We Are $40,000 in Credit Card Debt and Make Only the Monthly Minimum Payment. – Rachel

“Dear Steve,

My husband and I are currently about 40,000 in debt. This is not including our mortgage or car payment only credit cards, ect. We only make the monthly minimum payments each month but all of the cards/loans have different interest rates so our payment range from 20 – 362 a month. We are struggling to make ends meet due to my job loss at the beginning of the year. I have recently found a new job but took a pay cut. I have even taken a second job to help pay down this debt.

My question is what is our best option to get out of debt and free up some money each month? I don’t want to file bankruptcy if possible and debt managment plans worry me because I don’t know which one are legit. We can’t refinance our morgage because of our debt. I am really worried and stressed.


Dear Rachel,

Whew, that is a lot of stress to carry around with you.

Money problems are best first tackled by increasing income, reducing expenses or a combination of both. It sounds like you’ve tried to increase the income with the second job. Good for you.

If you’ve already tried to get better control over your spending but can’t or you are struggling with a budget then a solution like the web based tool Mvelopes might come in handy. It is an automated way to see where you money is going so you can make some informed decisions about where you might want to make some changes.

If you can only afford the minimum payments on your debt even with all the efforts above, it will take you decades to get out of debt. The key to any debt reduction tool is to apply some extra funds each month using the debt snowball method to reduce your debt.

You could also look at the debt consolidation loan site funded by peer-to-peer lenders at LendingClub.com. LendingClub is one of the few places people can still get a consolidation loan. And if the interest rate on the loan is lower than what you are collectively paying, that might give you the monthly payment breathing room you are looking for.

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If after all of that you are still just scraping along, you and I will have to look at some other options. But we can do that once you give me some updates or feedback in the comments.

Please update me on your progress by

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Damon Day - Pro Debt Coach

Steve Rhode

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