I’m in deep debt and it’s getting overwhelming. It all started when I got my hands on a credit card with a $16,000 limit at 18. I used it to kickstart a business and made $40,000 in my first year. But my lack of financial knowledge led to a huge tax bill, which I paid with more credit cards. Things went downhill from there.
I moved across the country with my girlfriend hoping to increase my income, but then COVID hit, ruining my plans. I managed to secure a full-time job at $36,000 and started investing in stocks and cryptocurrencies, turning $1,400 into $15,000.
To get my finances in order, I took out a personal loan, but then disaster struck – my dad needed help, my appliances broke, my car gave out, and I had to deal with mold in my basement among other things. It’s been one thing after another.
So, I’m turning to you for help. How bad is my situation, and what can I do next?
General Info:
- Credit Score: 623
- Derogatory Remarks: 0
- Income: $60,500
- Credit Debt: $25,200
- Personal Loan: $14,000
- Vehicle Loan: $1,530
- Mortgage: $149,000
- Estimated Equity: $56,000
Credit Card Payments (Usage: 64%):
- Card #1: $14,900 – APR 27.99% ($480/Month)
- Card #2: $2,800 – APR 14.9% ($50/Month)
- Card #3: $3,200 – APR 29.99% ($110/Month)
- Card #4: $1,000 – APR 28.2% ($41/Month)
- Card #5: $1,300 – APR 28.99% ($43/Month)
- Card #6: $2,000 – APR 30% ($73/Month)
Loan Payments:
- Personal Loan: $14,000 – APR 15% – ($450/Month)
- Vehicle Loan: $1,530 – APR 5% – ($340/Month)
- Mortgage: $149,000 – APR 2.625% – $1,020 (All dues combined incl. Mortgage Insurance)
TL:DR;
Credit score 623, no remarks, 40k in debt, some equity, drowning, what do?
Any advice or feedback is appreciated. Thank you!
Response from THE MONEY MINDER:
Hello There,
Hello,
I understand that you are struggling with a significant amount of debt and are feeling overwhelmed by the financial challenges you are facing. It sounds like you have been through a lot, and I want to commend you for your resilience and determination to improve your situation.
Based on the detailed breakdown of your debt and income that you provided, it is clear that your credit card debt is a major concern. The high interest rates on your credit cards are eating into your income and making it difficult to make progress in paying off your debts. My suggestion would be to focus on paying off your credit card debt first, starting with the card that has the highest interest rate. By making larger payments towards this card while making the minimum payments on the others, you can begin to chip away at the debt and reduce the amount of interest you are accruing.
In addition to tackling your credit card debt, it may also be beneficial to look into any potential opportunities to increase your income or reduce your expenses. This could include finding additional sources of income, cutting back on discretionary spending, or exploring ways to lower your monthly expenses such as refinancing your loans or negotiating lower interest rates.
It’s important to remember that this situation is not permanent, and with a solid plan in place, you can work towards financial stability and eventually achieve your goals. Taking small steps towards reducing your debt and improving your financial situation will add up over time and bring you closer to financial freedom.
I encourage you to reach out to a financial advisor or credit counselor for personalized guidance and support in creating a plan to address your debt. Remember, you are not alone in this, and there are resources available to help you navigate your financial challenges.
Take care, and best of luck on your journey to financial wellness.
Farewell from THE MONEY MINDER.
