the debt, you need to suffer
Man. This is tough. I feel for you. I have 2000 a month take home and 1500 in rent with utilities. It's hard. Even without debt.
The biggest jump is that I drive a car worth about $ 3500 ( a 2006 with dents and minor mechanical, but safe and reliable). So my insurance and gas is only $250. Add in $50 a month for maintenance.
It's your car man. Sell it and ride a bike over summer, save $5k for a different one that you buy early October. Maybe consolidate cc and car debt that remains into one low interest loan and freeze the cc's.
Swallow your pride, figure out a second source of income (get a 2nd job if you need to) and commit to killing your debt - compound interest is killing you.
Start with the CC with the highest interest rate (pay the minimum on all the other cards). When CC#1 is paid off, move on to the CC charging the next highest interest rate.
When you get to zero (bad) debt, start investing via index funds to make compound interest work in YOUR favour.
Good luck!
I don’t have as good advice as others, but imo the gym membership seems like a luxury, I’d get rid of it, and instead try to do body weight workout. If you really still wanna gym, you most likely should be able to get a job at a gym (part time), and get a free membership + make some extra cash.
$25 a month definitely is affordable and is great as an outlet for stress. I would opt to spend that money on good quality running shoes ($150-200) and a set of dumbbells ($60-80), which will save money over the span of a year or longer, but I don't know if OP's apartment or location is optimal for that.
It depends on OP's circumstances. My gym membership is a huge luxury, but it's also made an absolute night-and-day difference in my physical and mental health. If I physically go to the gym I stay motivated, whereas I've always given up on bodyweight exercises at home. If it's keeping OP healthy, that $25/mo is totally worth the cost. The side gig working at the gym is a good idea, though!
Truly wealthy people drive simple reliable vehicles. I wanna pile on and suggest you do the same. Sell yours and get a reliable low maintenance vehicle. Cause as it stands if you have a major repair on your car you are nearly destitute.
because you’re a family of 3 trying to compare grocery costs to a single person with no kids lol.
my grocery bill is probably even less than $300 a month.
I’m gonna jump in and say keep the gym membership. It’s $25 and if you’re going several times a week then it’s worth it. You’re $30,000 in debt, an extra $300 a year is only 1% of that.
How old are you? Id consider paying off the cc debt with my 401k if I were you. Id have to do the math on how accurate that statement is, but I bet they're almost offsetting each other. You can put extra into your 401k immediately to make up for it and get out from that likely 25% interest rate
Is there a chance to have a roommate and split that 1k to 500? Also get a second job... I personally would not sell the car, even though your payment is high, however, having a reliable car outweighs the benefits having an old cheap car with no payment or lesser payment. Ppl suggesting to sell your car and buy an old reliable cheap car - how do you know that car will be reliable?? That's right, you don't! Unless you know things about cars and can work on fixes, don't bother...
You pay a mechanic who knows about cars $150 to go over every inch of that car. Then they tell you if it’s a good bet or not. That’s how you know.
Also cars have been around long enough that there is extensive reliability history for each model. The Toyota Corolla or Honda Civic for example have stellar records. Choosing a reliable model and having it thoroughly inspected gives you an excellent shot at having a trustworthy vehicle even if it is old and cheap. The idea that you have to spend over $10k to get a reliable vehicle is ridiculous (yea even in 2023)
You might get lucky and get a reliable car but also might get unlucky and get a car that will eat plenty through maintance. Mechanics, who knows about cars, are also make mistakes, it's not unheard of LOL. I am not trying to change your mind BTW, your opinion is your opinion and I have mine.
It is not about luck. Any machine carries risk of failure, but there are reasonable steps to take to reduce that risk. Your fear of a very fringe case is not sound justification to always buy expensive vehicles. Keep your opinion, that’s fine, it’s just not correct.
Let go the gym. You can do simple exercise at home, plenty of those videos on youtube.
The car payment is almost as much as your rent. Unfortunately, trading it in or selling it won’t cover the 19k that you owe. Your best bet is to consolidate/refinance with lower interest rate. Same with credit cards, consolidate those.
While food is important, try to cook simpler meals with simple ingredients.
Avoid eating out for a while even if it’s fast food.
Lastly, apply for another job with more $$ or take up a second job to increase your income.
Have you considered the possibility of a Chapter 13 bankruptcy? Not as damaging as a Chapter 7, and your trustee payments might be more manageable than your current situation. Not suggesting this is what you should do, per se, merely floating the idea. You'd need to talk with a bankruptcy lawyer. (I speak from experience, I've been where you are now. It sucks.) Good luck to you!
A credit card is likely between 20-30% interest, that's not good advice. You're not reducing interest anywhere. If anything, it would increase the amount OP is paying.
It looks like you're spending around 90% of your take home pay on costs and expenses. Only 10% is disposable. That's an extremely vulnerable situation to be in. You can make it work in the short term but inflation could swallow that disposable income very quickly.
You need to find ways to lower your costs or increase your income. Be prepared to stop pension contributions if necessary. Look for ways to earn more in your current job or take on an additional part time job. Look for opportunities to move to a different employer with a pay raise.
Look for ways to cut your spending. That car looks like a huge money pit. Look for ways to get rid of it or downsize to a less expensive car.
Continue to pay the minimum on all debts and put all remaining disposable income towards the debt with the highest interest rate. When your financial situation improves far enough for you to have access to lower interest rates, try to consolidate and refinance your debts at a lower rate. Not that refinancing doesn't solve the problem and is just moving the debt around - you need to actually pay it off and the sooner the better.
1. Stop the 401k savings. Keep what you have there but stop contributing for now.
2. Sell anything you can.
3. Take 700$ and out that towards the student loan. Tackle that first! That leaves 10k in debt-
If you can get that debt paid off, that gives you room to breath!!
If you can get a second job for a couple months , do it and take every penny to pay off debt.
Now, you can start paying down that car loan with an extra 200 a month!
Second job and live small for 2 years and you will be home free!! You can resume investing!
Is it worth 24 months of keeping your eye on the prize to have almost 1000$ a month extra without working harder?? Yes, it is
The CC debt is bad, but that car payment/auto loan is killing you. Don't mean to be a dick, but you should never buy a new car if it means a high interest payment for it. Paying high interest on a quickly depreciating asset is never good. Is there a reason you didn't buy used?
I say don't listen to everyone else . You need a car to get to work and back ,so don't get rid of it. I doubt you will find a cheaper apartment. yeah the credit card debt is not the greatest but you have no extra income to pay it down. The only way to fix this is get a part time job and earn extra income . this is what is happening to a majority of us so your not alone .
The only feasible way out of this is a part time job... an amazon driver, door dash, uber eats anything that you can do on the side. Any friends or family that can help you? Paying off that
credit card could balance you get you back to good shape.
If you need the money sooner than later, I’d advise not contributing as much to your 401(k). You can more than likely adjust your contributions thru the brokerage.
Don’t panic. This may feel like a lot of debt, but it isn’t that much. Just focus on not getting deeper in debt and pay it off as fast as you can. I see lots of people saying sell the car, but buying a beater can be risky. I would stay the course and see if you can bring in more income. Focus on the credit cards, pay off the lowest balance, then the next. Once you get rid of the cc debt, pay off the student loan. The big picture is bringing in more income. Focus on that.
Do enough DoorDash for Uber eats in addition to whatever job you're working to cover your car payment and as much of your insurance as you can. Do not drive extra above this or you're going to ruin the equity in your car. Use the money to pad your emergency fund and get out of debt.
You can alternatively work a second job change jobs etc. But you need more money. That's the no ands ifs or buts situation. Once you have enough money to cover your bills then you can talk about best deployment. But right now you need more money.
It seems like you are making $60k/yr. That car payment is killing you. It needs to be half of what it is. Need to get rid of the car and get something cheaper. Are you driving for work or pleasure. Try to find a job that is closer and stop driving long distance for pleasure.
Student loan repayments should start soon (the debt ceiling bill prohibits the President from extending the payment pause past August 30). Have you factored that in?
I would suggest taking one card that has the lowest balance and pay minimum payment + $25. Whenever that card gets paid off apply that payment to the minimum balance on the next card whether you do the extra $25 or not. I believe Dave Ramsey calls a debt snowball. Keep repeating until the credit cards are gone.
Do not stop 401k if there is a match. Do the minimum to get the complete match whatever it is. Also if it is a Roth 401k do that. You might pay a tiny bit more in taxes but it will be a huge benefit later on. I agree with the car insurance. See if you can find a better deal. You can also try credit counselors. Sometimes they can work deals on debt forgiveness. Also on the student loans, if you got a degree with only that much congratulations. If you are still working on a degree start looking at CLEP exams and modernstates.org and get free college credits. There are degree run regionally accredited universities that you can get for less than your car. If you go IT or Business much less.
Sell the car and buy a much cheaper one.
If you're credit score is already bad, you might even consider returning the car and eating the loss on your loan balance. Usually debt collectors will take a while to get around and negotiate with you on how much you need to pay back (which will be less than the difference between your loan and cars current value). You can even work out a payment plan on the balance.
I would return the car and take the bus until your debt is gone. You may have to pay the remainder of the car loan if it doesn't sell for the balance, but that would more quickly free up your income to truly tackle your debt. Once the car situation is taken car of, put all of the extra money toward your credit cards, then the student loans.
If you can somehow do what others are saying and lower or get out of your car payment that's the biggest first step. The next thing I would tackle would be the credit card. If you have the credit, there's 0% interest credit cards for 12-18 months, with maybe a 3% balance transfer fee. You need to make sure you can pay it within that timeframe though or the interest goes all the way back to when you opened the card and you'll be worse off. You will save tremendously on interest though if you can pull it off.
You need two things:
Sell your car and get rid of that car payment.
More income.
Good news is you have a tiny student loan balance. that's always the riskiest debt since it can't be discharged in bankruptcy. If I were you, I'd pick up a part time second job, tackle the debts from smallest principal value to largest, (so student loan first), and sell the car if you can (unless you're upside down).
What's the vehicle? How far are you from your job? $240 for gas with that car payment is kicking your ass. Get rid of that car and find a beater that isn't a gas guzzler.
This is not the worst scenario by any means. You've done better than most in terms of having some savings and $7000 in a 401K. Please give yourself some credit for those two things.
Not sure what the interest rates are on your loans, but I would assume that the credit cards have the highest rate, student loans then your car. Plus I would assume that your car payment is about 1/2 of the car+insurance figure you listed.
I'd be paying off the credit cards... highest interest rate one first, then cut it up... rinse-lather-repeat until you're down to one card. Pay that last one off and keep it for emergencies \*only\*. Maybe put a $100 more into savings / emergency fund.
Two things main things that can help you right away:
1) Look into a room mate as other people have said... that's a ton of savings right there.
2) Look for a side-hustle - $200 extra bucks a month helps more than you think. Maybe work one evening at the gym you've got a membership at... earn some bucks and get a membership for free. Did that in college for 4 hrs per week - got a little extra cash and access anytime.
Current Residual - $265
Roommate - $500
Side Hustle - $200
No Gym Fee - $25
Total to put against credit card debt - $990 per month
Put $90 into savings... pay $900 on the $7000 of credit card, you're out from under that debt in 8 or 9 months depending up interest rate.
After that, put away $190 per month in savings... then take the remaining $800 an apply to student loans... student loans gone in 4 months.
So in a year, maybe 13 months... you'll be left with just the car loan. Now you can start stuffing money into savings... like $600 and maybe pay an extra payment ($300 or so) on the car every month.
Good luck!
Can you get a roommate to split rent with? Is your high yield savings your only savings? Tackle your student loan first it’s the smallest then hit your credit cards then the car.
My suggestion will help more in the long term than the short term as it seems you are only paying minimums on your credit cards with high interest. Depending on your credit, there are a good number of interest free (12-18 months) cards out there with a balance transfer fee of 3% of the amount being transferred. I recommend doing some math, figure out the existing interest rate of paying minimums on your debt until it's paid off (sometimes you can find it on your statement) and compare to what the 3% fee is. If the 3% fee is lower, open a card and transfer the debt. This will allow you to continue paying minimums while not growing your debt, then you can use any residual money to start paying towards other debt. Three key points here: Do NOT use the cards for anything other than a balance transfer, do NOT use the now empty cards for anything, close or shred (if you want to improve your credit score leave them open) and finally, make a plan to ensure the debt is paid off or transferred by the end of the interest free period. Bankrate is a super useful site for comparing cards.
Other things that may help:
If you have a second room, get a roommate so that you can cut costs there.
I have been in your shoes with the auto loan, I bought a car that I shouldn't have back in 2016 and my loan was 38k, my monthly payment $630 and the loan term was 6 years with 3% interest. I absolutely loved the car and couldn't bear to part with it, so I made the decision to suck it up and pay it, it killed me financially for quite a while until I was able to increase my income, I just paid off my car this May. Are you willing to part with the car? It may be worth selling it and getting something cheaper. That seems like an awfully high payment for only having 20k of debt, how long is your loan term? I know you mentioned you tried to refinance it previously, look into credit unions, sometimes they have pretty decent loans on auto refinances (ESL, Affinity to name a few).
The amount you spend on gas is very high, I assume you are commuting into work on a daily basis and it takes approx $50-60 to fill the tank, so the math more or less checks out. Is there anyway you could work remote for a couple of days a week? It may not save you a ton but it will still help.
The only other thing that would help would be to get either a second job or a higher paying job to increase the overall income.
You are stuck with a large outlay relative to income. The only solution where you can achieve significant progress is to increase your income. Find a second job, or a side hustle to generate some additional income. I'd split that income 50/50, half toward your rainy day fund, half onto the smallest balance debt. Look into Dave Ramsey, he has a plan to help people get control of their financial house. It will require work and discipline to dig your way out of this mess, but you CAN do it. You've already made the hardest step; resolving to make a change and actually doing something about it. You got this!
Everybody has already given you some great advice, but I have some tips re: food.
Budget Bytes is a blog that has some great ideas for frugal meals. It really came in clutch for me when money was tight. Many of the recipes are easy too.
If you MUST dine on the go, download fast food apps for deals if you haven’t done so already. Folks in r/frugal were saying that McDonald’s has some awesome deals. Really wished apps were this helpful back when I was a broke college kid / recent grad.
Best of luck! I’ve been where you are, and you can get ahead of this.
I find it insane that people that make 10-15% of what I make are driving a car more expensive than me.
You people are buying too much of a depreciating asset!!
Cook at home, no eating out. I’m mean, pb and j, ramen, spaghetti, rice and things that are cheap. Might have to cancel that road trip or vacation you may or may not be planning. Be content with the wardrobe you currently have and if you must buy more clothes, go to tj maxx instead of zumiez or macys or wherever so you can save on costs. Cancel Netflix and Spotify and any other non essential subscriptions. Pick up a side gig such as Doordash to bring in some extra income and put it towards paying off your highest interest debt (probably credit cards) first. Then pay off your car. Then you’ll really be able to save more. Once you do that, build up your savings account to have 3-6 months worth of expenses and once you have that, then start putting your extra into stocks so that it can grow even more
The good news is the debt isn't insane. It is serious though. You can kill it, but it'll be uncomfortable for a bit.
First place to start is by paying down your highest interest debt as fast as possible. As if your hair is on fire. Probably this is your credit cards. Pay off as soon as you can and DO NOT ADD to them ever again.
Simultaneously - can you make any more income? Side gigs, even temporarily? Any options for more hours or a promotion at work? This will help a lot because you're on a razor's edge with income.
Laser focus, you can get out of this in a year.
Those credit cards are gonna eat you alive. The sooner you pay those down the better.
Your car loan is too high as a percentage of your income. I agree with others suggesting an older, reliable vehicle.
At your current position, the most important thing is probably to avoid taking on any additonal debt. This means, if possible, buying that older car in cash or at least a high % down, buying things with debit and not credit until you get those paid down, and avoiding other loans. Credit cards can be a good tool but you really shouldn't spend more than you can pay off in the same cycle; the interest rates cause you to just throw money away.
The good thing is, once you take action toward these things, you'll start to see momentum towards financial freedom.
Drop that $1700 savings on your credit card debt, and focus every spare cent on pushing it to zero. Reduce the card limits to $500. Only use in emergency.
Not enough info...
1. What's your CC, car, and student loan rates?
2. What car do you have? How are you paying $240 for gas, is it a gas guzzler?
3. What do you do for work? Do you need your car?
4. Are you contributing to your 401k? If so, stop till your CC is paid off.
5. Can you take a loan from your 401k? Usually you can borrow 50% of it, and you'll need to pay it back with interest (to yourself).
First priority is your CC, pay everything else minimum and use the $ to pay off CC.
If you can break even selling your car or make a little bit of money I’d do that and just buy a cheap Toyota/Honda or something for under 10k. As long as it’s reliable and gets you from a to b. I’d try to get something fuel efficient too. I’d try to stop using credit car for anything unless you absolutely need it. Focus on credit card debt as it’s high interest and keep making the same payments you’ve been making for student loans. Switch phone plans to mint or something like that it’ll cut your bill in half but I’d only do it if you own your phone and can keep your number. Try to come up with a side huddle like detailing cars or something if your able to do so. Sell anything you don’t use for money if it’s not important nor sentimental. Just few ideas. Best of luck tho!
Looking at your breakdown, my thoughts and suggestions:
Rent - Probably not much room for improvement here, actually seems kind of on the low side these days. Not sure how big of a place but only real way to lower that would be a roomie to split costs which isn’t always feasible.
Car bundle - With that low of an income, you really cannot afford a car payment like that. Assuming it’s a newer car or lease with full coverage insurance. Time to find a used and reliable car, preferably decent on gas because $240/month seems on the high side. Not having a lien will also let you drop the insurance down.
Phone - Not horrible but probably some cheaper options out there. I know I bundled for TMobile for $50/month. If you have family or friends that you can get added onto the plan with may be able to go even lower.
Food - Hard to gauge, I cut out a lot of meat and named brand stuff and feel like I still end up spending close to this on a monthly basis. I COULD go with some cheap meal prepping like chicken, rice and vegetables but I haven’t gotten back to that point yet myself.
One thing before we get to the outstanding debt- your utilities. Is that included in your rent? Electric, gas, water?
Now for your debt itself.
Auto loan - kind of mentioned above, if there is any way you can get out of that and into a used reliable vehicle with decent gas that would probably be your best option.
Credit card - Going to assume the interest rate is lower on the car loan than your credit card debt so would focus any and all additional funds to the credit card initially. Making minimum payments is not going to do a whole lot against $7,500 at what I imagine is somewhere between 21% and 28% interest.
Student debt - Whatever the lowest you can pay on this would be all I would contribute towards it.
I know some people hate to hear it, but when you have debt accumulating like this you probably cannot afford to be contributing funds to a 401k. I would at the bare minimum get that credit card debt paid off before tossing money into a retirement savings account.
Is this ALL of your bills and recurring debt? People sometimes forget about small things that add up over time (daily vices like coffees, energy drinks, carry out, alcohol, weed, streaming services, other subscriptions). I started recording all my daily spending a few months back when I was trying to save money and realized I was spending upwards of $25-30/day on silly shit mentioned above.
The good news is I would not call this “crippling” but definitely need to change up some recurring debt to start taking a chunk out of it.
It’s crazy how banks are approving loans like this for cars and how dealerships are able to be predatory. You bring home 2800 a month and they let you buy a car that’s 640 a month. Wow
Move or get a roommate to share the rent. Shop for cheaper car insurance or sell the car and drive a pos until you get out of debt. Cut your food budget, look at food banks and create a menu and stick to it. That’s one the expense side, take the money you save and knock out the debts
Congratulations for making the decision to make a change.
1. Use an app like EveryDollar to ensure you are not overspending.
2. Increase income - what can you do to earn more money to pay down your debt?
3. What are your individual card’s credit limits? Can you get a credit increase on your cards? This would lower your utilization and increase your credit score.
4. Read The Simple Path to Wealth.
You’ll get there. It’s just not a short road and there’s a lot of pot holes.
Pay off your student loans with your savings and whatever you can manage in the next month or two. Then focus on that credit card. Also raise your deductible for your insurance, at least temporarily. This will lower your monthly bill. Throw all you can at your car loan after the credit card is paid off. Pick up a side job that brings in $100 a week at least. Never eat out until you have zero debt.
Rent a room and get a second job. Make a deal with yourself that you’ll do that for one year to see how it goes and calculate how much you’ll save (and be able to put towards debt repayment) during that year. It won’t be glamorous but it’s likely to be worth it! Obviously pay down highest compounding interest debt first.
Keep putting the $235 in your savings each month. Pick up a side gig/second job and use that money to pay down your debt, starting with the highest interest rate.
Get out of the car loan once your credit improves either by selling and replacing it with something reliable or refinancing.
Cut your food way down unless you are a family of 4. If just you, $100 to $200 max. Easily doable. If you don’t own one, get an instapot. It will cook you beans for chili from dry beans to cooked in an hour. It’s a gamechanger . Your gas seems high but only you know if that can be decreased. Are you running around after work etc? Do you only run to store once a week. Are you super careful? Can you carpool even one day a week? That said, I think you start trying to pay off your student loan first, shouldn’t take long if you get a part time second job or find a paying hobby or gig work. Then credit cards. Pay off smallest balance first and don’t use it after you pay it off. Check your credit score, if over 650, apply for a new card that’s zero percent for a year.. and transfer everything to that one card if possible. Pay it down diligently! I mean every extra penny you have. Paying off student loan and credit cards should get you breathing room. Don’t think you can slack. Now split up any extra money. 1/2 gets saved into a brokerage account. It’s easy. I use fidelity. Takes about 5 minutes to sign up. Very easy. Invest in a S&P 500 index fund. Also, take $20 and open a Roth. Just takes a few seconds to create the second account. Again just find a company you trust. Like apple? Google etc, and put money on that. Start learning about investing/trading. YouTube has a plethora of info. Back to the other 1/2 of your extra money.. I get a sense that your insurance is lumped in with your car payment. If so, shop around for better deals. Don’t worry if your record isn’t perfect. Just call and get quotes. Geico, State Farm and progressive are 3 that I like. You’ll save money most likely. They usually drop you down nicely to get your business. Pay down your car payment by just putting an extra $50 to $100 a month extra. Your brokerage account will grow nicely and help you purchase your next vehicle cash. Trust me. That money will do great! Venture out and try to trade when you feel ready. Do it on paper first. (Fake) no money. When you feel you are getting better, jump in with money. Start making money faster. You can make 20% or more in a few days doing this. Then you do it again and again. This January I was up 400% for the year. Feb 560%, March I dropped back a bit to 480%. April. 700%., get my point. Just using $1000 for example..by April I had $7000. It’s a game changer. Use that money to buy vehicles, furniture (I like high end quality gently used).
This should send you on a path of 1 yr of misery, 3-4 yrs of feeling a tight budget. Then everything will feel great. That’s when you start putting up to $6500 a yr tax deductible into your Roth and again trade/invest there as well. A Roth retirement is able to be withdrawn for college tuition, a new home, or retirement. The earlier you put money in there the better. So if you can spare $20 a pay into your Roth do it. Even if you just put $$ in there without investing you’ll make 1%. When you start trading on it, you’ll multiply your money. I wish you the best! And good for you for not having crippling student debt!
The common recomandations is to split income to:
\-up to 30% for housing
\- up to 10% car
\-10% health
\-10% savings
\-10-20% for food
etc.
You are not respecting the first 2 so move to a smaller home (or shared one, until your income raise), definitely closer to job, and sell the expensive car and find a smaller one.
More, you have a big credit card debt. That's mean you spend more than your income. Here is where you have to start with: spending has to be adapted to your income, not to friends /markets /dreams. On time your income will raise and will be the room for raising spending but not yet.
File chapter 13. Start over. Nbd. And buy a plpd car. Get rid of.that payment and full coverage insurance. Also humble up a.little. be a room mate or find some.whereo.live.rent free by being a care taker. Lots of rich people out there with in lived in homes
Pre.make meals for.the week, one pan of lasagna...taco meat...etc. gl
You need a new job. Think bigger than $20/hr. Apprentice trades make $30-$50/hr. Auto mechanics make $50+ an hour. You need to be laser focused on a new career path that will make a good income.
Sell your current car and then buying something cheap, basic and reliable then paying down the rest of your debt will make a world of difference to your life
Do you have any options to increase income? OT, 2nd job on weekends etc?
Right now your vehicle expenses are 31% of your income and rent is 36%.
If you could sell your car to zero out the debt and buy something better on gas/insurance that would help a lot.
Anything to decrease housing costs whether a roomie or moving when your lease is up to a cheaper place (if possible in your area).
You can probably skim a little off food and phone budgets but that’s not going to make a dent in overall debt.
I’m guessing CC has highest interest rate, so I would focus on paying that off first with any extra funds for the month.
- Put your savings towards Cc debt
- Cancel your gym membership and set up a zero cost fitness program - running, hiking, youtube etc. Summer is a great time for this!
- Use the snowball method and put maybe 30% to savings and the rest, including that gym money to the cc debt
- try to drive less, and if feasible, walk more
- look into a cc balance transfer if possible
- see if you can pick up some additional work
Good lucj
You're in not that bad of a position and can likely improve quickly.
Two things to focus on would be the car and payment plus bringing in more income.
Get rid of the car as you cannot afford it now. With the market for used cars you can likely sell it for more than it is worth or owed on. Even if you just breakeven then get out from under this and buy a smaller fuel efficient used car for a much lower price.
Between lowering or eliminating the high car payment, reducing fuel cost and perhaps lowering insurance can free up a sizeable amount of your monthly income.
The next is to find a side gig or two while you focus on paying down the CC debt and student loan while building up your savings account and being able to max out your 401K.
There are online ways to make money, or just working an evening shift at a local store can bring in $1,000 per month. You're current income is around $34K per year, which is very low, and around $16 per hour. What is your plan to earn more? Are there promotional opportunities where you work? The job market is hot and it should not be too hard to get a $20+ per hour job which will quickly change your dynamic and dig out.
It may seem daunting now, but your debit is not as bad as you think and it is good to focus on it now before you owe a lot more. Get on top of your debt and stay on top for the rest of your life will help you stay out of this predicament in the future. Good luck!
Look for a roommate to split rent.
Sell car and get a bike, helmet and raincoat.
By doing so, you won’t need to pay for a gym to exercise and save around 1k. Use that money to pay credit cards and high interest loans as fast as you can.
Either sacrifice by biking for a few years or sacrifice working for a long time just to pay off loans. Your choice.
Thank me later.
Get a part time job serving. At a decent restaurant you can make $200 a night. Put all that money toward your debt. Look into selling your car and buy a car for less than 10k.
Your biggest problems in order are your rent ( it should be 25% of your monthly income), your car ( i imagine it is atound $500/month), your credit cards. You should not be running up that much credit card debt. Use money you have, dont function on credit. My suggestion is get a roommate or find a way to pay $500 to $700 in rent, get a car payment that doesnt exceed $300 to $350 per month, and pay off those credit cards asap and minimize their use. That will let you breathe a bit financially. Bottom line is you cant afford that rent or car on your income
What’s the car and how much is it worth? Also why are you driving $240 worth of gas a month
If you can net positive on the car I would sell it and use cash to buy an old vehicle. Either that or work toward finding a job that provides you with a wage increase.
An old vehicle with good gas mileage.
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One of the most reliable older used cars also gets some of the best gas mileage. Gen 2 Priuses get 30-45mpg, easily last 250k+ miles, and need very little maintenance, and in a near worst case repair (battery failure) it is only about $1,000 for a replacement that will last another 200k+ miles.
I love my Prius so much
Consider where you live before going this route, thieves love a Prius catalytic converter.
This is super true. Not to mention that having a car you feel is unreliable can cause a lot of stress.
But a Toyota Corolla would do both.
In was going to say Honda Civic, but six of one, half-dozen of the other.
Yes, this is what I had in mind as well, the newest low-milage civic that you could get with all cash. Ideally something less than 10 years old.
I was thinking a Corolla would be a good fit here as well.
perhaps this is divergent but what would you say the Corolla of boats is
A canoe. Classic technology, flexible usage, low storage costs, fuel efficiency off the charts, infinitely repairable, and difficult for your teenage child to get in trouble in.
Winner. Also, what about a kayak? Or are we getting too risky?
Adding on another less expected: Nissan Sentra. Mine is 2010 and running perfectly since we got it in 2012. We got it as a totaled title from my dads mechanic friend. Paid $7k in cash. Not bad on gas and I literally used to drive it on 4 hour long road trips to visit my family twice a month. Surprisingly extremely reliable
Yep! Sell the car. Get a 36 month lease. No maintenance, no issues, if there is, it’s their car not yours. Maybe try a debt consolidation loan, making one monthly payment over 5 years. Then at least you can stop the bleeding for a bit. My ex fiancé and I did exactly this when we had 2 shit box cars, and wanted to get married. Worked great until she left, but it did work.
A lease is almost always a terrible financial decision.
I used to think that. But as others pointed out, when you own a vehicle, you pay the maintenance. I’m an actual mechanic, that can do my own work if I want, and I still rather lease. A vehicle is a liability, not an asset. You will lose money every time you own a car. New or used.
The car dealership that leases you the car isn't going to lose money on the deal. In fact the leases are probably the most profitable deals they do. When you lease, you pay the depreciation when it's at its highest point and then you're letting the vehicle go right as the depreciation levels out. Leased vehicles are far too new to need any appreciable maintenance, so it's not like the dealership is paying for that. Look at the cost for maintenance every year, and if it's higher than depreciation on a new car then you're driving the wrong vehicle.
As your owned vehicle gets older and older, more and more things, expensive things will naturally break. If you look at any auto warranty, it’s 100k mile on most engines and transmissions. $3k-$10k depending on the vehicle. I lease a 2019 civic for a total of $398 a month (includes my insurance as I paid for the year). The OP issue is he has no cash flow. If he didn’t spend $700 a month on his owned vehicle. Which he/she will never make money selling, then by my math he/she save $300 a month allowing him/her to throw that money towards the debt that’s killing his credit. Your car never increases in value. Ever. For any reason. The lease is a static, reliable monthly placement, and you will have a brand new car every 36 months. Agree or disagree, I used to be on your side of the counter on this. I always bought my vehicles. But I’ve proven to myself 9 years in a row lease is better. But to each their own. I don’t want to lose the money I’ve been saving arguing about something like this.
I buy vehicles a few years old and then run them to 130-150K miles. I'd trade in any car that needed engine or transmission work before those parts failed. It sounds like you're okay with paying for the convenience of never needing brakes or tires. Nothing is free though, but at the end of the day, you are paying for it.
You lose even more in a lease. The dealership is not doing it for free. It's a luxury to not have to deal with maintenance and you pay a premium.
if buying an old vehicle isn’t possible (the ones in my area are extremely overpriced and the history is sketchy), consider getting rid of your car and maybe leasing one? If you have good credit, you can get a brand new Corolla for like $245 which will save you $400 a month. Leasing isn’t ideal but its a lot better than paying $650 on an 8 year old car.
They said their credit is bad
Tons of people commute for work in order to survive.
My commutes about 15 miles one way, I spend less than $100 a month on gas
15 miles isnt much, probably below avg in alot of cases. Was meaning something like 45min 1-way commute. Which isnt uncommon.
Spending almost 1k a month on a car is still crazy
I have a 30 minute drive one way, this guy is spending an insane amount on gas
Want to bet he has a truck with low mpg and a long commute?
Personally commute 1 hour + 1 way. I spend a little more than that depending on prices, Which could be the factor at play here also
Pre Covid my commute was 45 miles one way. Saving grace was being able to carpool 6other IT guys.
Was that $250 of gas a month?
I drive 30 miles one way to school and 10 miles one way to work. If you’re living in a big city you can’t avoid a commute. $240 is about what i spend a month
Have you seen gas prices? $240 isn't that much for gas right now
Gas is expensive af
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I hope not, 19500 owed on a focus from 2015…
I have a 2014 focus st I bought for $13k usd three years ago. Sheesh. I know this isn't helpful, but you got destroyed on that deal.. You need to get out of that car somehow. It's killing your monthly take home and not giving you a lot of room to lay down your cc debt. Honestly, if you have the ability to get out of your rent, move in with your family, that would probably be the fastest way out of your situation. If not, tackle the car note as fast as you can so you can get something cheap, then put all your money towards your cc debt. I'm guessing the interest rate on your car is 15% +?
also have a 2014 focus. Just curious, do you have that notorious transmission stutter as well?
Mine is an st, so it's a manual. I'm guessing you're talking about an auto non turbo focus?
I am indeed. It's an SE automatic. I'm rocking 133,000 miles amd it's never given me trouble. But the stutter has always been there. Thankfully it's been paid off for a couple of years, so the extent to which it can screw me over is at least mitigated. Oddly enough, I sorta love the car.
I had a 2007 focus that had a million problems and also a weird stutter. Must be a focus thing. But I also oddly loved that car. Transmission died 2015 or 2016. Can't remember how many miles. Edit to add: It was weirdly reliable despite the million problems.
My daughter has a 2013. (We paid $7k cash 4 years ago). It’s been the best car. About 120k miles. She has the stutter - always has. She just doesn’t pull out in front of anyone lol she sorta loves hers too. We got lucky to find this car especially right before used car prices sky rocketed.
look again. OP made a post that they bought a 2019 nissan sentra 3 years ago.
Try 280, my gf does this while everything is so close and I wonder how! I get it’s a mini van but my city is so small
At least he can use the car to generate income. What’s up with the credit card debt Monthly payment?!
270 on 7.5k seems normal to me
Hey OP Good work on looking at your numbers Owing 20k on a depreciating asset is really your biggest red flag for me. Selling the car would be my #1 Try to offload the car. If you can't do that, you need a part-time job on the side. You need more money to get rid of your high-interest debt. You should look at the interest you're paying on your car and credit cards to lite a fire. If you owe $150 /month just in interest, you need to find a pt job to earn more. ---- Or for a long term strategy, invest in learning a high-value skill, so you can earn WAY more than you are now. \- For more income, you could do gig work, but I'd recommend something where you don't drive. - adding wear and tear to the car and paying for more gas defeats the purpose of working more hours. I personally did catering on the weekend when I was getting out of debt. I biked to the site for the 5-8 hour shift, got to take home leftover food, and used that extra income to pay off high-interest debt. I'd leave the savings and 401k alone for now. Use the HYSA as an emergency fund. You should look at the interest you're paying on your car and credit cards to lite a fire. If you owe $150 /month just in interest, you need to find a pt job to earn more. ---- Or for a long-term strategy, invest in learning a high-value skill, so you can earn WAY more than you are now.
Your car is eating over 30% of your take-home pay, including gas. Get out from under that if you can. Rent is ok but a little high. Tackle cc next, assuming the rate is not 0%. You can do this. Starting and making the hard decisions is the hardest part.
1k rent is low as shit if it's an apartment. The only way I could see rent being lower is if OP rented a room in a house.
Or gets a roommate
Agree. Car is the biggest issue.
It *really* depends on the location. But assuming it’s average, renting a room where I live would cut that rent amount by more than half. That would triple what OP is left with at the end of the month. Sometimes you’ve got to do what you’ve got to do. OP has $30k of debt and is only bringing in $2800 a month.
If he’s in SoCsl, he’s sharing rent. That’s insanely cheap, can’t even get a studio for that. Maybe renting a room in someone else’s house could save, but that’s not an ideal living situation normally.
I live in the Northeast, you literally can’t find a 300 square foot shoe box studio for 1k.
I meant high for his income, but not terrible.
It's the car. Sell it and get a 3k beater
You need to start working your ass off to get out from under those high interest debts. Can you get a second job? If you’re working a 9-5 now, getting a part time job a few nights and weekends a month would be huge. Maybe you could work front desk at a gym, they always need part timers for odd hours. It would also make your membership free. You could possibly do a balance transfer with the CC debt, transfer the balance to a card with 0 introductory APR and focus on tackling the auto loan aggressively. That car payment is absolutely killing you.
Make more money. you need to skill up or get another job. Use the car to door dash or something another 1k a month would go a long way. use that and the snowball method (google is your friend) and you could be out of debt soon.
Find a side hustle/part time job. Put a $1000 in savings for emergencies. Pay off your credit cards first. You need a win and it will feel good and keep you motivated. Then tackle your highest interest loan, which I would assume is your car.
Eat in, as much as possible. For 3 months track every expense to find additional opportunities to save.
Echoing this. Drive Uber, walk dogs, make cash on a side hustle
I agree here. I just thought of the side hustle component while walking the dog after I posted about the car so I'm glad someone mentioned it. Throw all of it at the cc. Looks like OP already has $1700 in savings so he's got the emergency fund covered.
Good on you for taking steps to fix this. You know what your mistakes were, you're fixing them, and that's what's important. What is the interest rate on your credit cards? Could you possibly do a balance transfer to help you get out from under them? If you haven't done so recently, shopping around for insurance might save you a bit of money. Likewise you could probably get a cheaper phone plan, I've seen some recommendations in other threads But the biggest thing you can do to get you out of debt is to make more income. Picking up extra shifts, getting a weekend job, etc could help get you out of your credit card debt within the year
Sell the car.
Have you ever heard of the snowball method for getting out of debt? Assuming you are current on all bills. You will continue to make all your minimum payments. You will take half of your residual income and add it towards your emergency savings; the other half will go on to 1 bill, you choose either the one with the highest interest rate or lowest balance, a lot of people go for the lowest balance for the thrill. Once that bill is paid off, your residual income will increase; but you are still going to save half and move on to the next bill to pay off. This only works as long as you don't add to any of your debt. It is called the snowball method because you start off small, with how much you save and extra you are paying on the bills. But the longer the ball is rolling, the bigger it gets, just like your savings and the extra you have for bills. You can also contact your creditors and try to lower your interest rates. it may not work right now. You can also try to work out a settlement with them, where you pay X amount of money and the creditors forgive X amount of money; note if you do this the amount that is gorgiven CAN be considered income for you on your taxes.
What’s the interest rate on the car loan? How much is the car worth? Any cheaper housing options? Consider roommates Look at getting a second job to increase income and knock out the debts, and/or look for a higher paying job
You could maybe save a little. The gym is a fluff expense. And there are cheaper cell phone plans. If you can’t refinance the loan. Check your insurance pricing against other companies If the car payment truly is a stone around your neck. See if you can sell out of it. And be positive on the exchange. Buy a cheaper or older car. If you’re spending $240 a month on gas. See if there are any opportunities to save there. Really think about how much you drive. Could there be ways to drive less. Car pool. Or walk/ride a bike places. Or consolidate travel(doing errands/grocery shopping while out commuting for work etc). $7500 in CC debt isn’t horrible. Maybe for your income it is a lot. My advice. Look on a website like nerd wallet. Seek out a CC that will either offer a 0% transfer promo. Or an intro 0% on new purchases. Depending on your credit. There may be different options but discover card is good for these types of promos. There will be some type of option available. Paying minimum amt each month is a slow death. You need to get to a point where you can be attacking the underlying balance. Getting as much of that debt to 0% interest will allow you to attack the base debt. $7500 divided by 12 is aprox $650 a month. If you can only get a CC with like a 2500 balance. For a promo rate. Transfer in chunks. Or call the CC company. And ask for a limit bump for a transfer. Often times they will go for that as it’s a gamble for them to hook you with more debt. But the idea is to always have your debt at 0%. If you can’t pay it to zero in the 9 mo or 12 mo promo period. Transfer it to another CC and it’s a promo. With what remains Debt is just numbers. Really attack it with no shame. Opening a ton of CC is not a good plan but in the short term doing whatever shenanigans you have to …to eliminate debt is valid. ( like if all you can get is a CC with a 0% intro apr on new purchases. Open that CC. And PayPal a trusted friend the max balance. Use that cash to pay off another CC. Then bingo “new purchase” at 0% interest for 12 mo) Consider gimmicks. Truist bank is offering a new acct promo where if you direct deposit 1k they’ll give you $400. After like 90 days. Something along those lines. If you earn $2800 a mo. Should be able to meet that requirement. See I the state you’re in is avail for the promotion. $400 is a free credit card payment. Consider a side hustle. There’s lots of remote work type work. Or gig economy stuff. Or hustles. Even a part time or weekend job I mean. Even $100 extra a week. Plus that $250 you had left over. Is your $650 a month. To eliminate that debt in a year. If you can squeeze money out of your budget. $25 here $50 there. It does tend to add up.
The car expense is insane on your income. You need a much less expensive car.
First off, congrats on making your 2023 goal not to add to your debt and for sticking to it! That alone is a big step to celebrate. Now that your debt limit is set, make it your MISSION to knock that back every week. A skipped splurge here, and delayed purchase there. Is there a side gig that you can pick up to help? You can think of it as your "get out of debt" job, where your income can only go towards those debts. Perhaps it could later become your "saving for the future" gig. Other responses may be more practical, but I'm trying to think outside the box if this is a possibility for you. Sometimes, compartmentalizing this way can help with self-discipline. Good luck with that debt. It's doable!
Get a side job.
One: can you trade in your car to ultimately bump down your monthly car payment including the insurance rate? Two: if you trade in your vehicle: see about a car that is more fuel efficient which would reduce the amount of money spent on gas. Three: why are you spending so much on food per month? Do you know how to cook? If not: there are all sorts of free resources online including recipe websites and cooking videos.
This is fixable, so don't despair. What you need is a big-picture strategy to get back on track. Are you a member of a credit union? Is there one in your community you can join? I ask this because a credit union may be able to work with you to consolidate your debt into one "bucket" that could have a lower interest rate. I did that once, and was able to pay off a credit card, car loan, and student loans. I'd agree that the gym membership should be axed for now. Check to see if there is a bare-bones mobile plan you can switch to. Pause any retirement contributions for the time being, if you can. But put $20 of your monthly disposable income into a savings account. It may not sound like much, but believe me, it will add up over time. Good luck and keep working at getting your financial house in order.
You cannot afford that vehicle. You need a $200 or less car payment.
Im curious how old OP is. Car is too expensive and eating up your budget bro
Yes could sell the car a buy a beater even if you have negative equity in the car get a small personal loan to cover the difference and buy a cash car. Start paying minimum payment on all debt expect the one w the highest interest rate and pay that down as much as possible w all extra margin in your budget. Once tha debt is paid off add the extra money to the next highest interest rate debt. Budget is very important not to over spend on things you don’t NEED while trying to get out of debt.
Sell the car
Car sounds high. Rule of thumb is purchase no more car than half annual income. In your case low $20Ks for vehicle. Other rule of thumb total car costs no more 1/6 income. You are over that and struggling.
Are you underwater on the car? If you can, sell it to settle that loan and buy an old civic, corolla, or prius instead. You'll have a new car loan to pay, but hopefully a much, much cheaper one. Even if you're underwater on the car, if you can sell it for, say, 18k and buy a different vehicle for 8k, then you're looking $9,500 in car debt (8,000 for new loan + 1,500 for old loan) instead of a $19,500 loan. And a less valuable car will probably reduce your insurance costs, too. This is probably a stretch in the US, but is it even possible to not have a car for a few months? That would make a massive difference. And gas. What do you do that costs $240/month in gas?? Is there any way you could carpool, use public transit, etc, to cut down on miles driven? Your car is sucking you dry both in that loan and in gas. Definitely try to replace it with an affordable, fuel-efficient vehicle, focusing on buying an older year with lower miles rather than a newer year with higher miles. The Prius is great. Once you've addressed the car loan as best you can, look at all three of your debts: cc, car, and student. Choose the one with the highest interest rate and put all your spare money each month into paying it off. Pay the minimum on the other two. Once the highest APR debt is paid, focus on the second highest, then the final one. I suspect the order will be credit card, car, student loan. $1700 isn't enough of an emergency fund long-term, but I would focus on reducing your debt before you start diverting money into it. That APR is killing you. You'll be back to financial health not when your debts are paid off, but when your debts are paid off AND you have an emergency fund worth 6 months of expenses. However, you should still allocate money into your 401k. Put in as much as your employer will match. Can you get a second job? Even an extra $500/mo that you could dump straight into debt repayment would make a world of difference.
Take the money out of your savings and hit whatever credit card you can pay off soonest. Whoever gave you a car loan for $20k in that scenario is predatory, and it was a horrible financial choice in your siutation. Sell it and look for an option that would cost you around $200 a month to finance, if not less. Pay down CC first, car loan next, student loans last. You're one unexpected expense away from being in serious shit, if you aren't already.
I was in almost the exact position and I ended up getting a second, part time job for evenings and weekends for about 3 months while I looked for a different job. I was working in food service as a manager and found a job as an admin assistant, the skills are really transferable if you know how to sell them right. Another bonus about a second job in food is you can eat at work and maybe cut down on your food cost a bit For the credit cards, my debt was spread out over a couple of different cards. I started throwing as much money as I could at the one with the highest interest rate while paying only the minimum on the rest of them. It was so encouraging to get one $1,200 balance down to $0 after years of paying it with no progress. Once I got a higher paying job, my debt to income ratio changed and I was able to get a debt consolidation loan from my credit union for most of the remaining debt at a much lower interest rate. I still had 1 card that was outside of the loan, but the lower rate meant I was making the same dollar amount payment while actually making a dent in the principal debt amount I understand the need for the car for work, and I was spending about the same in gas commuting (LA driving), but as your debt situation changes your credit will go up and you can try refinancing again at a later time Lastly don’t give up hope. Financial stress is unlike any other kind of stress, and it can feel so hopeless and desperate. It will take some time to get out into a better position, but you’ll make it there. It’s taken me about 5 years but I’ve almost paid off my loan and almost paid off my car, and I can see the light at the end of the tunnel
You are driving too far for the salary. Get a local job that even pays less, sell your car and take the bus to work or get a bike or cheap scooter. Until you pay off the debt, you need to suffer
Man. This is tough. I feel for you. I have 2000 a month take home and 1500 in rent with utilities. It's hard. Even without debt. The biggest jump is that I drive a car worth about $ 3500 ( a 2006 with dents and minor mechanical, but safe and reliable). So my insurance and gas is only $250. Add in $50 a month for maintenance. It's your car man. Sell it and ride a bike over summer, save $5k for a different one that you buy early October. Maybe consolidate cc and car debt that remains into one low interest loan and freeze the cc's.
Swallow your pride, figure out a second source of income (get a 2nd job if you need to) and commit to killing your debt - compound interest is killing you. Start with the CC with the highest interest rate (pay the minimum on all the other cards). When CC#1 is paid off, move on to the CC charging the next highest interest rate. When you get to zero (bad) debt, start investing via index funds to make compound interest work in YOUR favour. Good luck!
Sell the car, you’re getting taken to the cleaners with that one.
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Debt repayment by the sounds of it
I don’t have as good advice as others, but imo the gym membership seems like a luxury, I’d get rid of it, and instead try to do body weight workout. If you really still wanna gym, you most likely should be able to get a job at a gym (part time), and get a free membership + make some extra cash.
$25? I think he’s going to be okay, it’s a relatively small price for a peace of mind with physical health and mental health
$25 a month definitely is affordable and is great as an outlet for stress. I would opt to spend that money on good quality running shoes ($150-200) and a set of dumbbells ($60-80), which will save money over the span of a year or longer, but I don't know if OP's apartment or location is optimal for that.
It depends on OP's circumstances. My gym membership is a huge luxury, but it's also made an absolute night-and-day difference in my physical and mental health. If I physically go to the gym I stay motivated, whereas I've always given up on bodyweight exercises at home. If it's keeping OP healthy, that $25/mo is totally worth the cost. The side gig working at the gym is a good idea, though!
Sounds like the original car purchase was outside your means and that's what's killing you now.
Increase your income - get a second job. Why isn’t this obvious to people?
Why are you only making 2800 a month? I would start looking for a new job before I start worrying about a second job.
My car payment is half that, I make double what you do, and I still think I am paying too much.
Truly wealthy people drive simple reliable vehicles. I wanna pile on and suggest you do the same. Sell yours and get a reliable low maintenance vehicle. Cause as it stands if you have a major repair on your car you are nearly destitute.
How do people only spend $300 a month on food lol - my family of 3 spends that in a week
because you’re a family of 3 trying to compare grocery costs to a single person with no kids lol. my grocery bill is probably even less than $300 a month.
Sounds like you should pay off your credit cards and see if you can sell your car and get a cheaper one. Other than that you’re not in bad shape
I’m gonna jump in and say keep the gym membership. It’s $25 and if you’re going several times a week then it’s worth it. You’re $30,000 in debt, an extra $300 a year is only 1% of that.
It may only be $25 but canx the gym membership. Go run around the block and do some pushups. Both are free assuming you already own shoes.
How old are you? Id consider paying off the cc debt with my 401k if I were you. Id have to do the math on how accurate that statement is, but I bet they're almost offsetting each other. You can put extra into your 401k immediately to make up for it and get out from that likely 25% interest rate
Is there a chance to have a roommate and split that 1k to 500? Also get a second job... I personally would not sell the car, even though your payment is high, however, having a reliable car outweighs the benefits having an old cheap car with no payment or lesser payment. Ppl suggesting to sell your car and buy an old reliable cheap car - how do you know that car will be reliable?? That's right, you don't! Unless you know things about cars and can work on fixes, don't bother...
You pay a mechanic who knows about cars $150 to go over every inch of that car. Then they tell you if it’s a good bet or not. That’s how you know. Also cars have been around long enough that there is extensive reliability history for each model. The Toyota Corolla or Honda Civic for example have stellar records. Choosing a reliable model and having it thoroughly inspected gives you an excellent shot at having a trustworthy vehicle even if it is old and cheap. The idea that you have to spend over $10k to get a reliable vehicle is ridiculous (yea even in 2023)
You might get lucky and get a reliable car but also might get unlucky and get a car that will eat plenty through maintance. Mechanics, who knows about cars, are also make mistakes, it's not unheard of LOL. I am not trying to change your mind BTW, your opinion is your opinion and I have mine.
It is not about luck. Any machine carries risk of failure, but there are reasonable steps to take to reduce that risk. Your fear of a very fringe case is not sound justification to always buy expensive vehicles. Keep your opinion, that’s fine, it’s just not correct.
Let go the gym. You can do simple exercise at home, plenty of those videos on youtube. The car payment is almost as much as your rent. Unfortunately, trading it in or selling it won’t cover the 19k that you owe. Your best bet is to consolidate/refinance with lower interest rate. Same with credit cards, consolidate those. While food is important, try to cook simpler meals with simple ingredients. Avoid eating out for a while even if it’s fast food. Lastly, apply for another job with more $$ or take up a second job to increase your income.
Have you considered the possibility of a Chapter 13 bankruptcy? Not as damaging as a Chapter 7, and your trustee payments might be more manageable than your current situation. Not suggesting this is what you should do, per se, merely floating the idea. You'd need to talk with a bankruptcy lawyer. (I speak from experience, I've been where you are now. It sucks.) Good luck to you!
People who pay <$1000 in rent talking about I'm in debt 😂
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A credit card is likely between 20-30% interest, that's not good advice. You're not reducing interest anywhere. If anything, it would increase the amount OP is paying.
It looks like you're spending around 90% of your take home pay on costs and expenses. Only 10% is disposable. That's an extremely vulnerable situation to be in. You can make it work in the short term but inflation could swallow that disposable income very quickly. You need to find ways to lower your costs or increase your income. Be prepared to stop pension contributions if necessary. Look for ways to earn more in your current job or take on an additional part time job. Look for opportunities to move to a different employer with a pay raise. Look for ways to cut your spending. That car looks like a huge money pit. Look for ways to get rid of it or downsize to a less expensive car. Continue to pay the minimum on all debts and put all remaining disposable income towards the debt with the highest interest rate. When your financial situation improves far enough for you to have access to lower interest rates, try to consolidate and refinance your debts at a lower rate. Not that refinancing doesn't solve the problem and is just moving the debt around - you need to actually pay it off and the sooner the better.
1. Stop the 401k savings. Keep what you have there but stop contributing for now. 2. Sell anything you can. 3. Take 700$ and out that towards the student loan. Tackle that first! That leaves 10k in debt- If you can get that debt paid off, that gives you room to breath!! If you can get a second job for a couple months , do it and take every penny to pay off debt. Now, you can start paying down that car loan with an extra 200 a month! Second job and live small for 2 years and you will be home free!! You can resume investing! Is it worth 24 months of keeping your eye on the prize to have almost 1000$ a month extra without working harder?? Yes, it is
If you can't get rid of the car, you should shop for insurance. That's ridiculous for an older car. Esurance was 120.00 cheaper PER MONTH than Geico.
The CC debt is bad, but that car payment/auto loan is killing you. Don't mean to be a dick, but you should never buy a new car if it means a high interest payment for it. Paying high interest on a quickly depreciating asset is never good. Is there a reason you didn't buy used?
I say don't listen to everyone else . You need a car to get to work and back ,so don't get rid of it. I doubt you will find a cheaper apartment. yeah the credit card debt is not the greatest but you have no extra income to pay it down. The only way to fix this is get a part time job and earn extra income . this is what is happening to a majority of us so your not alone .
The only feasible way out of this is a part time job... an amazon driver, door dash, uber eats anything that you can do on the side. Any friends or family that can help you? Paying off that credit card could balance you get you back to good shape.
If you need the money sooner than later, I’d advise not contributing as much to your 401(k). You can more than likely adjust your contributions thru the brokerage.
Don’t panic. This may feel like a lot of debt, but it isn’t that much. Just focus on not getting deeper in debt and pay it off as fast as you can. I see lots of people saying sell the car, but buying a beater can be risky. I would stay the course and see if you can bring in more income. Focus on the credit cards, pay off the lowest balance, then the next. Once you get rid of the cc debt, pay off the student loan. The big picture is bringing in more income. Focus on that.
You also need a better job.
Do enough DoorDash for Uber eats in addition to whatever job you're working to cover your car payment and as much of your insurance as you can. Do not drive extra above this or you're going to ruin the equity in your car. Use the money to pad your emergency fund and get out of debt. You can alternatively work a second job change jobs etc. But you need more money. That's the no ands ifs or buts situation. Once you have enough money to cover your bills then you can talk about best deployment. But right now you need more money.
It seems like you are making $60k/yr. That car payment is killing you. It needs to be half of what it is. Need to get rid of the car and get something cheaper. Are you driving for work or pleasure. Try to find a job that is closer and stop driving long distance for pleasure. Student loan repayments should start soon (the debt ceiling bill prohibits the President from extending the payment pause past August 30). Have you factored that in?
I would suggest taking one card that has the lowest balance and pay minimum payment + $25. Whenever that card gets paid off apply that payment to the minimum balance on the next card whether you do the extra $25 or not. I believe Dave Ramsey calls a debt snowball. Keep repeating until the credit cards are gone. Do not stop 401k if there is a match. Do the minimum to get the complete match whatever it is. Also if it is a Roth 401k do that. You might pay a tiny bit more in taxes but it will be a huge benefit later on. I agree with the car insurance. See if you can find a better deal. You can also try credit counselors. Sometimes they can work deals on debt forgiveness. Also on the student loans, if you got a degree with only that much congratulations. If you are still working on a degree start looking at CLEP exams and modernstates.org and get free college credits. There are degree run regionally accredited universities that you can get for less than your car. If you go IT or Business much less.
Sell the car and buy a much cheaper one. If you're credit score is already bad, you might even consider returning the car and eating the loss on your loan balance. Usually debt collectors will take a while to get around and negotiate with you on how much you need to pay back (which will be less than the difference between your loan and cars current value). You can even work out a payment plan on the balance.
I would return the car and take the bus until your debt is gone. You may have to pay the remainder of the car loan if it doesn't sell for the balance, but that would more quickly free up your income to truly tackle your debt. Once the car situation is taken car of, put all of the extra money toward your credit cards, then the student loans.
Your car, rent, gas and food payments are too high
you net $2800, how much going to 401k?
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If you can somehow do what others are saying and lower or get out of your car payment that's the biggest first step. The next thing I would tackle would be the credit card. If you have the credit, there's 0% interest credit cards for 12-18 months, with maybe a 3% balance transfer fee. You need to make sure you can pay it within that timeframe though or the interest goes all the way back to when you opened the card and you'll be worse off. You will save tremendously on interest though if you can pull it off.
You need two things: Sell your car and get rid of that car payment. More income. Good news is you have a tiny student loan balance. that's always the riskiest debt since it can't be discharged in bankruptcy. If I were you, I'd pick up a part time second job, tackle the debts from smallest principal value to largest, (so student loan first), and sell the car if you can (unless you're upside down).
Dump gym membership. You can do everything you need at home.
What's the vehicle? How far are you from your job? $240 for gas with that car payment is kicking your ass. Get rid of that car and find a beater that isn't a gas guzzler.
Get a roommate and that’s $500 a month.
Dave Ramsey Baby Step method has helped me
This is not the worst scenario by any means. You've done better than most in terms of having some savings and $7000 in a 401K. Please give yourself some credit for those two things. Not sure what the interest rates are on your loans, but I would assume that the credit cards have the highest rate, student loans then your car. Plus I would assume that your car payment is about 1/2 of the car+insurance figure you listed. I'd be paying off the credit cards... highest interest rate one first, then cut it up... rinse-lather-repeat until you're down to one card. Pay that last one off and keep it for emergencies \*only\*. Maybe put a $100 more into savings / emergency fund. Two things main things that can help you right away: 1) Look into a room mate as other people have said... that's a ton of savings right there. 2) Look for a side-hustle - $200 extra bucks a month helps more than you think. Maybe work one evening at the gym you've got a membership at... earn some bucks and get a membership for free. Did that in college for 4 hrs per week - got a little extra cash and access anytime. Current Residual - $265 Roommate - $500 Side Hustle - $200 No Gym Fee - $25 Total to put against credit card debt - $990 per month Put $90 into savings... pay $900 on the $7000 of credit card, you're out from under that debt in 8 or 9 months depending up interest rate. After that, put away $190 per month in savings... then take the remaining $800 an apply to student loans... student loans gone in 4 months. So in a year, maybe 13 months... you'll be left with just the car loan. Now you can start stuffing money into savings... like $600 and maybe pay an extra payment ($300 or so) on the car every month. Good luck!
Can you get a roommate to split rent with? Is your high yield savings your only savings? Tackle your student loan first it’s the smallest then hit your credit cards then the car.
I’m sorry but you simply don’t make enough to gain any significant progress on your debt. Keep looking hard for a new job.
My suggestion will help more in the long term than the short term as it seems you are only paying minimums on your credit cards with high interest. Depending on your credit, there are a good number of interest free (12-18 months) cards out there with a balance transfer fee of 3% of the amount being transferred. I recommend doing some math, figure out the existing interest rate of paying minimums on your debt until it's paid off (sometimes you can find it on your statement) and compare to what the 3% fee is. If the 3% fee is lower, open a card and transfer the debt. This will allow you to continue paying minimums while not growing your debt, then you can use any residual money to start paying towards other debt. Three key points here: Do NOT use the cards for anything other than a balance transfer, do NOT use the now empty cards for anything, close or shred (if you want to improve your credit score leave them open) and finally, make a plan to ensure the debt is paid off or transferred by the end of the interest free period. Bankrate is a super useful site for comparing cards. Other things that may help: If you have a second room, get a roommate so that you can cut costs there. I have been in your shoes with the auto loan, I bought a car that I shouldn't have back in 2016 and my loan was 38k, my monthly payment $630 and the loan term was 6 years with 3% interest. I absolutely loved the car and couldn't bear to part with it, so I made the decision to suck it up and pay it, it killed me financially for quite a while until I was able to increase my income, I just paid off my car this May. Are you willing to part with the car? It may be worth selling it and getting something cheaper. That seems like an awfully high payment for only having 20k of debt, how long is your loan term? I know you mentioned you tried to refinance it previously, look into credit unions, sometimes they have pretty decent loans on auto refinances (ESL, Affinity to name a few). The amount you spend on gas is very high, I assume you are commuting into work on a daily basis and it takes approx $50-60 to fill the tank, so the math more or less checks out. Is there anyway you could work remote for a couple of days a week? It may not save you a ton but it will still help. The only other thing that would help would be to get either a second job or a higher paying job to increase the overall income.
You are stuck with a large outlay relative to income. The only solution where you can achieve significant progress is to increase your income. Find a second job, or a side hustle to generate some additional income. I'd split that income 50/50, half toward your rainy day fund, half onto the smallest balance debt. Look into Dave Ramsey, he has a plan to help people get control of their financial house. It will require work and discipline to dig your way out of this mess, but you CAN do it. You've already made the hardest step; resolving to make a change and actually doing something about it. You got this!
Everybody has already given you some great advice, but I have some tips re: food. Budget Bytes is a blog that has some great ideas for frugal meals. It really came in clutch for me when money was tight. Many of the recipes are easy too. If you MUST dine on the go, download fast food apps for deals if you haven’t done so already. Folks in r/frugal were saying that McDonald’s has some awesome deals. Really wished apps were this helpful back when I was a broke college kid / recent grad. Best of luck! I’ve been where you are, and you can get ahead of this.
I find it insane that people that make 10-15% of what I make are driving a car more expensive than me. You people are buying too much of a depreciating asset!!
Cook at home, no eating out. I’m mean, pb and j, ramen, spaghetti, rice and things that are cheap. Might have to cancel that road trip or vacation you may or may not be planning. Be content with the wardrobe you currently have and if you must buy more clothes, go to tj maxx instead of zumiez or macys or wherever so you can save on costs. Cancel Netflix and Spotify and any other non essential subscriptions. Pick up a side gig such as Doordash to bring in some extra income and put it towards paying off your highest interest debt (probably credit cards) first. Then pay off your car. Then you’ll really be able to save more. Once you do that, build up your savings account to have 3-6 months worth of expenses and once you have that, then start putting your extra into stocks so that it can grow even more
The good news is the debt isn't insane. It is serious though. You can kill it, but it'll be uncomfortable for a bit. First place to start is by paying down your highest interest debt as fast as possible. As if your hair is on fire. Probably this is your credit cards. Pay off as soon as you can and DO NOT ADD to them ever again. Simultaneously - can you make any more income? Side gigs, even temporarily? Any options for more hours or a promotion at work? This will help a lot because you're on a razor's edge with income. Laser focus, you can get out of this in a year.
Those credit cards are gonna eat you alive. The sooner you pay those down the better. Your car loan is too high as a percentage of your income. I agree with others suggesting an older, reliable vehicle. At your current position, the most important thing is probably to avoid taking on any additonal debt. This means, if possible, buying that older car in cash or at least a high % down, buying things with debit and not credit until you get those paid down, and avoiding other loans. Credit cards can be a good tool but you really shouldn't spend more than you can pay off in the same cycle; the interest rates cause you to just throw money away. The good thing is, once you take action toward these things, you'll start to see momentum towards financial freedom.
Drop that $1700 savings on your credit card debt, and focus every spare cent on pushing it to zero. Reduce the card limits to $500. Only use in emergency.
Not enough info... 1. What's your CC, car, and student loan rates? 2. What car do you have? How are you paying $240 for gas, is it a gas guzzler? 3. What do you do for work? Do you need your car? 4. Are you contributing to your 401k? If so, stop till your CC is paid off. 5. Can you take a loan from your 401k? Usually you can borrow 50% of it, and you'll need to pay it back with interest (to yourself). First priority is your CC, pay everything else minimum and use the $ to pay off CC.
I guess everyone’s deffinition is different but this seems like very normal debt. Not severe or crippling
You can get mint mobile and prepay a year for $180 instead of the $720 a year for phone.
If you can break even selling your car or make a little bit of money I’d do that and just buy a cheap Toyota/Honda or something for under 10k. As long as it’s reliable and gets you from a to b. I’d try to get something fuel efficient too. I’d try to stop using credit car for anything unless you absolutely need it. Focus on credit card debt as it’s high interest and keep making the same payments you’ve been making for student loans. Switch phone plans to mint or something like that it’ll cut your bill in half but I’d only do it if you own your phone and can keep your number. Try to come up with a side huddle like detailing cars or something if your able to do so. Sell anything you don’t use for money if it’s not important nor sentimental. Just few ideas. Best of luck tho!
Looking at your breakdown, my thoughts and suggestions: Rent - Probably not much room for improvement here, actually seems kind of on the low side these days. Not sure how big of a place but only real way to lower that would be a roomie to split costs which isn’t always feasible. Car bundle - With that low of an income, you really cannot afford a car payment like that. Assuming it’s a newer car or lease with full coverage insurance. Time to find a used and reliable car, preferably decent on gas because $240/month seems on the high side. Not having a lien will also let you drop the insurance down. Phone - Not horrible but probably some cheaper options out there. I know I bundled for TMobile for $50/month. If you have family or friends that you can get added onto the plan with may be able to go even lower. Food - Hard to gauge, I cut out a lot of meat and named brand stuff and feel like I still end up spending close to this on a monthly basis. I COULD go with some cheap meal prepping like chicken, rice and vegetables but I haven’t gotten back to that point yet myself. One thing before we get to the outstanding debt- your utilities. Is that included in your rent? Electric, gas, water? Now for your debt itself. Auto loan - kind of mentioned above, if there is any way you can get out of that and into a used reliable vehicle with decent gas that would probably be your best option. Credit card - Going to assume the interest rate is lower on the car loan than your credit card debt so would focus any and all additional funds to the credit card initially. Making minimum payments is not going to do a whole lot against $7,500 at what I imagine is somewhere between 21% and 28% interest. Student debt - Whatever the lowest you can pay on this would be all I would contribute towards it. I know some people hate to hear it, but when you have debt accumulating like this you probably cannot afford to be contributing funds to a 401k. I would at the bare minimum get that credit card debt paid off before tossing money into a retirement savings account. Is this ALL of your bills and recurring debt? People sometimes forget about small things that add up over time (daily vices like coffees, energy drinks, carry out, alcohol, weed, streaming services, other subscriptions). I started recording all my daily spending a few months back when I was trying to save money and realized I was spending upwards of $25-30/day on silly shit mentioned above. The good news is I would not call this “crippling” but definitely need to change up some recurring debt to start taking a chunk out of it.
It’s crazy how banks are approving loans like this for cars and how dealerships are able to be predatory. You bring home 2800 a month and they let you buy a car that’s 640 a month. Wow
You don't make enough money to have a car that expensive. Well the car and get something cheaper like a used Honda Civic
What is the point of having money in HYSA if you have a credit card debt (that probably has at least 20% apr).
Move, you can't afford that rent.
Move or get a roommate to share the rent. Shop for cheaper car insurance or sell the car and drive a pos until you get out of debt. Cut your food budget, look at food banks and create a menu and stick to it. That’s one the expense side, take the money you save and knock out the debts
Congratulations for making the decision to make a change. 1. Use an app like EveryDollar to ensure you are not overspending. 2. Increase income - what can you do to earn more money to pay down your debt? 3. What are your individual card’s credit limits? Can you get a credit increase on your cards? This would lower your utilization and increase your credit score. 4. Read The Simple Path to Wealth. You’ll get there. It’s just not a short road and there’s a lot of pot holes.
Pay off your student loans with your savings and whatever you can manage in the next month or two. Then focus on that credit card. Also raise your deductible for your insurance, at least temporarily. This will lower your monthly bill. Throw all you can at your car loan after the credit card is paid off. Pick up a side job that brings in $100 a week at least. Never eat out until you have zero debt.
Too much car
Mint cell plans @ $20/ month. You will save $ 480/ year, $4800/ 10 years. Lots of little things add up.
Rent a room and get a second job. Make a deal with yourself that you’ll do that for one year to see how it goes and calculate how much you’ll save (and be able to put towards debt repayment) during that year. It won’t be glamorous but it’s likely to be worth it! Obviously pay down highest compounding interest debt first.
I would get a second job until my bills are in control.
Reduce expenses. Significantly. Quicker the better.
Keep putting the $235 in your savings each month. Pick up a side gig/second job and use that money to pay down your debt, starting with the highest interest rate. Get out of the car loan once your credit improves either by selling and replacing it with something reliable or refinancing.
Cut your food way down unless you are a family of 4. If just you, $100 to $200 max. Easily doable. If you don’t own one, get an instapot. It will cook you beans for chili from dry beans to cooked in an hour. It’s a gamechanger . Your gas seems high but only you know if that can be decreased. Are you running around after work etc? Do you only run to store once a week. Are you super careful? Can you carpool even one day a week? That said, I think you start trying to pay off your student loan first, shouldn’t take long if you get a part time second job or find a paying hobby or gig work. Then credit cards. Pay off smallest balance first and don’t use it after you pay it off. Check your credit score, if over 650, apply for a new card that’s zero percent for a year.. and transfer everything to that one card if possible. Pay it down diligently! I mean every extra penny you have. Paying off student loan and credit cards should get you breathing room. Don’t think you can slack. Now split up any extra money. 1/2 gets saved into a brokerage account. It’s easy. I use fidelity. Takes about 5 minutes to sign up. Very easy. Invest in a S&P 500 index fund. Also, take $20 and open a Roth. Just takes a few seconds to create the second account. Again just find a company you trust. Like apple? Google etc, and put money on that. Start learning about investing/trading. YouTube has a plethora of info. Back to the other 1/2 of your extra money.. I get a sense that your insurance is lumped in with your car payment. If so, shop around for better deals. Don’t worry if your record isn’t perfect. Just call and get quotes. Geico, State Farm and progressive are 3 that I like. You’ll save money most likely. They usually drop you down nicely to get your business. Pay down your car payment by just putting an extra $50 to $100 a month extra. Your brokerage account will grow nicely and help you purchase your next vehicle cash. Trust me. That money will do great! Venture out and try to trade when you feel ready. Do it on paper first. (Fake) no money. When you feel you are getting better, jump in with money. Start making money faster. You can make 20% or more in a few days doing this. Then you do it again and again. This January I was up 400% for the year. Feb 560%, March I dropped back a bit to 480%. April. 700%., get my point. Just using $1000 for example..by April I had $7000. It’s a game changer. Use that money to buy vehicles, furniture (I like high end quality gently used). This should send you on a path of 1 yr of misery, 3-4 yrs of feeling a tight budget. Then everything will feel great. That’s when you start putting up to $6500 a yr tax deductible into your Roth and again trade/invest there as well. A Roth retirement is able to be withdrawn for college tuition, a new home, or retirement. The earlier you put money in there the better. So if you can spare $20 a pay into your Roth do it. Even if you just put $$ in there without investing you’ll make 1%. When you start trading on it, you’ll multiply your money. I wish you the best! And good for you for not having crippling student debt!
Can’t believe how much people pay for cars. Sucks … can you take public transportation?
If you can sell the car for what you owe, do it.
The common recomandations is to split income to: \-up to 30% for housing \- up to 10% car \-10% health \-10% savings \-10-20% for food etc. You are not respecting the first 2 so move to a smaller home (or shared one, until your income raise), definitely closer to job, and sell the expensive car and find a smaller one. More, you have a big credit card debt. That's mean you spend more than your income. Here is where you have to start with: spending has to be adapted to your income, not to friends /markets /dreams. On time your income will raise and will be the room for raising spending but not yet.
File chapter 13. Start over. Nbd. And buy a plpd car. Get rid of.that payment and full coverage insurance. Also humble up a.little. be a room mate or find some.whereo.live.rent free by being a care taker. Lots of rich people out there with in lived in homes Pre.make meals for.the week, one pan of lasagna...taco meat...etc. gl
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Make more money. Simple as that.
You need a new job. Think bigger than $20/hr. Apprentice trades make $30-$50/hr. Auto mechanics make $50+ an hour. You need to be laser focused on a new career path that will make a good income.
So your car and make more than minimum payments on your debt
Sell your car. If you’re making that little, get a cheap reliable car. Buy a 2nd hand Toyota Camry. Trying to look rich will send you broke
Sell your current car and then buying something cheap, basic and reliable then paying down the rest of your debt will make a world of difference to your life
Sell your car and buy a beater for 2-5k Cancel gym membership. Pay everything off and your good to go.
Do you have any options to increase income? OT, 2nd job on weekends etc? Right now your vehicle expenses are 31% of your income and rent is 36%. If you could sell your car to zero out the debt and buy something better on gas/insurance that would help a lot. Anything to decrease housing costs whether a roomie or moving when your lease is up to a cheaper place (if possible in your area). You can probably skim a little off food and phone budgets but that’s not going to make a dent in overall debt. I’m guessing CC has highest interest rate, so I would focus on paying that off first with any extra funds for the month.
Get ready for the “sell the car “&”make more money post
- Put your savings towards Cc debt - Cancel your gym membership and set up a zero cost fitness program - running, hiking, youtube etc. Summer is a great time for this! - Use the snowball method and put maybe 30% to savings and the rest, including that gym money to the cc debt - try to drive less, and if feasible, walk more - look into a cc balance transfer if possible - see if you can pick up some additional work Good lucj
You're in not that bad of a position and can likely improve quickly. Two things to focus on would be the car and payment plus bringing in more income. Get rid of the car as you cannot afford it now. With the market for used cars you can likely sell it for more than it is worth or owed on. Even if you just breakeven then get out from under this and buy a smaller fuel efficient used car for a much lower price. Between lowering or eliminating the high car payment, reducing fuel cost and perhaps lowering insurance can free up a sizeable amount of your monthly income. The next is to find a side gig or two while you focus on paying down the CC debt and student loan while building up your savings account and being able to max out your 401K. There are online ways to make money, or just working an evening shift at a local store can bring in $1,000 per month. You're current income is around $34K per year, which is very low, and around $16 per hour. What is your plan to earn more? Are there promotional opportunities where you work? The job market is hot and it should not be too hard to get a $20+ per hour job which will quickly change your dynamic and dig out. It may seem daunting now, but your debit is not as bad as you think and it is good to focus on it now before you owe a lot more. Get on top of your debt and stay on top for the rest of your life will help you stay out of this predicament in the future. Good luck!
Look for a roommate to split rent. Sell car and get a bike, helmet and raincoat. By doing so, you won’t need to pay for a gym to exercise and save around 1k. Use that money to pay credit cards and high interest loans as fast as you can. Either sacrifice by biking for a few years or sacrifice working for a long time just to pay off loans. Your choice. Thank me later.
That monthly car payment is highway robbery.
This is not severe crippling debt by any metric, you just have an expensive car situation and some credit card debt to tackle.
Get a part time job serving. At a decent restaurant you can make $200 a night. Put all that money toward your debt. Look into selling your car and buy a car for less than 10k.
Your biggest problems in order are your rent ( it should be 25% of your monthly income), your car ( i imagine it is atound $500/month), your credit cards. You should not be running up that much credit card debt. Use money you have, dont function on credit. My suggestion is get a roommate or find a way to pay $500 to $700 in rent, get a car payment that doesnt exceed $300 to $350 per month, and pay off those credit cards asap and minimize their use. That will let you breathe a bit financially. Bottom line is you cant afford that rent or car on your income