‘I make great money but feel so hopeless’: I have $20k credit card debt and $100k in student loans. How can I escape this financial nightmare?

Hey Money Minder,

I am so embarrassed to be in this situation and feel like I need some serious help!

I’m 32 years old, making 150k/year (which is around 7,500$/month)

I’ve got 20k in credit card debt with a crazy APR of 24%, and over 100K in student loans (currently on forbearance with no interest because of a court ruling). I still owe about 18K on my car loan at a whopping 9% interest rate. I’ve been trying to budget and figure out a way to pay this debt off, but I’m completely lost. It feels like I’ll never get out of this mess despite making good money.

Should I consider taking out an upstart loan for 20k? I can pay it off in 3 years with a 20% interest rate, but I’m not sure if it’s the best move. Any advice on what I should do next?

Here’s what I’m putting towards my debts each month:

– $700 to my car loan
– $1500 to credit cards
– $1850 to rent/utilities

I have zero savings and I’m engaged. I really don’t want to start married life with this massive debt hanging over me. We’ve even decided to skip a big wedding to focus on getting me out of debt once and for all.

EDIT:

Here’s my full budget breakdown below:

– $700 to my car loan
– $1500 to credit cards
– $1850 to rent/utilities
– $500 to student loans (just to include it in my debt payoff plan until the payment starts back up again)
– $300 to therapy
– $600 to food (cutting back from $1200)
– $300 to shopping (putting a limit of $300 to control my spending)
– $200 for wine (date night at a wine store every Tuesday for a tasting and a few glasses)

See you later Money Minder!

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the first step in acknowledging your financial situation and seeking advice. It is understandable to feel embarrassed and overwhelmed, but you are already making progress by creating a budget and analyzing your current expenses.

Given your income and monthly expenses, it seems like you are on the right track to paying off your debt. However, the 24% APR on your credit card debt is likely one of the biggest obstacles to your financial stability. I would recommend prioritizing paying off this high-interest debt as soon as possible. Consider allocating more funds towards your credit card payments by possibly reducing expenses in other areas.

Taking out an Upstart loan may seem like a viable option, but it is crucial to carefully consider the terms and interest rate. While 20% APR on a loan could be lower than your credit card APR, taking on additional debt may not be the best solution in the long run. Explore other alternatives, such as negotiating lower interest rates with your credit card company or seeking a balance transfer to a lower APR card.

Furthermore, it is commendable that you and your partner have agreed on prioritizing debt payoff over a wedding. By working together and staying committed to your financial goals, you can overcome this challenge and start building a more secure financial future. Consider setting up automatic transfers to a separate savings account for emergencies and future expenses to avoid accumulating debt in the future.

Remember, financial stability is a journey that requires dedication and persistence. Stay focused on your goals, continue monitoring your expenses, and seek professional advice if needed. You are capable of overcoming this situation and setting yourself up for financial success. THE MONEY MINDER wishes you the best of luck on your journey to financial freedom.