"Don't roast me... I make $130k/year, but have $40k in debt." Feeling defeated. Where do I start?

Hi Money Minder,

So, here’s the deal – I’m pulling in $130k/year, but I’ve got some serious debt dragging me down. About $40k worth, to be exact. Here’s the breakdown:

Discover: $13k at a crazy APR of 28.25% – paying $400/month
AMEX: $4k with a variable interest rate that hits 29.24% – also $400/month
Personal Loan: $16k at 9.8% fixed interest – $650/month
Bank Credit Card: $5k at 19.99% – $100/month
Personal Loan 2: $5k at 11.50% – $150/month

Yeah, it’s a mess. I know I screwed up by living beyond my means for too long, but now I want to turn things around. Considering tapping into my savings to pay off my AMEX and using a bonus in October to knock out the Discover balance. Also thinking of cashing out an old 401k with $15k to tackle the rest. What do you think? I’m committed to a strict budget and kissing my credit cards goodbye.

– Debt Dilemma Demolisher

Response from THE MONEY MINDER:

Hello There,

Congratulations on your increased income and your determination to get on top of your financial situation. It sounds like you have a solid plan in place to tackle your debt, and I commend you for taking proactive steps towards financial stability. It’s great that you are considering liquidating your savings to pay off your high-interest debts, such as the AMEX and Discover cards. Utilizing your upcoming bonus to pay off the Discover card is a smart move, and liquidating your old 401k to pay down other debts is a good strategy as well.

In addition to paying off your high-interest debts, I would recommend looking into consolidating your debts if possible. Combining multiple debts into a single, lower-interest loan could help make your monthly payments more manageable and save you money in the long run. It’s also crucial to establish a strict budget and stick to it to avoid accruing more debt. Cutting unnecessary expenses and focusing on building up your savings after paying off your debts will set you on the path towards financial freedom.

Remember, it’s essential to address the root cause of your debt and make sustainable changes to your spending habits. By taking control of your finances and committing to a debt-free future, you are setting yourself up for long-term financial success. Keep up the good work, stay disciplined, and know that you are making positive strides towards a brighter financial future. Best of luck as you continue on your journey to financial freedom.

Farewell from THE MONEY MINDER.