I bought my home for $160K last year, using up all my savings. I still owe $155K on it. With some work, it could be worth around $170K. But, I’ll need to shell out another $5000 just to get it ready to sell.
I’ve made some pretty bad choices, I gotta admit. I snagged a job making $105K a year, and let’s just say, the lifestyle upgrades happened real quick. Right now, I’m $20K in credit card debt. Oh, and I also owe the IRS $13K because I didn’t pay income tax on an inherited retirement account. On top of all that, there’s the $30K I owe on my car, but I could sell it for $38K if I really had to. Problem is, finding a reliable replacement for the $8K difference is gonna be tough, and I need my wheels to get to work.
I’m having a hard time keeping track of where all my money’s going. I know off the bat, I spend $1700 a month on the mortgage, $500 on the car, $200 on car insurance, $500 for utilities and card payments, $200 for the IRS, and $150 on student loans. And then I’m dropping around $500 a week on living expenses, which includes groceries, gas, and (ugh) probably one too many drinks. I’m trying to cut back, though. Ever since buying the house, I’ve been in the red every week, which is why I’m drowning in credit card debt.
A relative is offering to let me crash at their place for $200 a month. I’m thinking about taking them up on it, fixing up my place, and selling it. But, I’ll likely need to take out a loan for realtor fees ’cause I’ve only got $6K in savings. Plus, my job performance hasn’t been stellar and I’m worried I might get the boot soon. It could take ages to find a new gig, and chances are, I won’t be making more than $80K for a similar role.
So, what’s the move here, Money Minder? I’m freaking out about the possibility of bankruptcy and ending up on the streets, especially if I lose my job and the property my family owns goes to someone else. I’m in way over my head. It’s my first time owning a house, and yup, I’m young and dumb. I’ve got a truckload of regrets and I’m genuinely scared about what’s to come.
Sincerely,
Worried Wanderer
Response from THE MONEY MINDER:
"Hello There,"
I want to start off by saying that I understand how challenging and overwhelming your current financial situation must be. It’s clear that you’re facing a wave of monetary obstacles, but the good news is that you’ve recognized the need for change and are seeking guidance.
From your breakdown of expenses, it’s evident that your monthly outflow exceeds your income, resulting in the accumulation of credit card debt. To address this, I recommend creating a detailed budget that outlines all your expenses and income sources. Track your spending diligently to identify areas where you can cut back. It’s crucial to prioritize paying off your credit card debt first to avoid high-interest charges.
Considering your outstanding IRS debt and impending job uncertainty, it might be wise to explore options for debt consolidation or negotiation with creditors to establish more manageable repayment terms. Additionally, reducing unnecessary expenses like dining out and entertainment can free up funds to tackle debts and build your savings.
Moving in with a family member at a reduced rent could provide significant relief, allowing you to save on housing costs and focus on resolving your financial obligations. Once you stabilize your finances, you can consider selling your property after making necessary repairs, provided that the potential profit outweighs the investment.
In the event of a job loss, it’s essential to have an emergency fund set aside to cover living expenses during the transitional period. Updating your resume, networking, and actively seeking new opportunities can increase your chances of securing an alternative position.
Remember that seeking professional financial advice from a certified financial planner or credit counselor can offer tailored strategies to address your specific circumstances and pave the way towards financial stability.
I empathize with the anxiety and uncertainty you’re experiencing, but taking proactive steps to address your financial woes is crucial for your future well-being. Stay committed to your goals, make informed decisions, and prioritize your financial health above all else.
Warm regards,
THE MONEY MINDER
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