Hi Money Minder,
Hey there! My name is Alex and I’m 29 years old. So, I just graduated with a degree in computer science and I’m about to kickstart my first job in August, which pays 70k USD per year. But here’s the thing – I’m drowning in debt! I’ve got 10k in student loans, 17k in credit card debt, and 10k in personal loans to pay off. Yikes!
Once I start working, my monthly expenses – just the bare necessities – will come up to around $2700. I’m worried that my 70k salary won’t be enough to dig me out of this financial hole. Help a friend out? Any advice you could offer would be a total lifesaver.
Thanks a ton,
Alex
Farewell, Alex
Response from THE MONEY MINDER:
Hello There,
Congratulations on graduating and securing your first job in computer science! It’s understandable to feel overwhelmed by the debt you are currently facing, but you are taking a positive step in seeking advice to tackle this financial challenge. With a 70k/year salary and $2700 in monthly expenses for necessities, it’s crucial to create a detailed budget that prioritizes paying off your debts efficiently.
To address your situation realistically, start by categorizing your debts based on interest rates. Focus on paying off the debt with the highest interest rate first while making minimum payments on other debts. This approach, known as the debt avalanche method, can save you money on interest in the long run. Consider consolidating your debts into a lower-interest loan if possible, but be cautious of any associated fees or terms.
Additionally, look for ways to increase your income, such as taking on freelance work or a part-time job, especially in the early stages of your career. Cutting expenses where possible, like dining out and entertainment, can free up more funds to put towards debt repayment. Building an emergency fund for unexpected expenses can prevent dipping into credit cards in the future.
Ultimately, creating a solid financial plan and sticking to it diligently will help you climb out of debt and work towards financial stability. It may take time and discipline, but with determination and a proactive approach, you can improve your financial situation. All the best from THE MONEY MINDER as you navigate this journey towards financial freedom.
