July 18, 2024
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THE MONEY MINDER

‘For the first time in 6 years my account isn’t negative’: I declared bankruptcy at 23. What steps should I take now to secure my financial future?

‘For the first time in 6 years my account isn’t negative’: I declared bankruptcy at 23. What steps should I take now to secure my financial future?

Hey Money Minder,

I need some advice. I’m in a bit of a pickle with 67k in debt spread across credit cards, a personal loan, and a car loan. I was trying to pay it off, but at $23 an hour, I felt like I was getting nowhere. The debt mostly came from my past drug abuse and dumb decisions. I got clean in ’21 but struggled with drinking until January this year. Now, I’m working on kicking the smoking habit.

I had a 2000 Honda Accord that got wrecked in June, and I got a settlement of 6.2k. Paid off some debts to my parents and settled some legal fees. The rest of the money is in my savings, which is a first for me in years. I need help on how to stay debt-free. It’s the most money I’ve ever had in my account, and I want to keep it that way.

Here’s my budget breakdown:
– Car payment: $326/month
– Rent: $200/month
– Insurance: $156/month
– Phone bill: $130/month
– Spotify: $11.99/month

I earn $1,484.94 every 2 weeks and set up an automatic transfer of $800 to my savings. Any other suggestions?

Thanks! And yeah, I’m 23, so learn from my mistakes and don’t follow in my footsteps.

Catch you later,

Debt-Free Dreamer

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the important steps to get clean and work towards a better financial future. It’s clear that you are determined to stay on track and make positive changes in your life. With $3k in your savings account, you now have a solid foundation to build upon.

Based on your budget and income, here are some practical tips to help you stay out of debt and continue building your savings:
1. Prioritize Debt Repayment: Focus on paying off your high-interest debt first, such as credit cards and personal loans. Consider using the $800 you are transferring to your savings account to make additional payments towards your debt.
2. Create a Detailed Budget: Track your expenses carefully to ensure you are living within your means. Cut back on non-essential expenses to free up more money for debt repayment and savings.
3. Emergency Fund: Aim to build an emergency fund with at least 3-6 months’ worth of living expenses. This will provide a safety net in case of unexpected expenses or income loss.
4. Seek Support: Consider speaking with a financial advisor or counselor for personalized advice on managing your debt and improving your financial situation.
5. Stay Committed: Stay focused on your goals and continue making positive changes in your life. Celebrate small victories along the way to stay motivated.

Remember, financial stability is a journey, and it’s great that you are taking steps in the right direction. Keep up the good work and stay committed to your goals. All the best from THE MONEY MINDER!

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