Hi Money Minder,
I’m in a bit of a financial jam and could really use your expertise. My name is Jack and I’m married to Sarah. I bring in $90k a year while my wife earns $80k. I’m putting in 75% of my income towards our finances and she contributes about 35%.
As for our net worth, Credit Karma says I’m at around $115k. That’s mostly from our house valued at $305k and a used car worth $5k, although it’s giving us some trouble. In terms of accounts, I’ve got $1.5k in my personal account, $25k in a joint account with a 4.5% interest rate, and another joint account with $4k. I’m not sure about Sarah’s personal account since she uses it for bills and school loans. She’s got around $70k in student loans and $15k in credit card debt, which she’s working on paying off. I want to help her out, but I’ve got my own debts to deal with.
My 401k sits at $15k, brokerage at $12k, and crypto at $8k. We’ve got $230k left on our mortgage with a 3.5% interest rate. It’s around $2k a month, but I’m aiming to get rid of the PMI soon.
My debts include a $2k credit card bill that I plan to pay off with my personal account, and a $9.5k credit card bill from fixing our roof after a storm. I had to put it on a 0% APR plan for 36 months, with about 32 months left to pay. Plus, there’s a $450/month lease on a Mustang Mach-e that I got in January for work. Thinking of selling the problematic used car and carpooling with Sarah instead.
Our joint expenses come up to about $6.2k a month, covering the mortgage, groceries, utilities, gas, tolls, and takeouts. From my personal account, I’m handling the credit card debt, lease, and some other expenses.
How can I dig myself out of this hole?
Farewell,
Jack
Response from THE MONEY MINDER:
Hello There,
Congratulations on being proactive about your financial situation by seeking guidance on how to break away from the current scenario. It’s clear that you have a good grasp of your income, expenses, debts, and assets, which is a solid foundation to work from.
First and foremost, tackling the credit card debt should be a top priority. Utilize your personal account, as planned, to pay off the $2k credit card debt and continue chipping away at the $9.5k owed. Consider reevaluating your monthly expenses to see if there are areas where you can cut back to allocate more funds towards debt repayment.
Regarding the lease on the Mustang Mach-e, since you feel it’s not a necessary expense, explore options to either reduce the monthly payments or consider returning the lease early if feasible. Carpooling with your wife once her car is paid off could be a viable solution to save on transportation costs.
For your wife’s student loans and credit card debt, it’s commendable that you want to assist her in getting out of debt. Collaborate with her in creating a budget and debt repayment plan that works for both of you. Consolidating or refinancing the debts at a lower interest rate could also be beneficial in the long run.
In terms of your assets, continue to contribute to your 401k, brokerage account, and HYSA while keeping an eye on your net worth. Explore ways to increase your income or find additional sources of revenue to accelerate repayment of high-interest debts and increase your savings.
Remember, financial stability is a journey that requires patience, persistence, and discipline. Small changes and adjustments in spending habits can lead to significant progress over time. Stay focused on your goals, communicate openly with your wife about financial matters, and prioritize building a strong financial foundation for the future.
All the best from THE MONEY MINDER.
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