David Writes In “I Have No More to Give”

By Steve Rhode
Ask me your question.

David wrote me through the GetOutOfDebt.org site to ask his question below. You can too!

“Dear Steve,

I have about $20,000 in credit card debt. 4 cards that I’ve transferred balances to, each with a rate of 2.99 to 3.99% interest for life of the loan. Each monthly minimum is about $110.00. I have no more to give, and we charge our gas for the cars on a credit card.

What is the best way to dig myself out of this hole? I have a 401(k) I can borrow against, my first mortgage is at 5.125% for 30 years fixed and my second mortgage is 5% for a 15/30 fixed rate loan, the two payments total $914 a month. I make $58,000 a year, with wife, one teenager at home, one in college, and my wife does not work.”

Dear David,

First off let me congratulate you for all the cost saving measures you have put in place so far. I am very impressed.

Your balance transfer work was exceptional and it looks like you found a really cheap place to move that debt. In looking at todays best balance transfer options I could not find anything as good as that for a fixed rate, but I did notice there are still are some good 0% transfer deals out there.

I guess the bad new is that you’ve lowered your debt to the least possible costs with excellent credit card rates and a really low mortgage.

I’m not a big fan of borrowing from the 401(k) to pay off debt, except in certain circumstances. The problem with the 401(k) withdrawals is that it is nearly impossible for you to get back into the same place by starting to save all over again.

With expenses cut as far as they can go the only other real option would be to increase household income. It sounds like now might be the time that your wife should go an get a job to bring in additional income and that will give you some breathing room.

Your wife may not want to work but a marriage is a partnership and in difficult times you need to be able to depend on her partner. It would be good to sit down with her and look at your financial situation together. If she does not want to work, ask her for suggestions on how she thinks you can lower your monthly expenses by $1,000 a month because reducing expenses has the same impact as bringing in an extra $1,000 a month.

If she can’t come up with some way to do that then it might just be time for her to hit the job boards and look for available positions. The most popular ones seem to be Monster, SnagAJob, Job.com, HotJobs, or CareerBuilder.

I am very impressed with SnagAJob for hourly jobs in your area. They have a lot and the site is very easy to navigate.

If you do sit down with your wife and have that conversation, please come back and add a comment about how it went. We’d all like to know.

Big hug.

@GetOutOfDebtGuy

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