I’m Losing $800 a Month and Can’t Keep This Up. What Should I Do? – Dude

“Dear Steve,

I’ve always thought I had my credit under control. I have a credit score over 700 and was doing a great job of transferring balances to 0% cards every 6-12 months. Then the credit card companies stopped giving me new cards, a couple of my cards were maxed out and I now owe $38,000 in credit card debt ($900 monthly payments).

What I now realize is I had maxed out my budget and any additional expenses I have added to my credit cards couldn’t be covered. My credit card payments have gone to increasing that debt. I am now in a perpentual hamster wheel of increasing debt. I take home $3,000 per month but my monthly expenses are around $3,800. I co-own a house with my girlfriend that doesn’t have much equity and have a daughter with her so my expenses are more than just for myself. This is a breakdown:

Mortgage: $1000
Credit Cards: $900/month
Student Loans: $720 (interest only)
Utilities: $150
Food: $600
Gas: $250
Insurance: $100
Phone/Internet bill: $90

As you see, there isn’t many areas that I can just reduce my costs and my mortgage payment is about the same as I’d be paying to rent in my area. This breakdown doesn’t even include household, “entertainment” or unexpected expenses.

I found a debt consolidation loan will only reduce my credit card payments by about $130-150 and I can’t imagine a debt management program being able to reduce $800 from my payments. I don’t like the idea of bankruptcy and want to consider any other option available but I’m not sure if there is one. I have learned a lot about how to better manage my finances but have become too far into debt to be able to climb out and put what I learned into practice.

What options do I really have when I’m bleeding $800+ per month?


Dear Dude, (your assigned named)

You really don’t have any options except bankruptcy or to stop paying the bills and wait to be sued.

The minute you started juggling the balance transfers the die was cast. You never eliminated that debt, just pushed it forward into the future. It’s the future. And what were those 0% balance transfer offers? They were always an inducement for you to get stuck with your debt on their card. They were never a smart financial management tool.

You unfortunately fell for it and now there is no way out without bankruptcy other than increasing your income to cover the deficit. But even then, the moment you started using the cards to makeup for the shortfall each month the debt went into turbo.

Click here to find a local bankruptcy attorney you like. Make an appointment to go in and see them with your wife. Ask all the questions you can and then go home and think it over for a day or so. There is no need to rush into a decision on the spot.

The reason I think bankruptcy is imperative is due to your interest only student loans. Without eliminating your unsecured debt with bankruptcy you will never have enough money to start paying those student loans down and that a real priority debt. If you fall behind on those the student loan guaranty company can garnish your wages without taking you to court. It gets real nasty.

Now I always say there is no sense wasting a perfectly good failure. Learn all the lessons you can from this experience and don’t repeat those. The bottom line is you screwed up, you made mistakes, your situation requires intervention, you’ll do better in the future.


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.
Damon Day - Pro Debt Coach

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