Mega debt

Friends, The Tan Panther is anonymous for now and I need to get something off my chest.  This will be long.  But the short of it is, 

We have $105,000 in credit card debt.  

::gasp::  I know, I know.  How?  Let me make a list:  

1.  7 surgeries between us in the last 6 years.  Facing another one soon.  Thankfully, no cancer.  

2. Fracking earthquake shook our 120-yo house, which required a $35,000 foundation repair, which ballooned into a $70,000 remodel because we had to lift all every floorboard on the first floor.  We put this off for 5 years.  
3.  I was struck by a rheumatoid like illness and had to sell my service business.  Because I was sick, there wasn't much of a book of business to sell.  Couldn't do the work to get business.  No profit in the sale.

4.  The main money maker had a couple years of under performing brought on by market conditions, disagreement with upper management, and said surgeries.  When it came time to fix the house, the money didn't materialize as it usually had.  
5.  Career changes as a result of numbers 3 and 4, which lowered salary, and required purchase of newer vehicles in order to do those changes.  Previous vehicles were both in the 10-year, 270k+ miles range.  We traded them while they still had value.  But we also have payments.
6.  Kid in college.
7.  Depression and avoidance.  Constant struggle.  
8.  Mother moved in with us; required remodeling.  She paid, but it did take away a lot of our time for earning money.  

The good parts:  

1.  We have good health insurance coverage, but it's high deductible.  If we get the surgery done before the end of the year, we won't have to put the deductible on a credit card. :::wan grin::

2. The house looks GREAT!  Needs a roof, though.  
3.  Rheumatoid-like illness has been in remission for about a year.  Currently being monitored for heart arrhythmias....hard to tell if it's stress or what...see #1.
4.  Paycheck is steady, he loves his work, and he is fully vested in his pension.  My new career is taking off.  We're still in the 6 figure range of income.  We have IRAs and investments, but it is never enough.  
5.  Cars are reliable and the debt is at zero interest.

6.  Kid graduated, has a good job, and is self sufficient.  

7. Consistently using YNAB and making our finances a priority at all times.  Automating everything.  
8. Mom is moving out for awhile.  Will probably Airbnb her apartment.  

It's a constant worry.  Maybe that's why I have heart problems.  We've been at zero debt before.  We can get there again.  I just needed to unload this.  

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  • You can do this! Admittedly not accounting for interest, but if your income is exactly six figures, reducing outgo by 20% kills your CCs in 5 years. 20% is a nonscary amount (and right in line with plans like Warren's All Your Worth budget.) 

    Like 5
  • Good luck!!!! Debt snowball (dave ramsey!!!) you can do it!

    Like 3
  • You absolutely can do this! I have around the same in non-mortgage debt split up between student loans, credit cards, and auto loan. One step at a time and you can do it!!! YNAB seriously turned things around for me, and I like to use undebt.it to track our progress. We're here to support you!

    Like 7
      • thrak76
      • thrak76
      • 3 yrs ago
      • 3
      • Reported - view

      Hot Pink Lion (7c01647000fd) 

      Thanks for the undebt.it referral! Just checked it out, and I'm digging it. I've been using an excel spreadsheet for awhile, and undebt.it is a much better interface with many more options. Good stuff!

      Like 3
      • Tanya
      • brokeat40
      • 3 yrs ago
      • 2
      • Reported - view

      Pink Trombone (e31fb55050e1) I'm so glad you like it! I found out about it from the ynab Facebook group, and it's helped alot. Using the two tools together has helped us a ton with focus amd staying on track!! 

      Like 2
      • kayjay68
      • kayjay68
      • 2 yrs ago
      • 1
      • Reported - view

      Tanya My thanks also for undebt.it . This suggestion was right on time for where I'm at!

      Like 1
      • Tanya
      • brokeat40
      • 2 yrs ago
      • Reported - view

      kayjay68 Awesome! I'm glad it helped! I love looking at the progress features too...you can see the % of debt paid off and how much debt you have in different categories. It's really great for motivation!

      Like
  • I agree with the Dave Ramsey comment. His principles have changed our financial future and we have paid off a large chunk of debt already. While we are not as intense as most people following his program it has worked for us. 

    How are you with your budget? Are you budgeting monthly for the on-going medical expenses it sounds like you have? Starting a sinking fund for these items will help you not cash flow some of these items in the future.

    You've got this! Stick to your budget and make sure you are accounting for those little things that sneak up throughout the year.

    Like 1
    • Sea Green Welder (25a6da8d7c7a)The budget is working.  It is a lot of work to keep up with the balances on the cards and make sure the interest doesn't get too high. That's the biggest challenge.  

       

      I use a spreadsheet template that I downloaded which seems to work better than the various indebt websites, all of which I have tried.  

       

      I think DR is a scoundrel who shames people and I know all about him because I lived in Nashville when he first came on the radio. His ideas are not new or unique so I would appreciate not getting anymore recs about him.  

       

      But thanks for your input and encouragement.

       

      The principles of finances are not that hard to grasp. It is the execution that is hard. 

      Like
  • Wow! I'm encouraged by your positive outlook despite the long road ahead. I feel pretty doom and gloom about our own debt (college - 80k)

    Something I didn't see mentioned was getting a reduction in interest rate on your CCs while you pay them off. I keep seeing the recommendation on the facebook group and I do think now is a great time to call your CC companies and inquire about current offers for lowering your rate. I actually had a big offer for a 6.99% (for life of the transfer) for balance transfers from my bank and I took it. It will greatly help us pay down the small amount we have, though I will say my credit took a ding :/ I'd rather be debt free. My CC had 23% interest rate prior to this move, so the payoff is going to come SO much sooner now with 6.99!

    Like 2
  • Instead of thinking about paying off the big total credit card balance, set yourself smaller goals. i.e. the get it down to 5 figures, when get it down under 90K etc

     

    Even though it's the same amount you'll be paying off, it won't seem like should a  huge target but setting mini-goals along the way.

     

    Kinda like the saying ... how do you eat an elephant? one bite at a time :)

     

    Best of luck 

    Like 3
      • ekshelley
      • ekshelley
      • 2 yrs ago
      • 5
      • Reported - view

      Spring Green Pegasus (82d9f453ee3f) Those mini-goals work for me. I get excited when I hit a new milestone. I started at 35,000 in credit card debt. I was thrilled when it hit 29,999 and then again when it hit 24,999 (I'm below 25k in debt!). In December I should hit 19,999 and be below 20k in debt. The reports help keep me motivated. Seeing a downward trend in my debt helps me keep working on the downward trend.

      Like 5
  • Keep sharing the ups and the downs. This is a great place to get support when it is hard and to share the successes. Reading other people's journeys help get ideas to cut costs. Ynab is great because you know where you stand financially which is a must when in the position you are in. 

    Like 2
  • I would focus on the health end of things first and see if you can either get better health insurance and/or save a large cushion.

    Like 2
  • This may be an unpopular opinion, but ... are you fully paying for the kid in college? S/he has years of earning ahead of him/ her to pay off loans at rates that, while higher than (in my opinion), they should be, will be much lower than your credit card interest rates. 

    I realize that, if you've paid for the first kid, it might not be an option to change your level of support--but it's something to think about? Perhaps you could take over his/ her loan payments in a few years, when you're not struggling so much with current credit card debt? 

    Like 3
  • So this isn't an entirely helpful comment, but next time you have a surgery/medical bill two things to remember: 1) if you call about larger bills and ask for a discount, and say you are willing to pay the full amount right then they'll usually give you one (Range is 25%ish). Yes, this works even if you have insurance and 2) If you can't pay it, do NOT put medical bills on credit cards. Contact the billing company and get put on a payment plan. This way you won't be paying the CC interest. Mostly they'll take whatever they can get on a monthly basis.

    I second making smaller goals than "pay off 105k in debt". Maybe it's pay off credit card A or get debt to 90k. I also think that you should reward yourself for making those goals (something small, like a night out on the town to celebrate).

    Like 4
  • Well, if I added in my student loan debt, I would be right up there owing the same amount as you... but I digress! 

    If it were me I would set aside a portion of my after-tax paycheck to savings that is accessible- but not too accessible.  This could be your go-to account if other major expenses hit, like a job loss or something really big. Then I would dedicate a portion to debt pay off- I like the suggestion by Tan Major, 20%. That is not such a horrible number, but large enough to make some progress. 

    Then I would focus on living on the rest, so as not to incur more debt. Sounds silly, but easier said than done when recovering from career setbacks. 

    Like 2
  • I started in August with over 131k in debt, the largest portion was cc. I decided to go the debt management plan route through credit counseling. They drastically lowered my interest rates and I'm starting to make pretty large dents finally. My journal is still in the old message board

    https://forum.youneedabudget.com/discussion/54857/my-dmp-journey-paying-off-six-figures/p1

    Like 2
  • Hello friends.  Still remaining anonymous after all.  So, the situation has not gotten better and only gotten worse on the whole...not more debt, but less income and more expenses.  It finally came to a head, where it became obvious that we were not going to be able to sustain what we were doing, and we decided to file bankruptcy (chapter 13).

    We have not missed a single payment.  We haven't been late.  But the attorney advised us to stop making payments and hoard the cash.  My husband travels for his work and it is going to be very difficult to do that without credit cards, so we are taking those payments and putting it on a prepaid debit card and hopefully that will work for him.  This is one of the scariest parts of it, because if he can't travel he can't do his job.  

    I would like any links or advise on that topic, if you have them.  

    I have cancelled all the auto-payments on the credit cards and that is like a knife in the heart.  I think only YNABers will fully understand.  Should I also turn off auto-import on those accounts?  What would you do?  I'm not sure I'll even have access to the accounts after we file.  We are still in the information gathering stage of the process.  

    I think I will go ahead reconcile all those accounts on this day and turn off direct import.  What say you?

    Although it is very hard to do this and that there is still a long row to hoe, there is an unexpected sense of relief.  

    Thanks.

    Like 1
      • BeeBee
      • BeeBee
      • 2 yrs ago
      • 1
      • Reported - view

      Tan Panther (0a8085aae832) I'm getting ready to start a journal here and have been reading through some of the others. I just finished reading yours and really feel for you. My husband and I have maintained mostly separate cc accounts for most of the almost 29 years of our marriage. 

       

      A few years ago, pre-YNAB and feeling totally overwhelmed, I quit paying on my cards, thinking I would be able to negotiate settlements. Only I wasn't disciplined enough to save the money. Or maybe it was just unrealistic, but long story short, I ended up filing Chapter 7. 

       

      I think reconciling the accounts and turning off direct import is probably a good idea, though I don't know that it will really matter. Have you given your attorney a retainer yet? As soon as you do that, you will be able to refer your creditors to your attorney when they start calling... and they will!  Even when I tried to work with them, they were still calling me daily. Ugh! Even though I didn't answer the calls, it was a big relief to turn them over to my attorney.

       

      As far as your husband's travel, you may not have any choice but to do a pre-paid card.  I would check on liability, though, to make sure you have recourse if the card should become compromised. You don't need that on top of what you're already going through. Someone else might have better advice on that.

       

      All the best to you! I'll be following your journey!

      Like 1
      • BeeBee
      • BeeBee
      • 2 yrs ago
      • Reported - view

      I guess this isn't really a journal (I had wandered into a different part of the forum), but it was a topic of interest to me! Just thought I would make that correction.

      Like
      • Stacy C
      • nursepower
      • 1 yr ago
      • Reported - view

      Tan Panther (0a8085aae832)  Do you not qualify for a 7? 

      Like
  • You have gone through a lot, and that is emotionally draining. I would recommend you take it easy. Regarding the debt I recommend you put the debt payment in autopay of some number you can afford and still allows you to build your cash savings and forget about it until your 0% offer is about to expire and then switch it to another credit card.

    Take it easy, if I were you I would just put the finances in autopilot and focus on recovering my health and chill out. 

    Like 2
  • Also, Jesse wrote an excellent book about debt: The Debt Consolidation Myth: A Proven Method to Help You Get Out of Debt While Still Living Your Life (YNAB 80/20) https://www.amazon.com/dp/B073HN2YS5/ref=cm_sw_r_cp_api_mtjSAbW3RJTAZ

    Like 3
  • Well, it's been scary and tedious but thanks to YNAB I was able to provide info on every dollar spent over the last 6 months.  Even though it is not even close to over yet, because the attorney is still in the info gathering stage, we are just relieved to know that there is an end in sight.  I was at the point where I could see no way out and now there is one.  

    I have only felt slightly guilty about not repaying all my debts.  (There's no way we will pay them all in 5 years.)  I am generally not a person to feel victimized, and I don't feel that way about the credit card companies, although that was beginning to happen with punitive interest rates and jacked up payment amounts trickling in.  But we really were not in control of many of the things that happened to us, the surgeries and the earthquake and the house problems.  The proverbial straw was the salary reduction, and I have to say I'm proud of being able to hold it together for almost 2 years after that.  It was a rising tide, though, and the tsunami was going to swamp us anyway.  

    It's too late for any other methods and I won't have any trouble staying out of debt.  Our income is not fixed, because of my work, and there is a possibility that we could pay it all off in 5 years, or maybe discharge it early.  But there are no promises of that income.  Thankfully, when we added up all the various 401k rollovers and IRAs and my husband's pension and IRA from his current job which will not be affected, and taking into consideration that we really did plan ahead when we bought this place and our expenses are low, I feel very safe about our retirement years. That's a good place to be in your late '50s.  

    It was those late '40s that got us into trouble.  But we're still standing.  :)  Thanks, all.

    Like 3
  • Side note:  When the debt total reached a certain point last year my mailbox started being inundated with offers from all the unsecured loan companies:  SoFi and Prosper, etc.  I get at least 3 offers every single day and some companies send one to both of us at the same time, multiple times a week.  

    I don't want to have any interaction with them, but I hope that will dry up after the filing is done.  ENORMOUS amounts of paper going in my shredder every week!  Too bad I don't have a guinea pig to use the shreds for.  haha.  (that's a joke.  no guinea pig was harmed in the making of this post.)

    Like 4
      • ungifted
      • More fresh starts than hot dinners
      • Powder_Blue_Koala
      • 2 yrs ago
      • Reported - view

      Tan Panther (0a8085aae832) How dismal that people make their money by attempting to cash in on other people's misfortune! A bonfire might have been nice as well :)

      Like
  • Are earthquake frequent in your area? Can you insure your home for earthquake damage? Some home insurance companies do it as an extra policy attached to you regular home insurance.

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    • Slate Blue Robot  It was a fracking earthquake.  Earthquake insurance is not a typical coverage here but you can be sure that I DID add a rider after that happened.  It costs about $30 a year.  

      Like
    • MsTJ
    • YNAB has given me back my future
    • Believer_in_YNAb
    • 2 yrs ago
    • 2
    • Reported - view

    Looks like you are well on your way to taking control of your finances.  Getting started and realizing how bad I had actually been was hard for me also and you're on the right road now.  Congratulations.  Give it time.  Things will turn around.  

    Like 2
  • The number is large, but nothing is impossible with a good plan.

    If it makes you feel better, I have $60k in student loan debt, and $30k in personal loan due to a house project that went way over budget. The only consolation is the house project went over budget not because we were foolish, but because there was something installed incorrectly and we had to modify the plan. 

    My new job should be able to pay the student loan debt off in 2 years. 

    But yeah, I had a momentary pity party and much gnashing of teeth when first looking at the mess that is my finances at first. 

    Life happens. You can do this!

    Like
  • This is a huge debt but I know you are strong to hold up. The journey can be tough but I am really glad that you are trying your best. I wish the loan companies would stop already! Really a lot of waste of paper. Good that you got insurance now. Take care of your health first and continue paying as much as you can. Don’t worry about the debt collectors, we’ll care of them later. You have gone through a lot this year. I didn’t know the working of YNAB in helping with debt in this sense. Good that I know it now, maybe I can recommend this forum to my friends as well.

    Like
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