How Can We Pay Off Our Debt and Put Kids Through College and Save for Retirement? – Bill

“Dear Steve,

I have just turned 50 and my wife will be 49 in two months. We currently have roughly $177,000 in unsecured debt, mortgage for $183.000 on our home, a Home Equity Line of Credit for $50,000 and a loan of $64,000 against some acreage.

We also have two car payments that total $575 per month but these loans will be paid off within the next 3 months. One of our children will be entering college in 2012 and another that will enter in 2015. Our combined current annual income is $158,.236 which consist of my wife’s salary, my disability income and Social Security dependent benefit payments. Between our 401K, 403Bs and IRA we have retirement savings of roughly $250,000.

Our debt started building, in 1996, when we had to remove the synthetic stucco from the exterior of our house and reclad it with conventional stucco. The firts contractor walked away from the job after we had paid him over $63,000. We then had to hire another contractor to fix problems left by the previous contractor and complete the recladding of our home.

At that point in time our income was $194,000 per year so we were able to start paying down the debts and at one point actually had the HELOC paid off. At that time we also had college funds set up for our three children. The oldest had $42,000, the middle had $24,000 and the youngest had $7,500. Our savings at that time was roughly $24,000. In 2001 I was laid off from a position I had held for nine years at a non-profit organization, due to reduced donations after 9/11.

Within a week I was able to secure another job with another non-profit with my salary dropping only $10,000 per year so we were still making headway. After an auto acident in August of 2002 I became disabled so we had to start digging into our savings while my claimm for disability were being processed. Fortunately there was no delay in getting approval, but I had to wait 90 days until disability payments began.

When the disability payments began we still had a shortfall of $36,000 per year so we had to continue drawing down our savings to make ends meet. At that point in time we had a 23′ ski boat, and were leasing a Chevy Suburban as my primary car but more importantly as a tow vehicle for the boat. We also had all three children in private school. We put the boat up for sale but it took nine months to sell. We wanted to terminate the lease on the Suburban but the penalities were too high since it was only six months old when the accident occurred. It was November of 2004 before I had my final surgery for injuries I received in the auto accident. We had hopes that the surgeries would allow me to rerturn to work, but 21 days after the last surgery my Scion xB was rear-ended by a Cadillac, totaling the vehicle and causing injuries to my back that ultimately required a spinal fusion.

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After the last wreck my doctor told me that I would never be able to work again. We were fortunate enough to receive judgements against the first contractor that worked on our house, the employer I had worked for for nine years for wrongful termination, and from the other drivers’ insurance companies from both wrecks as well as our own insurance carrier. As these funds came in we started paying down our debt again. When these funds ran out we still had our children in private school and still had three months left on the Suburban lease. Our determination to keep our kids in private school as well as some issues with my aging parents were ultimately our undoing.

Our oldest son graduated in 2007 and with the attendant reduction in tuition we left the other two boys in private school for another year. For the school year 2009-2010 we had no choice but to take our two youngest out of private school and put them in public school, but by that time we were already living paycheck to paycheck with no room for any emergencies or problems.

I apologize for the length of the background story but I didn’t know how much information you might need to give us accurate advice.

What is our best option for paying off our unsecured debt and HELOC that comes due in 2015, while putting our kids through college and saving for retirement?


Dear Bill,

First, I’m sorry sorry that you’ve had to live with these obstacles. I know it is stressful and disturbing.

Now for some tough love. I hope you realize now that the situation you face today is a direct extension of not living within your income and properly dealing with this previously. The time has now come to deal with it. So let’s do that.

If you had pursued bankruptcy early on you may have avoided a lot of this mess. But the time has come to deal with it now.

Based on your current situation of living paycheck-to-paycheck and the massive amount of debt you have hanging over your heads and your income situation, there is no reasonable expectation you will be able to dig yourself out. There is also no reasonable expectation you will be able to overcome this situation without some brave action.

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Anyone that promises you anything less is going to be a scam that will take your money and leave you still in a mess.

In addressing this situation you need to put everything on the table. Maybe with the kids growing up and moving on the time has come to downsize your living arrangement and save some money that way. But all of this is going to hinge on you taking a close look at bankruptcy.

I would urge you to click here to find a local bankruptcy attorney you like. Make an appointment and go talk to them. Use this moment in your lives to close the door on the past, eliminate your debt you can’t afford and move forward towards something better.

The longer you try to save this situation without drastic intervention the longer you will slide further down grasping tightly to that lead balloon you are holding onto now.

If you went bankrupt today and instead used the next few years to rebuild and regroup you will have a much better future. If instead you elect to not take action you will waste the next few years dodging bullets and waiting for the lawsuits to come.

I hate to be brutally blunt but the time to negotiate a perfect solution is long gone. Now is the time to take the necessary action to make this start getting better starting today.


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.

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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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3 thoughts on “How Can We Pay Off Our Debt and Put Kids Through College and Save for Retirement? – Bill”

  1. Steve, brutality noted and appreciated. No one that my wife and I have talked too has been willing to be so frank about our situation. Every time that bankruptcy has briefly crossed my mind I feel like I’m going to throw-up. I have always believed in paying what we owe but we have obviously passed the point of that being a possibility.The obsticles we have had to to live with are what they are and nothing can change the past. We have been talking with one company, that is a member of TASC, for what that is worth, about having them trying to get our interest rates reduced but that, at best would give us a little, very little breathing room. I appreciate the work you do and the advice you have given me. I have a few more questions but will send them through the proper channel. Thanks

    • Bill,

      It was hard to post a longer response earlier on my phone. If you are talking to a TASC company they will be selling you debt settlement which sure doesn’t seem like a reasonable solution in your situation.

      The reason I can be so honest and tell you like it is, is that I have nothing to sell you. I have no motive for steering you into any one particular solution.

      Really, I’m here to help.



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