“I Have Three Degrees But I’m Broke And Miserable”


“Dear Steve,

I have $75,000 in school loans and I have one job bringing in $360 per week after taxes and another job where I make $150 per week after taxes. My car payment is $251, rent is $600, utilities are $130, Food is $80, and water is $45.

I have a 401(k) with $6,000.

Help me. I feel borderline and broke. I relocated ten months ago from New Jersey.

After acquiring three degrees I still can’t find a job to match my qualifications. I feel broke and miserable.



Dearest Theresa,

I certainly feel the pain and frustration that is coming through your electronic correspondence. Working hard to get three degrees and achieving great things in education always seems like it should pay off, but sadly it doesn’t always.

I recently wrote about this in “Is Going to College Really A Smart Financial Move?“.

I don’t know what your degrees are in and the student loans are not my first worry here since they are probably government backed student loans and you’ll have to pay them come hell or high water.

Let’s Look At Student Loan Options First

You did not mention what your student loan payments are and if your loans are on hold or in forbearance. If they are then they are just sitting there, ticking away, with the balances getting bigger due to growing interest being added to the amount of your loan.

The Department of Education offers a little known program called ICR (Income Contingent Repayment) that is worth investigating.

This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your Adjusted Gross Income (AGI), family size, and the total amount of your Direct Loans. To participate in the ICR Plan, you must sign a form that permits the Internal Revenue Service to provide information about your income to the U.S. Department of Education.

This information will be used to recalculate your monthly payment, adjusted annually based on the updated information.

This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse’s income if you’re married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

  1. the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  2. your monthly discretionary income* multiplied by 20%.
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If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized.

The maximum repayment period is 25 years. If you make payments under the standard or 12-year extended plan and then switch to the ICR plan, time under the former plan counts toward your 25-year repayment period.

Time spent in other plans or in deferment or forbearance does not count toward the 25 years. If you haven’t fully repaid your loans after 25 years under this plan, the unpaid portion will be discharged. You will, however, have to pay taxes on the amount that is discharged.

Let’s Look At Your Debt

The figures you gave me indicate that your problem isn’t the typical too much credit card debt. Your monthly obligations and payment amounts seem reasonable, except for your monthly food budget. Really, only $80 a month for food? There isn’t much to trim or cut in the expense category.

The Real Issue – Under Employment

Theresa, the critical issue of your “broke and miserable” situation is that you are underemployed rather than unemployed.

Now it is very easy for me to tell you to go out and get a better paying job, saying that does not make it happen automatically and there could certainly be some underlying issues that are holding you back from doing that.

Once case in particular stands out as an example. I once had a client that was working the night shift at Walmart for years. She was just barely getting by. As we talked about why she had not tried to look for a better job she finally let it slip, “I am ashamed of my feet”.

She felt her feet were too big and she did not want to go on an interview where she felt someone might make a comment or judge her by the size of her feet.

Once we talked through that issue she developed the confidence to at least go try an interview. She got the new job making 50% more and it solved her money troubles.

I’m wondering Theresa if you have an issue that is holding you back from looking for a new job?

Getting a new job is not fun or easy. It often involves a lot of rejection and when you are already feeling borderline, broke and miserable the last thing you want to pursue is rejection. But if you can face the process mentally prepared for rejection then it makes it a bit easier. In fact, I would adopt the approach that each ‘no’ that you get is a good thing because it means you are one rejection closer to getting to the ‘yes’.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
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To help I’ve put together this job bank page with links to help.

I have always found that the secret is to make a job of getting a job. What I mean is that you have to approach it like a project. You need to use your educational skills, project management abilities and communication skills to diligently hunt for more income.

Another issue that comes out in your email is one of self-worth or self-esteem. It sounds like you’ve been down for so long that up is impossible to set your aim on.

In your search for more income I don’t want you to find a third job, I want you to find a higher paying primary job. Even if you don’t think you deserve more than what you have right now, trust me, you do.

And I could tell you all sorts of mumbo jumbo that I believe in but let me distill it to say that as long as you feel you are not worthy to have a higher paying job, you’re not.

Theresa, bankruptcy, credit counseling, debt settlement and all the rest of the tools to use in problem debt situations will not help you, only increasing your income will.

And I did not forget about your $6,000 in 401(k) money. It’s just that unless we tackle those underlying issues that are holding you back, if you tap that cash, it will just be gone and the problem won’t be any more resolved than it is today. Don’t touch that 401(k).

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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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