#FinancialAdvice #DebtManagement #Budgeting
Assessing the Situation
At 22 years old with approximately $25,000 in credit card debt, it’s understandable that you may feel overwhelmed and stressed about your financial situation. However, it’s great that you’re taking the initiative to seek advice and make positive changes.
Evaluating Your Debt
First, take a closer look at your credit card balances and interest rates. With variable APRs ranging from 27-29%, it’s crucial to prioritize paying off your debts efficiently to avoid accumulating more interest over time.
– WF: $2800
– AMEX: $5830
– AMEX: $972
– DISC: $4200
– DISC: $1910
– CHASE: $2900
– CITI: $1100
– APPLE: $5856
Creating a Budget
With a monthly income of approximately $2,200, it’s important to allocate your funds wisely. Start by listing out your essential expenses such as car payments, insurance, phone bill, gas, tuition, and groceries. Consider cutting back on non-essential expenses to free up more money for debt repayment.
Exploring Options
While filing for bankruptcy may seem like a drastic solution, it’s important to explore all your options before making a decision. Consider speaking with a financial advisor or credit counselor who can provide guidance on debt repayment strategies, budgeting techniques, and negotiation with creditors.
Taking Action
To regain control of your finances, consider the following steps:
– Create a detailed budget to track your income and expenses.
– Prioritize paying off high-interest debt first.
– Consider debt consolidation or negotiation with creditors.
– Look for additional sources of income or part-time work to supplement your earnings.
– Explore credit counseling services for personalized financial advice.
Stay Positive and Determined
Remember that overcoming debt takes time and discipline. Stay committed to your financial goals, seek support from friends and family, and celebrate small victories along the way. With dedication and perseverance, you can work towards a brighter financial future. Good luck! 💪🏼🌟
In regards to my tuition, it is expected to be paid by the beginning of August (start of the Fall semester). The next tuition payment is expected to be beginning of January. These semesters are crucial to me transferring and graduating faster.
You owe roughly what you make. Have you considered bankruptcy? I’d be concerned though what got you into this CC debt in the first place because if you haven’t fixed the behaviors/circumstances the odds of you getting right back into 25k of CC debt are high.
1. Obviously stop spending on the cards completely.
2. What did you buy with all that debt? If there are physical items that you bought, sell it all. Ebay/Poshmark/Facebook marketplace. All the proceeds go towards your debts.
3. Why is your phone bill $153/mo? Is part of it financing your phone? If not, change to a low cost carrier like Mint Mobile. You can get an entire year for $180.
4. Where is the rest of your money going? You get $2200/mo and your expenses leave you with $1199. (Not including your tuition, but even that is a one-time $368.) You need to figure out where the rest of your money is going. Make a budget and track your expenses against it. Any money left after your bare minimum expenses needs to go towards your debt.
If you’re living at home stop spending on groceries. Your car payment is expensive.
Need to at least make those minimum payments on each card – so the interest is not building up. Other than that, go through your past 3 months of spending and make yourself a cashflow. Include your income at the top, and then all the expenses you listed out + ones you found reoccurring ever month when you go through 3 months of statements to see what you actually need to spend money on.
Stop using your credit cards completely. All your spending needs to be done on a debt card until you get a better grip on your impulsive purchases.
The cashflow will also give you a better picture of our much of a monthly deficit/surplus you have. Once you reach a point where you do have a surplus – start saving as much as you are comfortably able to. Great place to stash money away that you don’t plan on touching for a while is a high yield savings. BankRate is a great resource to compare different account. They are super easy to open, and will work a lot harder for you than a typical checking/savings account.
OK, I’ll bite.
Bankruptcy is a nuclear option. It will help in the moment, but it will not teach you any skills beyond giving up and asking for a bailout which will then take 7 long years to discharge. Your situation is not all that dire. It will be tough to deal with but it’s possible, so your best case scenario is powering through, learning many new skills, and setting yourself up for success in life. So that’s my recommendation – it will also allow you to feel hopeful about your future immediately, because you already have what you need to succeed: the will to change.
Onwards.
1. Make a budget, figure out where every dollar is going.
2. List your debts (either here or for yourself) with their rates.
3. There are two methods for paying off debt: snowball or avalanche. The wiki has information on both. The point is to order your debts either from smallest to largest, or from highest rate to lowest rate. Once you decided on the method and made a list, direct all your extra moneys toward that debt, and pay minimums on the rest. Once the first one is paid, move to the next, etc. When I was getting out of debt I used the snowball method to pay smallest balance to largest balance – it is not the most mathematically advantageous, but it gave me a huge emotional boost. The mathematically advantageous method is the avalanche (pay the highest rate first). Whatever you do, the fact that you have many smaller debts is in your favor emotionally as you will get a boost by paying them off one by one.
4. Streamline your budget. You have *way* too much car for your income. In your shoes I would sell it yesterday and get a beater until I’m debt-free.
5. Phone payment is too high. I pay less for 3 lines and extras, and my bill is definitely too high. Ditch the phone and get Mint mobile.
6. Stop spending on the cards. You are taking a blowtorch to your future.
7. Focus on your studies so that you can raise your income once you graduate. Look for every educational and work experience opportunity that can help you increase your income once your graduate. This is your best bet for getting out of debt soon.
Good luck.
Can you get a second job? Even an extra $100 a week will add up.
You can use Visible and get good phone service for $25/month (in the USA)
There is a saying about finding yourself in a hole. I think it suggest that you stop digging.
What kind of car? How much time is left on the loan? What’s the interest rate? How much would you get if you sold it?
That car payment is ridiculous, buy something you can afford. Go for $0 here if you can. You could probably knock down your phone bill in half as well by switching providers every couple of years. Find a credit card that will allow you to do large balance transfers for 0% for 6+ months and pay it down in that period of time. (Citi used to a have a card you could do this with)
A third of your money is going towards your car and car insurance. That’s absurd. You’re not going to make any progress while holding onto that vehicle.
Since you are a student you should call all the credit card companies and say I am studying and can they give 0% interest until you graduate. Most companies will do it, can save you thousands on interest while you gradually pay it down
If you live anywhere where you can do without the car sell it and then you won’t have the gas/insurance stuff to deal with. Replace with a moped/bike if public transit is not an option. keeping the car ‘to make extra money driving uber’ or whatever is a bad financial decision.
Be honest about your circumstances with your friends and girlfriend- it’s easy to follow other people into overspending (a night out, movie, dinner, whatever) and get into the habit of saying (out loud) ‘I don’t need it, I just want it’ when you see something you want but don’t need to help control your spending.
Re: groceries: sounds odd but consider going vegan or vegetarian; it is totally possible to get enough protein this way and it’s WAY cheaper and will help fix your diet issues which will help keep you healthier.
Sheesh. At this point, I think you should hand the cards to your parents and tell them to hide them from you (and lock them so they can’t be used). Pay all bills via ACH and for things like food or gas, physically go to the bank to pull it out. You need to make spending money as painful and inconvenient as possible.
Then I’d just tackle smallest debt to largest. Roll all the payments you were making on that into second largest. Don’t do bankruptcy, that’ll mess you up a longer than it would take to fix the problem.
Minus groceries, your current crucial bills is $1,000.
* Your car payment? That hurts. While I know it’s a depreciating asset, are you not under water where you could sell it and buy something more affordable for your budget?
* As others have mentioned, you need to ditch AT&T as your provider as there are other cheaper options. The bad part that I can see here is that you’re probably financing your device which would need to be paid off or it would be blacklisted.
Bankruptcy is a nuclear option. As you are in school, you’re wanting to better yourself and your future. I’d hate to see you have issues with getting a credit card, purchasing a vehicle, or even purchasing a house. I’d also be concerned about future employers running credit checks and you needing to have that difficult conversation with them.
You stated that you want to make changes, that’s awesome because you see that there’s a problem. You have a mock budget that you listed, but I think you should get something that is a little bit more concrete so you know the real numbers you are working with. If you’re able to sell your current car and get something that would be half your payment, that’s going to help out a lot as it is a little bit more than 10% of your income. People will argue with me on this as anyone would say that you want to pay off your credit card that has the highest interest rate on it first. With you saying you want to feel hopeful about your future, I think you could use a couple easier wins to show you that you can really do this. Pay your minimums on your cards and hammer our your smaller AMEX first. Once that’s paid off, move on to your Citi then your Discover, and so on. Will you pay a little bit more in interest? Yes, but you’re paying over $600 in interest alone every month. Get the positive habit down of paying your credit cards on time, making head way to paying them down, not making any more purchases on them until your balances are zero and you can pay in full every month, and make a plan to either close cards to limit possible credit card debt, sock drawer them, or cut them up so you’re not tempted to use them. You can do this.
You’ll get through this your young ! You have time ! But I’d get a $45.00 unlimited plan and get rid of AT&T . Live on the bare minimum and throw everything you can at your debt . Honestly maybe debt consolidation situation would make sense . Car payment is really high I’d get a beater for the time being and maybe door dash . That’s a lot of debt . Maybe go to your parents ? Hopefully mom or dad can help guide you a little too . Start with he highest interest rate but I don’t see you really having that much leftover after every even minimum payment .
Dave Ramsey is made for situations like this.
Find his plan, and follow it to the T.
You are not money smart enough to worry about any technicalities of his advice. His advice is for people like you.
Please just do what he says.
This is not by any stretch the worst situation I’ve seen anyone in. It’s not easy but it can be overcome.
Think about how much better you’ll feel if you’re able to get your debt down to $20k, then $15k, then $10k. The year after you pay if off you’ll be wondering why you took it on and why it seemed so far away to pay it off.
First thing I’d say is **consolidate the debt**. Talk to credit unions who may be more willing to help than a bank or loan consolidation service. Interest on credit cards alone has to be around $500/month, if you can bring the rate down it might be < $200 and you can chip away at principal faster.
**Can your parents refinance you?**
My brother was in a similar situation with about $10k in debt and our parents made a legally-binding agreement with him:
– they paid the debt out of a HELOC
– he signed a promissory note, notarized, for 1% above the HELOC rate, with a 3-year-term
– he made payments to them every paycheck
– he cut up his cards
He was actually done in 2 years, but it gave him a boost in how he managed finances.
**Car**
Do you need the car? Probably you do if you’re working.
If you only have to go to and from college, can you get by just with Uber? If so, what would it cost you?
If it’s less than $848/month you’ll save money. And this is short-term.
**Phone**
Yes, go with something cheaper. I understand you have to pay off the phone still, so you may need to surrender it, buy a $99 tracfone and one year’s plan and be done.
That’s an expensive car compared to your income. You get rid of that payment/cit it in half that will help a lot. Also, I’d work to consolidate a couple cards to ones that have an introductory 0% interest rate for a year plus. Then playoff the other cards while also getting to that one in time before that period ends. Gotta duck it up and throw ALL of your money towards getting that CC debt down. Early life lesson. Learn it once and learn it good.
Current phone plans are 20Gb for $29 and 40Gb for $39.
What are you getting for your plan? This is probably your first source of savings.
You’ve already got solid advice here but I guess I’ll try to add. If you need easy extra money, look for a local place to donate plasma. It’s easy and only takes about an hour and a half of your time. I’m not sure what the rates are but I’m sure it’s at least a few hundred dollars per month if you donate twice a week. You can also sit there and play on your phone or watch TV while you donate.
I would also reiterate that there are a lot of cheaper cell phone service providers. I pay $40 a month for cricket. I just looked at mints website and it’s even cheaper at $30/ per month. If your current cell phone is locked/ carrier specific you can get it unlocked and then use that phone on a different network.
If you want to eat out less, buy frozen foods. They last a lot longer. If you have an instant pot you can usually just throw the food in there frozen and it will cook in an instant lol. Rice is super easy to cook, especially in a rice cooker. If you’re trying to eat more healthy this is what a lot people do rice, chicken and veggies. Chicken is still relatively cheap, you can marinate in grill mates seasoning packets. Whatever you do, do not use any food delivery service… it’s so expensive. If you don’t like to cook or are just lazy you can meal prep. Some people meal prep “dump meals” and freeze them. The app “flipp” has many grocery store ads on it so you can buy what’s on sale and if you buy frozen you can buy in bulk. If flipp doesn’t have the grocery store you’re looking for, go to the grocery stores website.
You can also look into consolidating your debt. You can also reach out to each individual lender explain that you messed up and if it’s possible to reduce interest rate.
Your car payment is also very high. Idk how much you still owe and idk whose financed it for you. If you were financed through the dealership, it may be worthwhile to get it refinanced at a local credit union. If you still owe a significant amount, it may be worthwhile to downgrade.
Try to dig deep and find out why you’re spending so much. Credit cards, especially when linked to Apple or Google pay make spending so easy. Are you trying to keep up with the joneses or are you just impulsive. Hope is not lost, you got this!