Dear Marc & Julie,
I saw your video and wanted to offer you some advice.
My advice comes from the fact you have had sporadic employment and you have a child on the way in six months or so.
For me the issue distills down to one primary question. Do you have a greater responsibility to repair the past or fix the future?
With a child on the way you now I feel you have a greater responsibility to make the future safer for that child. You should focus on your daughter coming into a family that has a better financial foundation.
You speak about forgiving and healthy emotions and the desire to do the right thing, but for whom? For you the desire might be to do what you can to meet your obligations at all cost and sacrifice. But is that really the most balanced solution? Probably not.
Here is what we know right now. For whatever reason you are dragging along two types of debt. One is the student loan debt and the other is unsecured debt. With the student loan debt you may be able to lower your monthly payment through the Income Based Repayment (IBR) program if they are government backed loans.
For the unsecured debt what I am about to suggest might seem extreme, but hear me out. Based on your current situation, with child and without reliable employment, it is my opinion that you should strongly consider bankruptcy to discharge the unsecured debt.
Based on what you’ve shared you should be able to keep the car and home and extinguish the unsecured debt in a couple of months. You can click here to find a local bankruptcy attorney that can help you.
Now, if your first reaction is that you don’t want to consider bankruptcy because you want to honor your debts, consider this, there is nothing saying you can’t repay your debt after bankruptcy under terms you can afford without fear of collections or being sued.
But while we are imagining, let’s pretend you knock the budget even closer to the bone and try to reduce your debt. Before you know it the baby will be here and some of the debt may have been reduced but you won’t be out of debt. You also won’t be prepared for the child in case of emergencies.
If you did decide to go bankrupt, which would be the most responsible thing to do, you would be able to stop paying your unsecured debts right now, you could eliminate those payments moving forward, and you would finally be able to start saving money in an emergency fund or savings account to care for your family in case some unexpected financial surprises happen. And if you can trim your budget back then you get to save even more money.
On the motorcycle front I hate to see you get rid of the bike if it gives you an outlet for joy. Riding motorcycles is my passion also and there are some great life benefits from riding. Here is an article I just wrote about a recent motorcycle trip of mine. Getting out of debt doesn’t have to be a life of without. It is permissible to have fun and enjoy life along the way.
This is not the time to beat yourselves up over this. You can be as self-critical as you want but I always saying there is no sense wasting a perfectly good mistake. Learn from the experience, take action for a better future, get your new beginning and then pay it forward by helping people, like I do, to find ways to deal with difficult money troubles.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.