My wife and I have approximately $20,000 in credit card debt as well as an additional $20,000 in student loan debt. We’ve also wracked up $6,000 in dental bills recently. We are always on time with our payments but making ends meet has become a major problem and I only see it going totally over the edge with this new expense.
My wife is a government employee, and our concern is the negative impact it will have on her security clearance as well as any other issues it would create.
We are one disaster away from ruin, ie.a Major repair to the home or car, health care etc..
Is there a viable option to our situation with consideration to my wife’s career? If so, what would be the best way to go in order to get out of this mess?
I assume your feeling is that with something drastic like bankruptcy that it can impact your wife’s security clearance. People fret about this all the time but it is actually less of an issue than you would imagine. In fact, having too much debt is more of a security risk since it is a defect that can be exploited with bribery or financial inducement.
Being worried about security issues is normal. But to alleviate your fears the best approach is to ask your wife to confidentially discuss the issue with the security officer and get advice. I think she will rest easier once she hears that bankruptcy alone is less of a concern than she might believe.
I’m also assuming that you have no savings account or emergency fund to fall back on and tap in case of a financial surprise. You are correct to be worried about not having that safety net. But, rather than feel wholly unprotected and want to rush to create that safety net you might want to consider a more measured approach.
If you can afford to pay the minimum payments plus a bit extra each month you could start to pay down your debt using the debt snowball approach. What I’d like to see you do first is to just pay all the minimum payments due and put any extra money you can stash away into your new savings account. Once you can get $2,000 saved then launch into your debt snowball debt reduction strategy.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.