I owe 46,000 on 3 credit cards, with a monthly combined payment of 930.00, and the monthly combined interest of 464.00.
I get debt consolidation offers in the mail which I have thought of using, but I am not sure they are legitimate.
I have thought of trying to get a second job but don’t think I have enough time after I finish my primary job and then combined income equals more taxes.
I have thought about taking online courses to learn an additional new skill to work at night to make more money.
Not sure what to do.
You ask a number of great questions.
It is amazing how such a simple question can have so many possible outcomes and ramifications.
Let’s knock the job question out right now. I’m not sure starting an unsustainable struggle is working smarter and not just harder. And learning a new skill is always a good thing to do but what is the cost to learn a new marketable skill and the time it will take?
For example, is your past, present or financial future the most important thing for you? Do you have enough going into retirement savings? How important is your credit score right now?
One of the more important questions to consider is how much digging out of your current debt is going to cost you in future retirement loss. Use this calculator to find out.
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Take bankruptcy as an example. If you filed bankruptcy right now and instead just saved your $930 monthly payment in a retirement account for the next five years and then no more, and you have 35 years before retirement, the cost of repaying your debt will cost you about $1,428,619 in lost retirement savings.
Some people feel they have an overriding moral responsibility to repay their debt no matter what the future cost and loss is to them. And that’s one position to take. But I’m always curious why people feel a greater responsibility to repair the past instead of the future.
Mixing moral and emotional feelings into essentially a math problem is a tragedy. It causes people to make the wrong financial decision about how to deal with their debt. I’ve written so many posts on these issues. Here are a few to read: The Fine Art of Getting Out of Debt, You Ain’t Your F***ing Debt, and How to Get Out of Debt. The Honest and Unvarnished Truth. Oh and don’t forget What Does the Bible Say About Bankruptcy? Is Bankruptcy Scriptural? and If Bankruptcy is So Bad Then Why Do Churches Keep Filing Bankruptcy?
My advice is to talk about your specific situation with an independent debt coach like Damon Day or someone else you find. Think about this like going for a medical consultation. Typically when you contact a debt relief company they want to sell you their product and not provide independent advice.
You don’t go to the medical supply store for medical advice.