‘It’s absolutely eating our lunch’: We’re drowning in credit card debt despite living frugally. Is credit card consolidation the solution?

"Hi Money Minder,"

Hey there! My husband and I bring in a combined $100k each year. Our vehicle payments add up to $1,000 every month, and we shell out $850 for rent. Daycare for our little one costs $700, and our utilities can get pricey in the summer, around $400 for water/electric. I try to stick to a $200 bi-weekly grocery budget, and our phone & internet bill is $170. On top of that, we’re paying $170 for vehicle/renter insurance, $150 for subscriptions (no cable for us!), and dealing with a credit card minimum payment of $600-$800. It’s really taking a toll on us.

Oh, and on top of all that, we’re spending about $200 a month on diapers and formula. We don’t go out to eat – I cook at home and pack lunches for both of us. I meal plan and budget like a pro, but somehow we’re still struggling to make ends meet by the end of each pay period.

We’re feeling totally lost and overwhelmed. Any tips for us? Should we think about credit card consolidation?

Thanks,
Struggling with Finances

Response from THE MONEY MINDER:

Hello There,

I understand the financial stress you are facing and commend you for being proactive in seeking advice. It sounds like you are managing a lot on a relatively tight budget, which can be incredibly overwhelming. Looking at your expenses, it’s evident that the credit card debt is the major concern here. The high-interest rates on credit cards can definitely eat into your monthly income, making it difficult to make ends meet.

Consolidating your credit card debt could be a practical solution to consider. By consolidating your debt, you can potentially lower your interest rates and make one monthly payment instead of multiple minimum payments. This may provide some relief and help you better manage your finances. However, it’s crucial to ensure that the consolidation plan you choose is reputable and offers terms that are favorable to your situation.

In addition to consolidation, it may be beneficial to review your expenses and see where you can make cuts. For example, evaluating your grocery spending and finding ways to reduce costs, such as meal planning, can free up some extra cash each month. It’s also worth exploring options to reduce your utility bills and possibly negotiate better rates for phone and internet services.

Lastly, seeking the guidance of a financial advisor or counselor could provide you with personalized advice on how to tackle your debt and create a sustainable budget. They can offer practical tips and a structured plan to help you regain control of your finances.

Remember, you’re not alone in this journey, and there are resources available to support you. Taking small steps towards financial stability can make a significant difference in the long run. All the best from THE MONEY MINDER.