How Can I Continue My Education With All This Debt?


Dear Steve,

First of all, LOVE that you are answering such tough questions with all proceeds going to Pilot.Dog. Love this. You’re amazing.

Some background: I am a 28 year old living in NYC. I am currently making $55,000 with a monthly rent of $1450 excluding utilities.

I have three credit cards: one with a balance of about $7000 (APR 15%), another with a balance of $5,000 (APR 20%) and a third with a balance of $4250 (APR 13%). A total debt of $16,250. I am looking to go to grad school this fall, with an option of taking a course this summer for $3,550 (of which I have to pay up front out of pocket).

My monthly expenses:
Rent: $1450
Verizon phone bill: $230 (currently paying for 3 members of my family on a family plan)
Con-edison: $60-65
Transit pass: $120
Food: $450
Tithes: $150
Total: $2465

After taxes, I make about $3120 a month, which leaves me with $655 to pay my cc bills.

I have heard various options, from debt consolidation to checking out credit unions and the like.

Here is my problem: my credit score has dropped significantly since my cc bills started to rack up. I was unemployed for most of 2016 and recently got my job that I currently have right now.

My parents don’t know about my debt and quite frankly, I am ashamed to tell them. They need not have to break their backs for this. They really worked hard to pay for my undergrad tuition, of which, I still graduated with a 40k debt.

Please help. What is the best thing for me to do? I’ve applied to Prosper and they rejected me because of my low credit score. Ideally I would like to find a way to pay off the CC with the highest APR and then consolidate the rest of my debt.

Additionally, I would like to figure out a way to take this summer course ($3,550 out of pocket).



Dear Julie,

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Clearly you are going to be wildly conflicted with my answer. Keeping in mind that debt problems are just simple math wrapped in emotion, let’s look at your situation.

It’s probably a safe bet your credit card debt is the result of making up the gap between your income and your expenses. It happens slowly and insidiously to many.

Only you can decide if you are willing to sacrifice your future to deal with this debt. What I mean is if you are willing to delay your education to find a way to live below your means and free up money to reduce your debt over a couple of years. Is that a possibility, sure it is but I find when people strip their lives to beans and rice it is not sustainable and more importantly the future cost is huge.

For example, take the lost retirement cost of repaying your debt. Look at my online calculator here.

In your case the delay created by focusing on reducing your debt right now would prevent you from continuing your education. If your graduate studies and the resulting debt would be a good investment in increasing your overall income then the math would suggest that is a logical pursuit.

So outside trying to get a reasonable loan with horrid credit, which is not going to happen, and spending the next several years on the beans and rice budget, what can you do?

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Well the logical answer is bankruptcy. A Chapter 7 bankruptcy would eliminate your debt in about 90 days and be the least expensive legal solution. Filing bankruptcy and getting the discharge will not prevent you from getting federal student loans, if needed, for your graduate studies.

Considering your tithing I would bet you have an emotional religious perspective that my suggestion may not be valid. I would urge you to read this and this.

The question here is if you want to make an emotional decision about your future or a fact based decision. Factually speaking, to accomplish your goals, discharging your debt to move forward is the logical solution. Ultimately only you can decide. And speaking of facts, I think you should read “So You Are Going to File Bankruptcy. That’s Great News. Congratulations.” to learn fact from fiction when it comes to bankruptcy.

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At the very least, find a local bankruptcy attorney and go talk to them about your specific situation before you leap to any decision. You can read “How to Find a Great Bankruptcy Attorney.

Once you talk to a bankruptcy attorney or three, come back here and update me in the comments and let’s talk this through.

Oh, and by the way, you might just have to use some of the money to file bankruptcy instead of taking that summer course. But if you can get on a solid financial foundation now you can build a better future and head back to school financially safe.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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